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Guv apologizes to taxpayers over refund delays

New York Gov. David Paterson, center, listens to

New York Gov. David Paterson, center, listens to State Assemblyman Sheldon Silver during a news conference announcing $400 million federal funding for city public housing in New York. (March 15, 2010) Photo Credit: AP

ALBANY - As lawmakers Wednesday blasted the state's decision to delay paying income tax refunds until after March 31, Gov. David A. Paterson apologized to taxpayers but said he had no choice.

Paterson acknowledged the furor. However, he said the state needs the cash to help pay $14 billion in bills due at month's end. The money will go to the state's general fund - it is not earmarked for any specific use.

"I apologize that we had to do this," he said in Manhattan after a St. Patrick's Day event. "I hope it serves notice on the public about how serious our financial situation is, how sensitive . . . we are as a state to going into the kind of financial disaster that other states are in."

Lawmakers vowed to stop the same thing from happening in the future.

"It's rightfully their money," state Senate Democratic chief John Sampson of Brooklyn said, referring to taxpayers.

"If I'm late in making my [tax] payments, there are interest and penalties on them," he said. "If we [the state] are late in paying them, well, interest and penalties need to be accumulated also."

Assemb. Thomas Alfano (R-North Valley Stream) agreed, saying, "This isn't right. . . . Hardworking New Yorkers should receive their checks on time."

Faced with the specter of New York running out of money March 31, Paterson is withholding $500 million in tax refunds to hundreds of thousands of taxpayers. Their returns were submitted in late February and the first several days of this month. However, they must now wait six weeks instead of four weeks to receive money back.

Refunds will resume on April 1, the start of the state's new fiscal year. In 2009, about 6.5 million households received $6 billion back. Before last Friday's suspension, 1.4 million households had been refunded $1.25 billion so far this year.

New York joins Alabama, Hawaii and North Carolina in announcing plans to delay refunds. Under Gov. George Pataki, refunds were delayed three times in the 1990s.

In the Capitol Wednesday, furious lawmakers admitted Paterson had acted legally. But they vowed to change the law, with the Assembly voting on a bill as early as today.

The legislation, sponsored by Assemb. Richard Brodsky (D-Westchester) and Sen. George Winner Jr. (R-Elmira), would require refunds to be paid within 30 days, instead of the current 45. If the bill passes both houses, Paterson has 10 days to sign it into law or issue a veto. It remains uncertain whether the Senate can muster the votes necessary for a veto override.

"I don't know if we can stop it now," said Assembly Speaker Sheldon Silver (D-Manhattan). "But we can certainly stop it in the future."

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