Q: Why is there a tax refund delay? If you don't meet the tax refund deadline on April 1, will you have to extend it another couple of weeks?
Paterson: "The problem is that the state owes about $14 billion in cash for Medicaid and local governments and other items. We're $2.1 billion short. We're going to have to find a way to come up with the $2 billion. This is separate from the budget process. We're going to have to engage in short-term borrowing in order to make sure the state doesn't run out of money. It ran out of money in December, and the way we addressed the problem was by delaying some payments for a few weeks and that's what we'll do again. It just points out how dire New York State's financial situation is."
Q: When should people expect their tax refunds?
Paterson: "Maybe a delay of two to three weeks."
Q: You delayed it on the 15th because you hit a cap of $1.25 billion. Will you have to delay it again because it doesn't look like there will be a budget deal by the deadline?
Paterson: "We're not expecting to."
Q: What do you say to taxpayers who are not going to get their refunds?
Paterson: "What I would say to them is that the damage, at this time, forgoing those couple of weeks of refunds, which will bring the state $500 million that we'll save, would be far worse because if we do not pay, if we do not pay our debts on time, it thrusts the state into a downgraded credit rating, which means more payments go to interest than to principal, and the services that will be lost would be greater than the delay.
"I apologize that we had to do this. I hope it serves notice on the public about how serious our financial situation is, how sensitive and in many ways vulnerable we are as a state to going into the kind of financial disaster that other states are in, but we're taking the steps to avoid it as we did in December to make sure the state didn't go bankrupt."