He also noted that while sales-tax revenue had fallen below predictions in December, it was still running higher than a year ago.

It is also taking a toll on state and local governments, which have had to cope with fallen sales-tax revenues.

As a result, sales-tax revenue in New York City has also slowed.

"And since people have less money to spend, our sales-tax revenues continue to fall," he added.

When annualized, sales-tax revenues were $1.3 million short of the $178 million hoped for this year.

Nassau County alone would receive $25.5 million as its share of the sales-tax revenue.

But he said that with continued weakness in consumer spending, sales-tax revenues - which contribute two-thirds of the state budget - could fall further still.

Higher sales-tax revenues, an indicator of stronger retail sales, partly explains the contradiction.

He would not have continued to propose budgets based on one-time sales and phantom sales-tax revenue.

Layoffs are running at a record pace this year, and sales-tax revenue has sharply dropped off.