Statement by Alan Lubin
and Bruce Ventimiglia,
|
Savings of $2 Billion in Current Year, $3.2 Billion Next Year Are Spread Across All Areas of State Spending Plan Represents Series of Tough Choices Necessary to Address Record Four-Year $47 billion Budget Deficit
|
November 19, 2008
No budget fix as Gov. Paterson, pols only bicker
By Kenneth Lovett and Glenn Blain
A special fix-the-budget session fizzled Tuesday as Gov. Paterson and legislative leaders fought and bickered, but did nothing to remedy the fiscal crisis.
"If it looks like a dysfunctional government and it acts like a dysfunctional government, it may actually be one," a frustrated Paterson said shortly before the brief session.
Read the entire article: No Budget Fix
~ ~ ~
Political gridlock persists
Governor fails to reach agreement with top legislative leaders
on $2B in cuts
By Irene Jay Liu
Gov. David Paterson may have sounded the alarm on the state's fiscal crisis, but it was drowned out Tuesday by partisan bickering and political rhetoric from state leaders, who did nothing to address the state's looming $1.5 billion budget deficit in what was supposed to be a special session.
The governor and legislative leaders failed to reach an agreement on the $2 billion spending cuts that Paterson requested for this year in anticipation of the scheduled session, and said he does not expect the Capitol to address the issue until January, when Democrats will take control of Senate for the first time in 40 years.
Instead of the planned legislative session, the governor and leaders of the Senate and Assembly participated in a public meeting in front of the assembled media — an hourlong piece of political theater during which all participants voiced grievances, pointed fingers and argued over the reasons why they were not able to act, all the while acknowledging the severity of the problem that brought them there in the first place.
Paterson called the meeting late Monday evening, after Senate Majority Leader Dean Skelos said he would put the governor's draft budget bill to a vote in the Senate, but would not vote in favor of it. Skelos had earlier refused to negotiate with the governor and Assembly Speaker Sheldon Silver, a position Paterson called politically motivated.
Read the entire article: Gridlock
~ ~ ~
November 14, 2008
Medicaid cases rising, `millionaire tax' revisited
By Michael Gormley
As New York's deficits spiral toward historic depths, the state is starting to see its first increases in Medicaid cases in years.
State budget office figures project a 5-percent gain in cases under the government health care program for the poor in the 2009-10 fiscal year starting April 1. That would be 176,973 more cases, increasing the state's share of Medicaid funding by almost $2 billion next year. That would also be a quicker uptick in Medicaid cases than is common for economic downturns.
The latest data on some of the New Yorkers being hit hardest by the state's fiscal crisis comes as hope was resurrected for a millionaire's tax.
"I can only tell you, among my friends, I've never heard one person say 'I'm going to move out of the city because of taxes,"' said New York City Mayor Michael Bloomberg, the billionaire businessman. "Not one. Not in all the years I've lived here. You know, they can complain, 'Oh got my tax bill, it's heavy.' But they've not ever thought that. My friends all want to live here and understand the value."
Read the complete article: MillionaireTax
~ ~ ~
November 12, 2008
Paterson’s plan set for release today has “reductions across virtually every area of state spending”
By Casey Seiler and James M. Odato
Gov. David Paterson will unveil $2 billion in budget cuts this morning, less than a week before the Legislature returns for a special session to address the state’s ballooning deficit.
The proposal will include “reductions across virtually every area of state spending,” said Risa Heller, the governor’s communications director, in a statement.
“Given the magnitude of
this crisis, the only way we are going to be able to get New York’s
fiscal house in order is through shared sacrifice,”
the statement continued. “Just as families across the state must adjust
to changing financial circumstances, so must our government and those who
rely upon state funding.”
The cuts will be discussed in detail at a news conference scheduled for 11 a.m. at the governor’s New York City offices.
Read the full article: PattersonPlan
~ ~ ~
November 11, 2008
OVER 200 NON PROFITS,
SERVICE PROVIDERS, UNIONS AND FAITH-BASED GROUPS
TO GOVERNOR PATERSON: CUTS ALONE WILL DEVASTATE NEW YORK’S FUTURE
Groups Providing Critical
State Services Call on Paterson to Stop Exempting Wealthy New Yorkers from
Budget Pain
and to Use the Tax Stabilization Reserve Fund to Fill the Gap!
(Albany, N.Y)— On the day Governor Paterson is announcing billions in budget cuts, the Better Choice Budget Campaign and the One New York: Fighting for Fairness joined together to call on the Governor and legislative leaders to abandon a budget policy that calls on working families and vulnerable New Yorkers to bear the burden of the state’s fiscal crisis.
Together the two coalitions represent more than 200 non-profit organizations, faith-based groups, service providers and unions that supply front line services to many of New York’s most vulnerable citizens. The two coalitions called on Paterson to examine revenue options rather than gutting services to close the state’s huge budget gap. Similar events are also occurring today in New York City, Buffalo, Rochester, Utica, Binghamton, and in Central Islip on Long Island.
The groups called on Paterson
to use the Tax Stabilization Reserve Fund (a “Rainy Day Fund”
that currently has $1.039 billion)
to bridge the mid-year budget gap, to wait for a state fiscal relief package
from Washington before making massive cuts in services,
and to ask the wealthiest New Yorkers to take part in the “shared sacrifice
as we did in 2003.
Read the entire article: StopExempting
~ ~ ~
By Valerie Bauman
NY public worker unions oppose reopening contracts
Three of New York’s most
powerful public employee unions say they won’t reopen contracts to any
concessions
despite the state’s fiscal crisis, delivering an early blow to Gov.
David Paterson’s plans to fill a $2 billion deficit next week.
“I don’t see any local leader wanting to come to the table to give something up,” said Richard Iannuzzi, president of New York State United Teachers. “So, if there’s an incentive being offered in exchange for what they would be giving up, then local leaders may entertain that.”
Civil Service Employees Association President Danny Donohue said reopening contracts is “not acceptable.”
It’s unclear what incentives may sway employee unions, which carry tremendous power with lawmakers in Albany.
Ken Brynien, president of the Public Employees Federation, said “nothing that comes to mind” would be incentive enough for his union to reconsider opening labor talks.
“I don’t believe that further reduction in staff would benefit the taxpayers of the state,” he said. “We’re having a difficult enough time providing services.”
Read the entire article: OpposeReopeningContracts
~ ~ ~
Mayors press to keep state aid - group plans strategies to discourage governor from cuts
by Tim O'Brien
In the hope of discouraging Gov.
David Paterson from cutting aid to local governments, the state's mayors launched
a new Web site Monday.
The site, http://www.stopthetaxshift.org,
makes their case that less state aid to municipalities would cause property
tax hikes.
"Raising taxes is not what our residents need," said Cohoes Mayor John McDonald, president of the New York State Conference of Mayors. "Decades of unfunded mandates have played a large role in expanding deficits."
