New York is about to achieve a dubious milestone: For the first time in history, the state’s main bank account is poised to end the year in the red.

After months of plunging revenues and weeks of budget battles, New York had a negative balance of $174 million in its general fund on Wednesday, with nearly $1 billion in bills owed by day’s end. Every sign pointed to the account’s still being in the hole when 2010 begins. To fill the gap, New York will be forced to rely on its own version of overdraft protection by raiding its short-term investment pool — a kind of statewide checking account. But that account itself is dangerously low, with only about $800 million on hand, compared with a balance in more flush years of as much as $16 billion.

And the lower the short-term balance falls, the harder it is for the state to cover its day-to-day bills and the closer New York moves toward a previously unimaginable eventuality: A government check that bounces.

“New York State is officially living paycheck to paycheck,” said Thomas P. DiNapoli, the state comptroller, whose responsibilities include managing New York’s finances. “The state is starting the new year by scrambling to make payments and juggle money.”  More here.