As bad as things look for New York State’s finances right now, the comptroller, Alan Hevesi, thinks they’re going to get much worse.

Mr. Hevesi predicts that heavy borrowing by the federal government will trigger a nationwide recession in the next year. That would throw tens of thousands of New Yorkers out of work, play havoc with the stock market, and decimate the tax revenues of the state and city governments.

Albany is hardly in a position to absorb such a blow. It faces a huge projected deficit in the fiscal year that begins April 1, which Governor Pataki estimates at $6 billion. And that doesn’t count the cost of complying with a court order to improve funding for New York City schools, pressure to bail out the Metropolitan Transportation Authority, and a looming shortfall in funding for healthcare programs.

What’s more, state lawmakers have already drained their cash reserves, borrowed to the hilt, and enacted a multibillion-dollar tax hike in the aftermath of the terrorist attacks of September 11, 2001.

Many in the state Legislature are banking on continued growth in the economy to make ends meet this year, and their budget will likely reflect that assumption. But Mr. Hevesi sees the present growth as a “sugar rush” brought on by tax cuts and increased federal spending. Mr. Hevesi predicts this rush will soon wear off, pushing the state to the brink of its worst budget crisis since the 1970s.

“I’d be very surprised if we didn’t start sliding by the end of ’05,” Mr. Hevesi told The New York Sun in a recent interview. “Not everybody agrees, obviously. But there are a substantial number of economists and prognosticators who are very fearful about what’s happening.”

The state comptroller, an independently elected official who handles the state’s cash and audits its books, plays no formal role in shaping the budget. But he’s more than an armchair quarterback when it comes to the economy. He is the sole fiduciary of the pension fund for state and local government employees, presently worth about $121 billion, which makes him one of the biggest investors in the world.

In that capacity, Mr. Hevesi is putting his money where his mouth is. Although the pension fund has done quite well on Wall Street in recent months, recouping most of what it lost in the bear market of 2001 and 2002, the comptroller said he is shifting much of those gains into other investments, such as hedge funds and real estate, which hold their value when stocks slide.

He’s even going so far as to request legislation that would loosen the statutory restrictions on how the pension fund allocates its money, which would allow him to pursue his “risk-averse” strategy more aggressively.

“What I’m looking for with the fund is not rapid growth anymore,” he said. “What I’m looking for is stability.”

Mr. Hevesi said his strategy is designed to produce a steady return on investment of perhaps 4% or 5%.That will look healthy if Mr. Hevesi is right about the gathering storm. But if he’s wrong, the fund will miss out on the much higher returns available in a bull market. He is staking billions of the pension fund’s dollars, and his professional reputation, on his gloomy forecast.

The consequences of a misjudgment either way fall on the taxpayers. The state is constitutionally obliged to provide the retirement benefits it has promised, regardless of how its investments fare. If actuaries conclude that the fund’s returns aren’t keeping up with its projected payouts, the comptroller simply collects more money from the employers – i.e., the state government and local governments outside New York City, which has its own pension system. The sharp decline in stock prices three years ago has already triggered big increases in those employer contributions.

The thing that makes Mr. Hevesi so pessimistic is the soaring national debt. Over the last four years, President Bush and Congress have cut taxes deeply while increasing spending on such big-ticket items as homeland security, the Iraq war, and a new Medicare drug benefit. To make ends meet, the government has borrowed on a massive scale.

“President Bush inherited a surplus of $5.6 trillion over 10 years,” Mr. Hevesi said. “And now the predictions are $5 trillion deficit. So in four years we have turned around a surplus to a deficit to the tune of $10 trillion. That’s remarkable.”

Some analysts argue that the economy is strong enough to bear the weight of this added debt, but Mr. Hevesi takes the opposite view. He recalls that a similar run-up in the national debt during the 1980s, under President Reagan and the first Mr. Bush, contributed to a recession that ultimately cost New York State 600,000 jobs.

He points to the recent weakness of the dollar in international currency markets as a sign that the cycle is repeating.

Although Mr. Hevesi is a Democrat who sharply disagreed with Mr. Bush’s tax cuts, his analysis is more than a critique of the president’s policies. He points out that Democrat-led Congresses in the 1980s went along with borrow and-spend budgeting and notes ruefully that New York State is guilty of the same sin, with a per-capita debt load second only to California’s. He even admits to a certain complicity in the practice, acknowledging that he was less outspoken in his opposition to borrowing during his 22 years as a state assemblyman from Queens.

Now that he finds himself in the role of fiscal watchdog, however, he is sounding the alarm.

“If the federal government is borrowing huge amounts of money, it either freezes out private business that is looking to expand…or it drives up the interest rates,” he said. “I don’t know why this doesn’t happen again. As a citizen, I don’t want it to happen again. As manager of the pension fund, I obviously don’t want it to happen again.”

“I hope I’m wrong,” he said. “But I think we’re in for a shock.”