The group's site lists actions
people can take to discourage the state from cutting aid to local governments.
It also includes a blog written by "Joe Taxpayer" and a "Mandate
of the Week" feature.
"We started with 45 different mandates on local governments, some of which may not be huge but the cumulative impact of all of them is enormous," said Peter Baynes, executive director of the Conference of Mayors.
Baynes said that when state aid was cut in the 1980s and '90s, tax increases inevitably resulted.
Sam Teresi, mayor of Jamestown, said he has prepared three scenarios for his 2009 budget. If aid to municipalities increases as the state had originally projected, he can keep services and lower taxes; if state aid stays at 2008 levels, he will have to make some cuts and raise taxes 4 percent; if the aid is cut, he'd be forced to cut essential services and raise taxes by a double-digit percentage.
Albany Mayor Jerry Jennings said
state aid to localities is not based on logic.
The mayor has long said the capital city gets less state aid than other municipalities.
"We are asking (the state) to correct the inequities that have gone on for years," he said.
McDonald said he and Baynes met
with the governor, who was open about the state's fiscal trouble and ideas
to help.
The governor made no commitments about municipal aid, he said.
In an interview with the New York
Times published Monday, Paterson said cuts to Medicaid
and schools were inevitable as the state deals with a $12.5 million deficit.
Three years ago, the state said it would increase aid to municipalities by $50 million for 2009-2010.
"We realize that it's going to be very hard to come by," McDonald said, but the mayor's hope is that they can forestall any cuts.
Schenectady Mayor Brian U. Stratton
said he thinks residents will use the Web site to learn about the issues and
respond to state leaders.
~ ~ ~
November 10, 2008
Paterson Says Schools and Medicaid Will Face Cuts
By Danny Hakim
SAN JUAN, P.R. — Gov. David
A. Paterson said in an interview on Sunday that he would almost certainly
seek billions of dollars
in cuts to Medicaid, as well as midyear reductions in school aid, to address
New York’s worsening fiscal condition.
He also said he expected to urge labor unions to reopen the contracts they have struck on behalf of public employees as a way to avoid or decrease layoffs.
Such a step is reminiscent of measures taken by New York City in the financial crisis of the 1970s or moves made more recently by the Big Three domestic automakers to reduce their labor costs after years of granting steady raises and comprehensive health and pension benefits.
Those same types of wage and benefit concessions have long weighed on New York, though the catalyst for the state’s current predicament has been the collapse in tax revenue from Wall Street.
The governor, who spent more than two decades as a state senator representing Harlem, said he would be forced to cut even programs he sponsored as a legislator, and he expected to preside over a turbulent period for the state government.
Read the entire article: SchoolMedicaidFaceCuts
~ ~ ~
October 28, 2008
GOVERNOR PATERSON
CALLS ON CONGRESS
TO INCLUDE STATES IN SHAPING REFORM AND OVERSIGHT OF THE RESCUE PLAN
GOVERNOR SCHEDULED
TO GIVE TESTIMONY TO HOUSE WAYS & MEANS COMMITTEE;
WILL CALL ON FEDERAL GOVERNMENT TO TAKE SPECIFIC ACTION TO ADDRESS FINANCIAL
TURMOIL
Governor Paterson Invited to Participate in Wednesday’s Hearing on “Economic Recovery, Job Creation and Investment in America”
In Letter to Congressional Leadership,
Governor Urges Involvement for States to Keep Focus on Prevention of Unnecessary
Foreclosures
In an open letter to Congressional leadership, Governor David A. Paterson
today urged Congress to include state representation
in oversight responsibilities for the implementation of the Emergency Economic
Stabilization Act (EESA).
Additionally, Governor Paterson announced that he will testify before the
House Ways & Means Committee on Wednesday
for a hearing on “Economic Recovery, Job Creation and Investment in
America,”
in which he will urge the Federal Government to take specific action to address
the national financial crisis.
Read the entire story: Economic
Recovery
~ ~ ~
October 8, 2008
Paterson wants union help in cutting costs
ALBANY -- Gov. David Paterson,
already wrestling with a potential $8 billion budget deficit next year,
said today he plans to meet with union leaders later this month and
has not ruled out layoffs of state workers as a potential cost-cutting measure.
But on a day when prices on the
stock market, which has been a key part of New York's tax revenues for decades,
again plummeted,
a spokesman for the state's largest public-employee union said Paterson promised
this summer that there would be no layoffs.
"We're going to talk about
the deep fiscal crisis and how we can work together to solve it,"
Paterson said today of the session with union leaders, planned for Oct. 21.
He added in a radio interview today that he's not planning any tax hikes or layoffs of state workers to help get New York out of its fiscal crisis.
But he added on Talk-1300 in Albany that, "I'm not ruling out anything because I don't know what the future holds."
That statement conflicts with
a promise made to the head of the largest state-employees' union this summer,
according to a spokesman for the union, the Civil Service Employees Association.
"The governor personally
indicated personally Danny Donohue over the summer that there would be no
state layoffs,"
said the spokesman, Steve Madarasz, referring to union President Donohue.
"We will hold him to his word."
But Paterson press secretary Errol Cockfield said that the state's financial problems have worsened since then.
"Since last summer, when the governor raised early alarms about the state's budget situation, there has been widespread recognition from our partners inside and outside of government that New York's fiscal situation has worsened," he said.
Paterson has been sounding the alarm that the state's finances are out of whack because of the general economic downturn and more particularly because of the Wall Street meltdown. Bonuses to big producers at investment banks and other securities industries helped to propel state tax revenues far above forecasts in recent years. But next year promises to be far different because of the demise of several big Wall Street firms and the continued struggles of most of the rest.
He has summoned the Legislature
back to the Capitol on Nov. 18 to look at cutting $2 billion to balance this
year's budget
and said he plans to introduce his proposal for next year Dec. 16, more than
a month ahead of the normal schedule.
Paterson did deliver some good
news today as well: a deal has been struck between the state
and a subsidiary of Advanced Microsystems to build a $4.6 billion computer
chip-fabrication plant in Saratoga County.
Construction is to start next year and take about three years.
The deal, which includes a $1.2
billion payment from taxpayers and will create 1,465 jobs,
"can be in many respects a hub for investment all over the capital region
and even a shot in the arm for the whole upstate economy," Paterson said.
But that won't help the state's immediate budget woes.
An analyst for a conservative
think tank thinks that conflicts between employers and public-employee unions
are inevitable as the state
tries to deals with a financial downturn that he says is the most serious
the state has experienced in decades.
"There is going to need to
be confrontations with public-sector unions," said the analyst, E.J.
McMahon of the Manhattan Institute's Empire Center.
He said that's true both at the state level and probably in school districts.
That's because school aid, on
which the state is spending $21 billion this year and is slated to spend more
than $23 billion next year,
"is the 800-pound gorilla in the room," he said.
And cutting school aid from the state will mean that school boards will have
to figure out a way
to save on their big cost drivers: teacher salaries and benefits, McMahon
added.
