New York, NY —

The state’s budget director says New York is facing an "unprecedented" cash flow problem, and he says if there’s no budget in place in six weeks, delaying payments to schools and others won’t be enough to stave off a financial crash.

Gov. David Paterson’s budget director, Bob Megna, a 32-year veteran of the state’s budget and tax departments, says he’s never seen a cash crunch as bad as the one New York State currently faces. New York already had to delay some payments in December, and he says if the legislature does not agree with the governor on a spending plan by June 1, there won’t be enough money again to pay all New York’s creditors, including, a $4 billion payment owed to schools.

“Delaying payments is not the easy answer it was in December,” Megna says.

He says the state might consider spreading out some of the payments over a longer period of time, or even reviving an old-time practice of spring borrowing, obtaining short-term loans to get the state through. Later in June, quarterly income tax payments are due, as well as sales tax collections, but Megna says without a budget that includes significant recurring cuts in state spending, there still won’t be enough money. He says the best solution is to pass a budget before then.

The budget office also released an emergency spending extender to take the state through April 18, and lawmakers are expected to pass it on Monday. The bill does not pay for 4% raises due to unionized workers, and also holds back state funds for road and bridge repair projects. Megna says with the dire financial crisis, the state can’t carry on with “business as usual” spending extenders. And, he hinted, the austerity measures may help squeeze the legislature into agreeing on a budget sooner.

“Past experience has told us when we do emergency bills that are business as usual nothing gets done,” said Megan. “There’s no impetus to get a budget solved.”

The emergency spending bills do include money for state income tax refunds.