by SALLY GOLDENBERG in New York and S.A. MILLER in DC
The state's fiscal mess could end up costing the city dearly, a new report says.
State Comptroller Tom DiNapoli yesterday said the $1.2 billion reduction in state assistance for the city, coupled with an uncertain contract with the teachers union and a budget deficit, could mean a $2 billion hole for the city in fiscal year 2011.
"The city has been far more fiscally responsible than the state, but unfortunately, fiscal problems trickle down, and the state's actions could have a harsh impact on the city's finances," DiNapoli said.
The comptroller also said the city has benefited from a surprisingly quick Wall Street recovery.
However, he predicted a $350 million loss for the city if the teachers union does not agree to Mayor Bloomberg's proposal to raise salaries 2 percent, instead of the 4 percent other unions received.
Meanwhile, the US Senate yesterday passed a long-stalled "jobs bill" that would inject $500 million into the city and $2.3 billion into the cash-strapped state, money Gov. Paterson has been counting on to help close the budget gap.
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