But even though Paterson for the moment has ruled out tax hikes, others say that's the only fair way to go.
"When push comes to shove
and we're in tough times, there really has to be shared sacrifice," said
Dan Cantor,
executive director of the Working Families Party, a union-backed political
group.
October 7, 2008
Paterson projects next deficit a record $8 billion
ALBANY, N.Y. - New York Gov. David Paterson predicts the 2009-10 state deficit
will be a record $8 billion.
He says, however, that the deficits
projected for the several years should be handled without raising taxes.
The Democrat says he has agreement with legislative leaders on taking tax
increases off the table at least for the next several months.
That was also the goal of Republican
Senate Majority Leader Dean Skelos of Long Island
who sought a pledge of no tax increases in a meeting of state leaders last
Friday.
A recession and Wall Street's
meltdown have led to what Paterson says will be a $2 billion shortfall in
the current budget.
He and legislative leaders plan spending cuts to balance the current $120
billion budget.
The 2009-10 fiscal year begins April 1.
~~~
October 4, 2008
Paterson Seeks $2 Billion in Budget Cuts
By Danny Hakim and Jeremy W. Peters
Gov. David A. Paterson said on
Friday that he would seek $2 billion in new cuts to the state’s current
budget
and challenged lawmakers to abandon Albany’s spending habits amid a
deepening financial crisis.
In a meeting with legislative
leaders that was at times remarkably testy for what are often scripted affairs,
the governor said he would call the Legislature back to Albany — but
not until after the election — to reopen the state budget.
The governor and lawmakers agreed during a session in August to cut $427 million
from this year’s budget,
but recent turmoil on Wall Street has opened an additional $1.2 billion hole,
and the numbers are expected to worsen.
While Mr. Paterson and legislative
leaders have warned that the Wall Street crisis would have a magnified impact
on New York,
the extent of the damage is only beginning to emerge.
Preliminary tax receipts released
this week by the state comptroller’s office showed that revenue in September
from sales, business and other taxes declined by about 7 percent, or $154
million, compared with September 2007.
Tax receipts are expected to get
worse, Mr. Paterson said. Tax revenue from Wall Street bonuses, expected to
be down sharply this year,
will not be counted until early next year.
Mr. Paterson said he would take
the unusual step of submitting an executive budget more than a month early
— in mid-December
instead of late January — in an effort to stave off a downgrade of the
state’s financial rating.
Such a downgrade would raise the state’s borrowing costs.
Delivering a budget that early
— which has not been done since 1995 — will present challenges
for the State Division of the Budget,
which will have to forecast next year’s revenue earlier than usual.
Mr. Paterson also said that he would seek to move up the start
of the fiscal year from the current April 1.
“With the tremendous amount
of deficit hanging over our economy, it appears clear that we are going to
have a downgrade
in our financial rating by the ratings agencies,” the governor said
during the Friday morning meeting,
which was held at his Midtown Manhattan office.
“I want to try to avoid that, and I want to try to avoid it in a way
that addresses their concerns as quickly as possible,
letting them know that in spite of the difficulty of these times, New York
State is going to attack this problem.”
Under the law, however, the conditions under which New York can borrow money to pay for its operating costs are very narrowly defined.
The governor and lawmakers ruled
out raising taxes to plug this year’s deficit, but Assembly Speaker
Sheldon Silver,
the Legislature’s top Democrat, would not preclude such a step for next
year.
Dean G. Skelos, the Senate majority leader and the Legislature’s top
Republican, has adamantly opposed tax increases;
the governor, too, has said that he does not want to raise taxes, but he has
resisted making any promises.
On Friday he would not flatly
rule out a tax increase.
During a contentious exchange after Mr. Paterson said he did not believe taxes
should be raised, Mr. Skelos pointedly asked him,
“Will you stand firm on that pledge?”
Mr. Paterson paused and said, “I just did,” but later declined to say that he would never approve a tax increase.
The two men, who are known to
have cool relations, in no small part because Mr. Paterson and his fellow
Democrat
are trying to wrest control of the Senate from Mr. Skelos, also had a bitter
exchange after Mr. Paterson
accused the Legislature of not grasping the severity of the state’s
financial problems.
The governor, himself a former
state senator, brushed aside the compliments conferred on him by the legislative
leaders
sitting beside him and said he was “going to risk some of those friendships”
and “say some things I would have normally said privately.”
“I don’t think we all get how serious this problem is,” he said.
Mr. Paterson then challenged the legislative leaders to cut their own budgets the way the executive branch has cut its own—the governor has already ordered state agencies to cut 10 percent from their spending.
Mr. Skelos bristled.
“I’m not in college and I’m not in law school anymore and I don’t need to be lectured,” he said.
“I apologize, Senator, if
I hurt your feelings,” the governor said later, to which Mr. Skelos
replied sharply,
“I’ve been in the business a long time, so my feelings don’t
get hurt.”
Wall Street accounts for a fifth
of the state’s revenue. And the state is now forecasting that it will
take in about $39.6 billion
in general fund revenue this year, while earlier forecasts had projected $43.2
billion.
Next year’s budget deficit, which had been projected at $5.4 billion, is now expected to be considerably larger.
Many observers believe that when
a special legislative session is convened after the election,
lawmakers will be forced to cut the two largest areas of the budget,
Medicaid and education. Hospitals and their workers and teachers are among
the most powerful interest groups in Albany.
“It has to be done,”
said Carol Kellermann, the president of the Citizens Budget Commission.
“There really isn’t anyplace else to go to make cuts of that size.”
And the challenges keep coming.
Mr. Paterson lamented the news that the Wachovia Corporation
had agreed to be acquired by Wells Fargo, a West Coast bank,
instead of the expected acquisition by Citigroup, which is based in New York.
The governor called the development “a significant hit to the New York economy.”
“There’s no way to
sugarcoat it,” he said of the overall situation, and then cited an analogy
used recently
by the billionaire investor Warren Buffett: “The United States economy
can be compared to a great athlete who suffered a stroke.”
~~~
September 30, 2008
As federal bailout fizzles, state warns of ominous budgetary ripple effect
by Tom Precious
ALBANY
— Just hours after defeat in Washington of the bailout package for the
financial system,
State Comptroller Thomas P. DiNapoli warned Monday that the state’s
finances are
starting to stare at the same ominous challenges that New York encountered
after the terrorist attacks of 2001.
While he did not provide an actual number, the comptroller’s forecast means that the projected budget deficit for the fiscal year beginning next April 1 could top $9 billion.
In
his most ominous fiscal message yet, DiNapoli said the Wall Street crisis
could cost the state up to $3.5 billion in lost revenues over the next 17
months and the evaporation of up to 40,000 jobs
in the securities industry alone.
The downturn is on track to reduce revenue — both personal and business taxes — to Albany by about $1.1 billion for the rest of this fiscal year and $2.4 billion next year, DiNapoli aides said.
