ruxo: Gov. Paterson to discuss how to close $1.5B budget gap

This morning, Gov. David Paterson will reveal his suggestions for how to come up with $1.5 billion in spending cuts and new tax revenue to close the state budget deficit.

Paterson will attempt to frame the budget debate on his terms ahead of a Nov. 18 special legislative session.

During that session, legislators will have to close a $1.5 billion budget gap. Paterson is asking for $2 billion in savings in order to prevent the need for further budget cuts later in the fiscal year, which ends March 31.

The cuts must come from the state’s general fund, which is projected to have $56.1 billion in spending this fiscal year. That is a 5.1 percent rise over the year before.

The unrelenting turmoil on Wall Street, and the thousands of ensuing job losses there, are undercutting the state’s finances. Wall Street annually provides 20 percent of state tax revenue through taxes on income, year-end bonuses, real estate deals and initial public offerings on the stock market.

Paterson has intimated that his suggested budget cuts will be widespread and targeted at the state’s largest spending items: Medicaid and school aid. During the recent election campaign, Senate Majority Leader Dean Skelos, a downstate Republican, vowed to fight mid-year cuts in school aid, which was projected to increase by a record $1.75 billion this fiscal year, to $21.4 billion.

Top Senate Democrats, including Senate Minority Leader Malcolm Smith (D-Queens), made similar pledges. Democrats won control of the Senate in the Nov. 4 elections but will not officially become the majority until the 2009 legislative session, which begins in January.

Paterson is also expected to target the government’s 200,000-member work force by asking their unions to reopen contracts to negotiate savings for the state.

Labor unions and lobby groups already are criticizing Paterson and rallying to protect their own interests. Many union contracts were ratified last year and include annual pay increases.

“The governor knows, or should know, that reopening contracts is not acceptable. Any serious businessperson knows that a contract is a contract,” said Daniel Donohue, president of the Civil Service Employees Association.

The Public Employees Federation, a union representing 53,000 white-collar state workers, has published its suggested list of initiatives that will generate the $2 billion that Paterson seeks. The union, affiliated with the AFL-CIO, suggested moves such as utilizing the state’s $1.2 billion in “rainy day” reserve funds, adding an extra tax on the state’s wealthiest residents and closing corporate tax “loopholes.”

“Layoffs and other serious cuts in state services are counterproductive in a recession,” the union said. “At the very least, the state must close its budget gap with an equal share of revenue raisers and budget cuts.”

Bipartisan associations representing mayors and counties in the state have lobbied legislators to avoid “cost shifting” that pushes state obligations and mandates down to the county and municipal level, leading local leaders to raise property taxes.

“We are calling for state spending to reflect the reality of available revenues, not to be shifted from the state budget to the property tax,” Maggie Brooks, executive of Monroe County, said in a statement.

ruxo

Wednesday, November 12, 2008

Gov. Paterson to discuss how to close $1.5B budget gap

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