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Wed July 30, 2008
Paterson Details Cuts, Asks Legislature to Make Sacrifices
By Karen DeWitt
Albany, New York – Governor David Paterson says he'll slash the state budget by $630 million dollars to respond to the deteriorating economy and it's effects on the state budget. Paterson says lawmakers must be willing to make some sacrifices, when they convene in a special session on August 19th.
Governor Paterson says he's cutting all state agency spending by 7% , and has instituted a hiring freeze to cope with the state's ballooning deficit, which has grown by $1.4b in the past few weeks alone. He says he's also looking at creative ways to lease or sell state properties. And the governor says he's calling on the legislature, when they return on August 19th, to double those reductions so that the state can end the fiscal year without going further into debt.
"I want to hear self sacrifice and self awareness here," said Paterson, saying he'd like to hear specific proposals from lawmakers.
Paterson's budget director, Laura Anglin, laid out the details of the financial erosion, saying she expects job cuts on Wall Street to be as bad as in the downturn caused by September 11th, and that end of year bonuses and capital gains profits will fall dramatically. New York State relies on taxes from the financial sector for 20% of its budget.
"We're officially saying that New York is in a recession," Anglin said.
Anglin says the situation may be even worse than the slow down earlier in the decade, because there is now the added factor of inflation leading to stagflation.
The ever affable governor tried to smooth ruffled feathers created by his remarks Tuesday night, which were broadcast statewide on radio and television. Paterson says he did not mean to insult lawmakers when he said he was calling them back from "vacation", saying he knows that they work full time in their districts. And he said he understood why state worker unions are angry with his remarks that he would take a hard look at the work force, saying it's not the state employees' fault that financial markets were mismanaged.
But the governor seemed to be threatening to cut the worker's jobs, when he said if the legislature did not agree to more reductions and savings, he'd be left with no choice but to initiate lay offs.
Recently elected State Senate Majority Leader Dean Skelos says he wants to work with the governor to deal with the crisis. But Skelos said there are several budget areas that he is reluctant to touch, including school aid, and health care, which make up 63% of the budget. Skelos also says it would be unfair to punish state workers for the problem by cutting their jobs. When asked for examples of what he would cut, the Republican Senate Leader named an excess of state commissions, and said greater efficiencies could be imposed.
Skelos says he's encouraged by the lack of acrimony so far in the crisis, and believes that a solution can be reached.
"Rather than attacking one group or another I think we have to have a reasonable conversation," said Skelos. "I like the tone that Governor Paterson has established in Albany."
Assembly Speaker Sheldon Silver has also said though he wants to help close the gap, he's not interested in cutting school aid or health care. Many members of the Assembly Democratic Majority back proposals to increase income taxes on the wealthy to plug the deficit or pay for new programs. Senator Skelos rejected the idea of more taxes.
Governor Paterson says right now, nothing can be ruled out, not school aid cuts, or even higher taxes, though he says the state has become too "addicted" to new taxes and he would only raise them as a last resort.
Speaker Silver has also said he'd like to wait until more economic numbers are in before jumping to conclusions, and Paterson has been criticized in some corners for over dramatizing the budget crisis. But the governor says he doesn't think New Yorkers or state lawmakers really understand the extent of the troubles. He says he'd rather be accused of being an "alarmist" than be remembered for not sounding the alarm when he should have.
Coping with the budget crisis is not the only item on the agenda for the special session. Paterson will also continue to press the Assembly to go along with the Senate's plan to pass the governor's property tax cap plan. Paterson says he also wants to find funds to help alleviate what's anticipated to be a home heating crisis next winter.