DiNapoli
acknowledged that the forecast was made more difficult by the fluidity of
the nation’s financial troubles. Indeed, the documents his office released
Monday used the word “could” —
as in “could lose up to $3.5 billion” — 12 times.
Nonetheless,
the forecast is a further sign of the state’s coming budget problems
that will trickle down to hospitals, schools, parks, police, roadways and
everything else that relies
on state and local government funding.
The
comptroller’s outlook comes in advance of a meeting Friday in Manhattan
with
Gov. David A. Paterson and legislative leaders to try to deal with the worsening
budgetary picture.
In
August, the state trimmed $425 million. Those cuts were relatively painless
to most groups that rely
on state funding. The next round, with less time in the fiscal year to absorb
the cuts,
will likely be much more painful.
Paterson
praised DiNapoli’s assessment and said he is reviewing the situation,
especially since
New York relies on Wall Street for 20 percent of its government revenues.
Senate Majority Leader Dean G. Skelos, R-Rockville Centre, said he, too, is monitoring the problem and pledged to help work on a solution. Assembly Speaker Sheldon Silver, D-Manhattan, called for hearings.
This
year’s Wall Street bonuses are expected to total $40 billion, according
to state projections from last spring. Every 10 percent drop below that level
translates into $350 million in lost tax revenue for the state. Monday, DiNapoli
warned that the bonus money could match the 50 percent drop seen after 9/11.
If that happens,
he said, the $33.2 billion bonus level from 2007 could plummet to about $16
billion.
Job losses of 40,000 in the securities industry would have a ripple effect. DiNapoli said that as many as three additional jobs — from restaurant workers to lawyers — are created by every job in the securities industry.
The warning signals are everywhere these days in Albany. On Sept. 15, estimated quarterly tax payments — mostly by self-employed people who do not have taxes directly taken out of their paychecks — were due to the state. DiNapoli aides said Monday that the revenues from those payments are down by $120 million from the same time a year ago. The 2008 state budget is about $120 billion.
A
fiscal report by DiNapoli’s office said the impact of the financial
crisis on state and local economies in
New York “will be substantial.”
There were some positives: Income tax revenues were up for the first five months of the year, and the number of nonfarm jobs — 8.8 million — is up from last year. But any bright spots won’t last, DiNapoli said, noting that the August unemployment rate of 5.6 percent was a full point higher than the figure a year ago.
September 17, 2008
STATEMENT
FROM STATE COMPTROLLER THOMAS P. DiNAPOLI REGARDING FINANCIAL
MARKET IMPACT ON THE COMMON RETIREMENT FUND
"Despite
recent developments in the financial markets, the New York State Common Retirement
Fund
remains strong and benefits are secure.
Relative
to its size, the Fund has small investment exposure in many of the financial
institutions
that have made recent headlines. We, along with many other investors, will
experience losses,
but those losses must be put in the context of the overall Fund.
The five million shares of Common Stock in Lehman Brothers the Fund held as
of yesterday
represent a fraction of one percent of the total Fund.
We
don't place all of our investment eggs in one basket.
The Fund is well-diversified across multiple asset classes, investment types,
markets and industries.
This diversification has served us well. During the market downturn from 2000
- 2003,
although the Fund lost $31 billion in value, our diversified approach enabled
us to recover in less than two years, and retirement benefits were never in
jeopardy.
Unlike
many other pension funds across the country, our Fund continues to be fully
funded.
We can meet our obligations to our members, beneficiaries and retirees today,
tomorrow
and well into the future.
The
trouble on Wall Street is obviously very disturbing.
But the million members of the New York State Common Retirement Fund can rest
assured.
Their pension fund is safe, and their benefits are secure."
~~~
September 16, 2008
STATEMENT
FROM STATE COMPTROLLER THOMAS P. DiNAPOLI
REGARDING FINANCIAL MARKET CRISIS
"The
health of the financial services industry is the worst it's been in
decades. Governor Paterson is taking important steps to try to stop the
hemorrhaging. The Federal Reserve must do its part as well.
"Wall
Street hates uncertainty, and that uncertainty impacts even those
firms with a strong book of business. The first goal of both New York and
the federal regulators is to restore confidence and stabilize the markets.
"Governor
Paterson's call for the Federal Reserve to provide short-term
liquidity for AIG sends a strong message: the problems at AIG are not rooted
in its fundamental business, but stem from a crisis of confidence. If the
Fed responds positively to the Governor's request and gives AIG the
liquidity it needs, some level of confidence may be restored.
"More
importantly, the failure of Lehman Brothers and other financial houses
should serve as a cautionary tale of the need to control risk. For far too
long, federal regulators have turned a blind eye to excessive risks and
over-leveraging of capital. Credit has been issued too easily and used too
carelessly. Federal regulators need to step up and strengthen oversight. The
markets need more robust regulations and more transparency.
"There
must be a national focus on solving the crisis gripping our financial
markets. The Lehman Brothers debacle can be a painful and short first step
toward a market transition that stabilizes the crisis and points the way
toward a more rational approach to risk management. Or, if nothing is done,
it could be a crippling blow to American financial markets and our economy."
~~~
September 15, 2008
THOMPSON
STATEMENT ON IMPACT OF WALL STREET
CONDITIONS ON CITY ECONOMY
New
York City Comptroller William C. Thompson, Jr. issued the following statement
at a news conference today with Mayor Michael R. Bloomberg
regarding the impact of Wall Street conditions on the City’s economy:
Today
is a sad and stunning day.
Thousands of people are losing their jobs, and many are unsure about their
future.
Every job on Wall Street results in the creation of additional jobs –
and this unfortunately ripples
in the opposite direction as well.
It
is troubling that so many back office workers and support staff suddenly are
out of work.
It is equally distressing that many small satellite businesses and their employees
inevitably will be affected.
Let us never forget the pain that this incredible collapse has caused.
The
approximately 640,000 retirees, beneficiaries, and City employees
who are invested in the New York City Pension Funds
should know that their money is safe and secure.
Although we own a number of Lehman Brothers securities,
they represent a very small percentage of the Pension Funds.
As
of last week, the Funds held more than 2 million shares of Common Stock in
Lehman Brothers,
valued at more than $15 million.
However, I must emphasize that our investments in Lehman Brothers securities
are just a miniscule percentage of the Funds, which currently total more than
$100 billion.
Since I took office in 2002, the Trustees of the Pension Funds and I have
reduced the Funds’ exposure
to risk by diversifying our portfolio beyond the traditional asset classes.
In light of recent events in the economy and financial markets,
this approach is helping us withstand the tough times.
By dramatically increasing the amount we invest in private equity,
real estate and other asset classes, we have ensured the long-term health
of our portfolio.
Of
these investments, we currently have roughly $550 million in private equity
and real estate assets
managed by Lehman Brothers’ Investment Management Division (IMD).
