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Updated 03/17/2010 07:49 PM

Governor Delays Payment Of State Tax Refunds

By: Erin Billups

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Governor David Paterson announced Wednesday he is delaying state tax refunds in order to prevent the state from running out of cash.

The governor is delaying the payment by about two weeks for hundreds of thousands of New Yorkers.

"We may even have to engage in short term borrowing in order to make sure that the state doesn't run out of money," Paterson said.

Those who filed in late February and early March will have to wait for their money.

Putting off the payment of about $500 million will help ensure that the state has enough cash on hand.

Lawmakers, however, say the move is crossing the line.

"I think it's inappropriate. I think it's wrong," said Assembly Speaker Sheldon Silver.

"It's obviously their money, they have budgeted that money in anticipation of receiving it so that money should be released," said Senate Democratic Leader John Sampson.

Lawmakers said they will ask the governor to release the refund checks and work on legislation to deal with the issue.

"I don't know if we can stop it now but we can certainly stop it in the future," Silver said.

The average state tax refund is about $1,000 and takes about three to four weeks to arrive.

Meanwhile, state tax refunds won't be the only payments on a delayed schedule.

Just as he did in December, Paterson will likely have to defer payments to medicaid, local governments, service providers and possibly school districts.

"If we do not pay our debts on time it thrusts the state into a downgraded credit rating where more of our payments go to interest than to principle and the services that will be lost will be greater than the delay," said the governor.

Paterson is expected to announce the specifics on other delayed payments later this month.