New York State May Delay Tax Refunds

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New York State’s budget deficit and dysfunctional legislative process may prompt the government to withhold state income tax refunds, according to embattled Governor David Paterson.

The governor, facing dismal approval ratings, has warned that the 8.2 billion budget gap may force the state to postpone the tax refunds in order to avoid going bankrupt, unless it passes a budget by its April 1 deadline.

“We can only do this to stop the state from going bankrupt, but there are procedures we will have to take if the legislature doesn’t act, and close this deficit with real and recurring deficit reductions, not made-up, phony revenue enhancers that don’t really exist,” he said, according to local radio station WRVO’s Web site.

Paterson told another radio station, WOR, that taxpayers should blame the legislature for the budget woes. He claimed the legislature refused to cut spending and resolve the budget deficit.

New York is one of many states facing budget shortfalls this year due to the recession and plummeting tax revenues. Last year, California also announced it would be forced to delay income tax refunds, but the state eventually issued them.

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