This division also manages U.S. Government bond portfolios and other portfolios
totaling approximately $4.8 billion.
Fortunately, these funds, as part of the IMD, remain a separate legal entity
from Lehman Brothers Holdings and are not part of the bankruptcy filing.
The
City’s Pension Funds are healthy, and we are ready for the trying times
that are no doubt ahead.
New York City has weathered previous Wall Street troubles, such as the financial
crisis of the 1970’s,
the stock market crash in 1987 and the burst of the dot-com bubble only a
few years ago.
I have confidence in New Yorkers and our ability as a resilient city to create
a stronger future.
~~~
September 10, 2008
Paterson Argues for Spending Cuts
By Erik Engquist
Gov.
David Paterson Tuesday morning said cuts to education and health care spending
and possibly a tax increase will be needed
to erase a projected $24.1 billion state budget deficit over the next three
years.
But
he declined to specify how the cuts should be made or whose taxes should be
raised
while speaking to 1,100 business executives at the Crain’s New York
Business breakfast forum.
He added that the public would not object to a tax hike if Albany first cut
spending.
Before
even uttering a word, Mr. Paterson received a standing ovation from the audience,
which matched the largest attendance for a Crain’s forum.
He did not disappoint the executives, taking a hard line on state spending
without resorting to rhetoric and false promises.
“I don’t think we can solve the whole problem by just taxing people…or
by cutting spending,” he said.
“We may have to do both.”
In
fact, he reminded the audience, he was a “proud supporter” of
a 2003 tax hike as a state senator,
but lamented that the Legislature used the revenues to increase spending.
“I have never ruled out a tax increase,” he said.
“[But] if that’s the first solution, we are continuing the addiction.
The
first solution has to be to cut spending.”
The
governor also said he hopes to bring the state Senate and Assembly back to
the negotiating table
after the November election to curb property taxes.
Among the possibilities, he said, were to have school districts tax themselves,
to fold school districts into county government,
and to enact a “circuit breaker” to limit increases to a certain
percentage of a taxpayer’s income.
He
noted that Senate Republicans had passed a property tax measure in early August
without any expectation that it would become law.
“It’s an election year,” he said. “Maybe they had
to do that for political reasons.”
Assembly Democrats followed with their own one-house bill, Mr. Paterson noted.
The
governor avoided controversy at his first Crain’s breakfast,
declining to say whether high earners are entitled to rent-regulated apartments,
or if city government should extend term limits without voter approval.
“I’m sure they can do it without my intervention,” he said,
“because I’m a little busy right now.”
He
also backed off his comment that legislators are akin to Count Dracula
when they entertain powerless voters
during the day and then vote against their interests at night.
“I don’t think my colleagues are bloodsuckers,” he said.
But he noted that campaign finance reform would empower them to do right by
groups
that don’t make big donations and hire high-powered lobbyists.
Most
of his appearance was devoted to warnings of the state’s dire financial
outlook,
which necessitates spending cuts on top of those agreed to last month.
He predicted that projected state deficits would grow in October because new
financial data would show
Wall Street doing even worse than current forecasts estimate.
The
fiscal woes jeopardize grandiose visions for the renovation of Moynihan Station
and a Javits Convention Center expansion, the governor said.
“I don’t see any way that they can all go forward if resources
aren’t there,” he noted,
referring to large infusions of state capital. The Moynihan project could
proceed as a transportation project,
not a massive real estate deal, he suggested.
“This isn’t fiscal conservatism,” he said. “This is fiscal reality.”
~~~
August 21, 2008
State
budget reductions are broad and, critics maintain, far too deep
by Rick Karlin
Hundreds of programs are sharing the pain of $427 million in cuts from the
present state budget
as Gov. David Paterson and legislative leaders Wednesday congratulated themselves
on the effort.
A closer look at the numbers suggests that, just as lawmakers have said,
the burden of reduced spending is being shared fairly equally
across the state's geographic and social landscape.
Read the complete story: TimesUnion
~~~
August 20, 2008
Cuts
By The Numbers
Here's the breakdown of the spending cuts currently under discussion by Gov.
David Paterson
and the legislative leaders, according to a source who has been briefed on
the talks.
Caveat:
This is Albany, which means everything here is subject to change.
Both houses are in recess.
- $141.1 million in targeted health savings. (There is no agreement on this as yet).
- $40 million savings from further delay of the statewide wireless network.
- $51 million from CUNY.
-
$20 million worth of executive programs - a 50 percent across-the-board cut,
veterans programs are exempt, as is aid to schools and localities.
- $9 million worth of legislative programs - a 6 percent across-the-board cut.
- $80 million in aid to municipalities. - also a 6 percent cut, with some exemptions, including: AIM, TAP, community college aid and school aid, due to a concern that cutting here would cause local property tax increases. Also, anything with an appropriation of under $500,000 is held harmless.
- $50 million in legislative member items - would not impact any current programs, represents unused funds from previous years.
- $20 million from HCRA - a 6 percent reduction in special revenue aid for appropriations over $500,000.
GRAND TOTAL: $411.1 million.
~~~
Legislators
Are Negotiating to Cut Budget by $1 Billion
By
Danny Hakim and Jeremy W. Peters
Gov.
David A. Paterson persuaded lawmakers to cut spending by $1 billion over the
next year and a half,
as legislators took the rare step Tuesday of returning to the capital in the
late summer
to re-open a budget they passed in April.
While
Mr. Paterson was not able to trim the budget as deeply as he said he wanted,
he still got more than many had expected, especially for an election year.
The
deal reached Tuesday night includes cuts in aid to hospitals that will probably
be in excess of
$200 million over the next 18 months, when federal matching funds are included,
legislative leaders said.
Aid
to a number of local programs is to be cut, as well as to the City University
of New York.
Lawmakers are also forgoing $50 million they had set aside to spread around
their districts
for favored pet projects. Many of the cuts will actually slow the rate of
growth in spending
in various programs, rather than reduce spending.
Because
the deal was struck so late, the lengthy bill was still being printed at 10:30
p.m.
Assembly leaders said they would stay the night and pass the bill, while the
Senate
planned to return on Wednesday morning to pass the measure.
Mr.
Paterson had called the Legislature back for what he called an emergency economic
session;
the Legislature’s regular session ended in late June.
The governor has been sounding the alarm in recent weeks,
saying that the state faces a potentially disastrous financial outlook because
of the struggles
of Wall Street and the nation’s broader economic woes.
Fully
a fifth of the state’s revenue comes from Wall Street,
and the credit crisis that has gripped the investment banking industry
has been weighing heavily on the state’s tax revenues.
“I’m
asking them to do something that’s unprecedented, go into an existing
budget
and cut it without using taxes, and cut it to some proportion higher than
it’s been cut before,”
the governor, a Democrat, said in comments to reporters before continuing
talks
with the Assembly speaker, Sheldon Silver, and the Senate majority leader,
Dean G. Skelos.
