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State agencies told to further cut budgets

New York State Budget Director Robert Megna Wednesday ordered agency heads to find ways to cut spending by 2.5 percent next year.

The cuts are a sign that the weak economic recovery promises another tough budget year even after lawmakers closed a $10-billion deficit in the current year.

"We must challenge ourselves as we approach this year's budget to achieve the governor's vision of making government work better, smarter and operate more efficiently," Megna wrote in a letter to commissioners. "Agencies need to re-think their operations from top to bottom."

Next year's cuts are based on current spending and will be submitted as part of agency budget requests to the governor's office. This means that not only will agency spending not grow next year, it's likely to shrink by roughly $184 million.

On Tuesday, Gov. Andrew M. Cuomo said the state's budget deficit would be greater than the $2.4 billion already projected but didn't say by how much. Personal income tax collections have been coming in higher this year than last, but that growth has slowed significantly, from a 35-percent increase in April to a 4.6-percent increase in September, according to data from the state comptroller's office.

The state missed a Monday deadline for issuing its midyear budget update because economic volatility on Wall Street has made revenue projections more difficult, said Division of Budget spokesman Morris Peters. Impacts related to tropical storms Irene and Lee have also contributed to the delay, he said.

The release of the midyear update is the first step in the budget process that begins this month. Peters said the update would be released this month but couldn't be more specific.

Megna also indicated that capital spending, while necessary to maintain infrastructure, could be curtailed because of constraints on the state's ability to borrow money. State law limits how much debt the state can issue and it has inched closer to that limit for years.

"This year's budget process will emphasize coordinating capital projects investments across agencies to ensure that projects that generate the best returns go forward," Megna wrote.

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