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Wall Street woes -- huge problem for the state

  Just a few weeks ago, Gov. David A. Paterson and the State Legislature agreed on a series of budget cuts and other measures that began to deal with the state's worsening economic position.

   But in the last few days, the situation has only worsened -- significantly. Read my story here.

   As a result, New York's projected deficit of $5.4 billion will only increase as a result of the toppling of several financial giants on Wall Street. And since the state's financial wizards estimate that 20 percent of its tax revenue stem from five ZIP codes in lower Manhattan, the decimation of firms like Bear Stearns, Merrill Lynch, Lehman Brothers and AIG means even less revenue streaming back to Albany.

   The underlying problem in all of this is the possibility of raising taxes. Paterson has said all along he will do everything in his power to avoid that scenario, though he has not ruled it out.

   Nobody will even mention the word in an election year, but the situation is so dire -- according to the experts -- that hiking taxes in some way may have to enter the discussion. And that only stymies efforts to lower taxes, make the state attractive for business development, and end the unhealthy dependence on Wall Street.

   Maybe it will be a "millionaires' tax" in which only the wealthy are hit. Or maybe the
state will be able to avoid it altogether and cut its way back to the black.

   Either way, New Yorkers are in for tough days ahead, because New Yorkers and their dependency on Wall Street revenues get hit the hardest.

   What would you recommend to Paterson and the state's leaders?

  -- Robert J. McCarthy

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