Lawmakers
had initially been resistant and many said the governor was overdramatizing
the depth of the state’s fiscal condition. Ron Canestrari, an upstate
Democrat and majority leader of the Assembly, said “I’m surprised
that we did as much as we did. I thought it would not be this productive.”
“I
wasn’t this optimistic last week when this was all announced.
I thought both the timing and the content would be difficult,” he said.
Senator
Thomas W. Libous, a Binghamton Republican and the deputy majority leader of
his house,
said that the cuts hit “every area that we could find that we believed
could absorb some pain.”
“I
think you’ll see obviously there are going to be some folks who aren’t
happy,
but we did the best we could,” he added.
The
issue of how to cut health care funding — which represents the second-largest
piece
of the state budget behind education — was one of the major sticking
points that held up
negotiations on Tuesday night, lawmakers briefed on the talks said.
Funding levels for hospitals proved particularly difficult to resolve
because the governor’s plan called for greater cuts than the health
care industry
and many lawmakers wanted.
“I think it was a pragmatic approach by the hospitals to avoid potentially harmful cuts,” said Senator Kemp Hannon, chairman of the Senate Health Committee. “In the end, I think it all worked out.”
Some prominent interest groups were not as pleased with the outcome.
“The
cuts that were enacted will still inflict real pain on health care providers,
health care workers,
and the New Yorkers they serve,” said Kenneth E. Raske,
president of the Greater New York Hospital Association.
Over
all, the cuts are relatively modest in a budget of about $122 billion
when the state is facing a projected three-year, $26.2 billion deficit.
Still,
it is relatively rare for lawmakers to agree to re-open a budget deal after
it has been signed into law.
The governor had sought $600 million worth of cuts for the current fiscal
year, which began April 1,
and more than a billion dollars in reductions for next year.
The sides agreed to cuts in excess of $400 million for the current year
and roughly $600 million next year, Mr. Canestrari said.
While
negotiations continued among the governor and legislative leaders over the
budget,
there was other legislative action — and notable inaction — during
the day.
The Democrat-led Assembly refused to take up a measure backed by the governor
and Senate Republicans that would have imposed a mandatory ceiling on school
property tax increases.
The
measure was vociferously opposed by the state teachers’ union
as well as the labor-backed Working Families Party, an influential third party
which was part of a coalition that mounted a seven-figure advertising campaign
against the proposal.
Instead,
the Assembly passed a bill that would increase taxes on the wealthiest New
Yorkers
and provide tax credits for middle-class homeowners. It was supported by the
Working Families Party.
“I’m disappointed that they did not take action on the cap today,”
said Thomas R. Suozzi,
the executive of Nassau County, who was chairman of a state commission on
property taxes.
“It’s a missed opportunity.”
Mr.
Silver said his house’s plan would “deliver true income-based
tax relief to New Yorkers
who rent their homes or own a house, co-op or condominium.”
The governor has said increasing taxes on the wealthy should be a last resort.
~~~
August 14, 2008
New
York Business and the Wealthy Should Pay Their Fare Share
Statement by BALCONY Co-Chairman Bruce Ventimiglia,
Chairman of Saratoga Capital Management, LLC
"BALCONY
– the Business and Labor Coalition of New York,
is concerned that the New York State budget is being balanced by Governor
Paterson
disproportionately on the backs of workers who are middle and low income wage
earners.
The governor’s approach will result in a loss of essential services,
social services,
and cuts in Medicaid funding for health care, all of which could further damage
our State’s economy.
Many businesses in New York which rely upon our State's services,
such as higher education which provides a quality work force,
stand ready to share the responsibility for keeping our State solvent.
Furthermore, there are thousands of wealthy New Yorkers who are ready, willing
and able
to do their fair share to help us maintain our State's economy.
We call upon the State Legislature to adopt a balanced approach to our budget
shortfall
and to consider policies that restore tax equity to our state and local tax
system."
~~~
Déjà
Vu All Over Again – Budget Balancing in Bad Times
Raising Revenue Needs to be Part of the Solution
Lessons From the Last Two Recessions
(Albany,
N.Y.) The Better Choice Budget Coalition,
a large coalition of over 100 non-profit, labor and faith based organizations
representing nearly one million New Yorkers,
called upon Governor Paterson today not to cut essential state services
to needy populations across the state.
The groups urged the governor to examine how the state has balanced its budgets
in the past
and to do what has been most effective
so we do not make the same mistakes twice.
They urged the governor to support a high end income tax on the wealthiest
1% of New Yorkers
to help address the budget shortfall in a balanced way.
Read the entire press release: Press Release
~~~
Déjà
Vu All Over Again – Budget Balancing in Bad Times
Lessons From the Last Two Recessions
Governor
Paterson has sounded the warning bell that the economy is in trouble and the
deficit is growing.
Just this week he proposed additional cuts (a menu of $1 billion in cuts)
to this year’s state budget,
on top of the cuts (3.35%) that he made earlier this year
and has called the Legislature back to Albany for a Special Session to act
on his proposals.
He has said we need significant cuts to state expenditures,
but he has completely ignored the revenue side of the budget equation.
The governor calls for “shared sacrifice”
but seems to be targeting those with the least means rather than those with
the most.
Read
the entire fact sheet: Fact
Sheet
~~~
HOSPITALS
AND HEALTH CARE UNION
ESTIMATE THE IMPACT OF
GOVERNOR PATERSON’S PROPOSED MEDICAID CUTS
AND HEALTH CARE TAXES
Facility-by-Facility
Report Shows that New York’s Hospitals
Will Lose Nearly $1 Billion if the Governor’s Plan is Enacted
New
York, NY, August 13, 2008…The Healthcare Education Project, a joint
initiative of
Greater New York Hospital Association (GNYHA)
and 1199 SEIU United Healthcare Workers East,
released a report today that estimates—for every hospital in New York
State—the financial impact of
Governor Paterson’s proposed $1.5 billion in Medicaid cuts and health
care taxes
for the remainder of state fiscal year (SFY) 2008-09 and all of SFY 2009-10.
In total, hospitals in New York State would lose $974.1 million if all of the governor’s proposals were enacted. Regional losses would be as follows:
•
New York City hospitals: $663.1 million
• Long Island hospitals: $84 million
• Northern Metropolitan hospitals: $71.5 million
• Central New York hospitals: $36.1 million
• Northeastern New York hospitals: $32.3 million
• Western New York hospitals: $35.4 million
• Rochester hospitals: $31.8 million
• Utica/Watertown hospitals: $19.9 million
All estimated losses are for the rest of SFY 2008-09 through all of SFY 2009-10.
“The
data released today makes it alarmingly clear that these proposals will have
a disastrous impact on hospitals and the communities they serve throughout
the entire state,”
said GNYHA President Kenneth E. Raske. “Without question, many hospitals
will eliminate
critically important services, and others will close their doors for good.”
“These
proposed cuts to New York's healthcare institutions will lead directly to
reduced services
and endanger quality care,” said 1199 SEIU president George Gresham.
“New York City hospitals alone would lose $663 million.
These are extremely damaging cuts, particularly on the heels of recent downsizing.
Our workers and the patients they serve deserve better and will work in coalition
in communities throughout the state to prevent this."
The
governor’s proposals include:
• Freezing Medicaid reimbursement rates for hospitals for the remainder
of 2008 and for 2009
(elimination of the inflationary update or “trend factor”);
• On top of the freeze, cutting Medicaid reimbursement rates for hospitals
by a further 7.2%
for the remainder of SFY 2008-09 and by 3.6% for SFY 2009-10; and
• Imposing a new 0.7% tax on hospital revenues.
Making
matters worse, the proposed cuts only reflect the impact on the Medicaid fee
for service (FFS) program. Under the Governor’s plan, there will also
be an automatic cut to Medicaid managed care rates because most hospital Medicaid
managed care contracts automatically tie to the Medicaid FFS rate.
As a result, the financial impact of the Medicaid provisions for many hospitals
will be double
what is shown in the attached report.
The Healthcare Education Project is calling on the New York State Legislature to protect and defend New York’s health care community by rejecting these proposed cuts and taxes, and instead work with relevant stakeholders to find new, viable sources of revenue. This includes the Project’s efforts in Washington, in partnership with Governor Paterson, to urge Congress to enact an economic stimulus package in September—only a few short weeks away—that would include a 2.95% increase to each state’s Federal Medicaid matching rate, or “FMAP.” If enacted, an FMAP increase would bring New York State an additional $1.8 billion in Federal Medicaid funding, wiping out the need for Governor Paterson’s proposed cuts and taxes.
GNYHA
and 1199 SEIU will continue to voice its deep opposition to these proposed
cuts and taxes.
* * *
The Healthcare Education Project is a collaborative initiative of 1199 SEIU United Healthcare Workers East and Greater New York Hospital Association (GNYHA) to conduct education and advocacy efforts on critical health care issues. 1199 SEIU is the largest local in the United States, and the largest health care workers union on the eastern seaboard, representing over 275,000 healthcare workers employed in hospitals, nursing homes, home care, clinics and social service agencies in New York, Massachusetts, Maryland and the District of Columbia. GNYHA is a trade association representing more than 280 not-for-profit hospitals and continuing care facilities, both voluntary and public, in the metropolitan area and throughout the State, as well as in New Jersey, Connecticut, and Rhode Island.
Contacts: Brian Conway (GNYHA): (212) 506-5477 or (917) 576-1966
Leah Gonzalez (1199 SEIU): (212) 603-1190 or (347) 231-7231
~~~
August 13, 2008
Paterson Assailed Over Bill to Cap
Property Tax Increases
By Jeremy W. Peters
He is not campaigning for office — at least not yet —
but that has not immunized Gov. David A. Paterson against the political attack
ad.
Starting on Tuesday, the left-leaning Working Families Party and the education
advocacy group Alliance for Quality Education
began broadcasting commercials in the state’s biggest television markets
that assail the governor for his support of a cap in property tax increases.
(Watch the Commercial: Commercial
[QuickTime] or Commercial
[MPEG])
The commercials, which are being broadcast at a cost of $1.5 million and will
run repeatedly
on cable and network television from now until Aug. 19,
the day the Legislature convenes for a special session, refer to the cap as
a “gimmick” and a “scheme.”
The measure, which would place a mandatory limit on property tax increases,
was approved by the State Senate last week.
In the State Assembly, however, a similar bill faces an uphill battle.
The ad campaign represents an aggressive attempt by the Working Families Party,
which would seem to be a natural political ally of the governor’s, to try
to influence the public dialogue
on property taxes and the New York economy as a whole.
Mr. Paterson, a Democrat, has made a property tax measure one of the central
policy objectives of his young administration.
He has crisscrossed the state in recent weeks on a campaign-style tour to
promote the plan.
“The governor does have a big megaphone,” said Dan Cantor, executive director
of the Working Families Party.
“This is a bad idea that will harm our schools, and we want to drive that
home as the Legislature heads back into session.”
Billy Easton, executive director for the Alliance for Quality Education, said,
“Millions of New Yorkers will see this ad buy multiple times, and it’s our
hope that Governor Paterson will hear from them.”
The 30-second commercial opens to ominous-sounding piano music as a narrator
says,
“Everyone agrees property taxes are a problem, but Gov. David Paterson’s property
tax gimmick is the wrong answer.”
The narrator then cites what the Working Families Party and the Alliance for
Quality Education say
were some of the effects of plans to cap property tax increases in other states:
larger class sizes,
billions of dollars in education cuts and laid-off teachers. The commercial
ends with the narrator saying,
“Tell David Paterson hurting schools is the wrong answer.”
Mr. Paterson’s office responded to the advertisement on Tuesday in a written
statement calling the cap plan “sensible”
and citing progress by students in Massachusetts, where a cap on increases
was put in place.
It also tied the cap in with the governor’s plan to turn New York’s economy
around.
“There is widespread recognition among New Yorkers that runaway increases
in property taxes
are deeply hurting our state,” the statement said. “Anyone who does not acknowledge
this trend is out of touch with working families.
The longer we wait to approve a property tax cap, the more we will hamstring
New York from reaching its full economic potential.”
The timing and size of this advertising campaign raised questions about whether
opponents of the plan
suddenly feared that it was gaining momentum.
“We do not see a groundswell of support in the Assembly for the tax cap,”
said Bob Master, a co-chairman of the Working Families Party.
“Nevertheless, you know, we want to send a clear message to the governor and
to all members of the Assembly,
and really to all citizens of the state, that this tax cap gimmick is not
a solution. It is only a sound bite that has not been thought through.”
~~~
NYSUT: Cuts to higher ed are 'inconceivable'
ALBANY,
N.Y., August. 12, 2008 —
Higher education union leaders today ripped Gov. David Paterson’s proposed
cuts
to the CUNY and SUNY systems, calling them “inconceivable”
and saying their devastating toll could limit the ability of many New Yorkers
to attend college.
The
governor wants $51 million cut from the City University of New York,
as part of an overall $1 billion mid-year budget reduction he has proposed
to deal with the state’s projected $6.4 billion deficit.
Paterson also has proposed slashing millions in aid to SUNY and CUNY community
colleges,
and cutting the Tuition Assistance Program by roughly $30 million.
Read the complete statement: NYSUT
~~~
August 12, 2008
Statement
by CSEA President Danny Donohue
in response to governor’s proposed budget cuts
"The
governor’s proposal to the Legislature is nothing short of an all-out
assault
on public services and taxpayers throughout New York State.
“The cuts he proposes cannot be made without affecting real people and
real services
and will undermine local governments and health care among other areas.
“Aid to localities, Medicaid, and other health care funding provide
essential services
in every community. In difficult economic times, the governor’s proposed
cuts
put more people and real services at risk when needs are the greatest.
“CSEA will not stand by and see our communities undermined
while working people get stuck with the bill.”
~~~
August 6, 2008
Paterson cuts may suffice, controller says
By
Kenneth Lovett
ALBANY - The state's top moneyman Monday gave the Legislature a pass
on Gov. Paterson's push to cut $600 million from the state budget later this
month.
State
Controller Thomas DiNapoli said $630 million in planned administrative cuts
by Paterson should be enough to balance the current year's budget.
Paterson wants the Legislature to cut the budget an additional $600 million
during a special session he called for Aug.19.
But DiNapoli said the governor's cuts give the Legislature "some flexibility
in terms of timing as to when some of the decisions have to be made."
Still,
he said, the sooner the Legislature and governor act,
the better off the state will be in addressing a projected $26.2 billion deficit
during the next three years.
"I'll
leave it to the governor and the Legislature to figure out the numbers,"
DiNapoli said
when asked if he agreed with Paterson's call for the Legislature to cut $600
million.
Meanwhile,
after years of increases, the state pension fund dipped slightly in the past
fiscal year,
according to the latest numbers released yesterday.
The fund's assets dropped to $153.9 billion by the end of March,
compared with $154.9 billion on March 31, 2007.
DiNapoli
said the situation could have been worse
except that the pension fund saw a positive return of 2.56%
for fiscal 2007 despite a volatile market.
~~~
July 31, 2008
Gov. Paterson’s Budget Emergency
Across the country, states are slashing their budgets as tax revenues dwindle. New York, with its heavy dependence on Wall Street, is far from immune to the nation’s economic slide, as Gov. David Paterson this week made abundantly clear.The governor warned this week that New York’s financial situation has eroded rapidly, largely because of a “mammoth collapse” in revenues from the financial sector. He is predicting a state deficit of $6.4 billion this fiscal year alone. He is doing the right thing by starting now to cut his share of the $121 billion state budget and by calling the Legislature back into special session on Aug. 19. Cutting the budget is never easy, especially in an election year. Already the special interests, the ones that fund campaigns, are lined up to defend their shares.
Since Governor Paterson has not yet given a clear road map of where he wants to cut spending and raise revenues, here are our suggestions:
• New York’s budget has traditionally hidden hundreds of millions of dollars in slush funds, money that legislators and the governor hand out to their communities. These secret pools are the place to start.
• Sharing the pain, as the governor promises, should not mean forcing the poor to make most of the sacrifices. Cuts in funds for schools and health care should only take away the extras that special interests have added, not crucial services.
• Governor Paterson said that he is considering raising money through private-public partnerships involving the leasing of state assets. He should tread carefully there. Unloading public assets can too easily be the sort of one-time budget gimmick that does little long-term good.
• New taxes have to be on the table, if only as a last resort, but any changes in the tax code must be fair. Governor Paterson has already endorsed a property-tax cap that helps the suburbs and upstate but threatens cities. A temporary tax surcharge on wealthy New Yorkers makes sense, but it should not drive too much revenue away or allow the Legislature to keep wasting funds.
Governor Paterson has promised to consult with legislators and “those affected” before his final proposals on where to cut funds. It is a very collegial plan, but if the new governor really wants to put the state’s fiscal house in order, he is going to have to get a lot tougher with his old friends in Albany.
~~~
July 30, 2008
Paterson
seeks hiring freeze, spending cuts
By Michael Gormley
Associated Press
Writer
ALBANY, N.Y.
New York Gov. David Paterson on Wednesday said he wants to freeze hiring
and cut state agency spending by an additional 7 percent
to shore up a state economy that his budget director said is "officially"
in recession.
A
budget document Paterson announced this morning laid out specifics to address
a budget deficit
he said will hit $26.2 billion in three years because of high state spending
and declining revenues,
including a 97-percent drop in banking taxes from a year ago.
He
is also seeking approval of measures that have failed to gain support in the
Legislature,
including privatizing some state assets and resources. One of the most ambitious
proposals,
made a year ago by former Gov. Eliot Spitzer, would privatize the state lottery,
providing the state with billions of dollars up front and billions more over
the life of the contract.
"We
are now officially saying New York is in a recession," said Budget Director
Laura Anglin.
She said New York's recessions have historically lasted 25 months, longer
than national recessions.
Paterson
said he will cut $630 million from the executive budget without cutting services
to New Yorkers.
He'll also ask the Legislature in the coming weeks to approve a plan to cut
another $600 million
"across all areas of the budget." That will rebalance the current
budget - now $630 million out of balance - and stave off further imbalance.
Paterson said the cuts will set up a responsible process
for the 2009-2010 budget due April 1.
Paterson said school aid and other funding areas highly protected by the Legislature will be considered.
Paterson
doesn't support the Assembly Democrats' proposal for a temporary income tax
increase
on millionaires. He said tax increases are a last resort because, historically,
New York tax increases
get used for purposes other than reducing debt.
The
Democrat said the state is suffering "a mammoth collapse in revenue."
Banking revenue that was $179 million for June 2007 totaled just $5 million
this year, he said.
Agency spending was already cut by 3.35 percent in April.
~~~~
2009-2010
Budget Deficit Now Projected at $6.4 Billion,
a 22 Percent Increase in 90 Days
Governor
Calls on State Government to “Follow the Lead”
of New York Families and Dramatically Cut Spending
(click
here)
~~~
New
York economy officially in recession, state budget director says
The Business Review (Albany) - by Adam Sichko
Gov. David Paterson and his budget director said today
the state faces "the specter of stagflation" as it tries to cut
more than $1 billion in spending.
Budget Director Laura Anglin has concluded the state's economy is officially in a recession.
Paterson
has called state legislators back for an "emergency economic session"
on Aug. 19.
He wants them to cut about $600 million in state spending in the current budget,
on top of measures he announced today.
That
includes a hiring freeze and a 7 percent reduction in spending at state agencies.
That will generate most of the $650 million Paterson said he can save with
such unilateral actions.
"These
are essential areas we're looking at cutting.
That's how bad our economic situation is," Paterson said at a press conference
in Manhattan.
"We've been running a deficit, but we've been bailed out by Wall Street many times," Paterson said.
Those times have ended, he said.
Another
way Paterson wants to raise or save money is by developing public-private
partnerships
for state assets, including lease-back programs. In such a case,
the state would sell an asset--a bridge or tunnel, for instance--to a private
investor,
who would then immediately lease the asset back to the state.
Unlike
his predecessor, Eliot Spitzer, Paterson said he is not going to sell any
state assets.
Spitzer wanted to privatize the state lottery to start an endowment for the
state's public universities.
"I
don't want to sell the Thruway," Paterson said. "But we need to
look and think creatively
about how to create long-term revenue streams and provide opportunities for
the state to grow."
He declined to elaborate.
Anglin,
the budget director, outlined several negative trends in the state's economy,
including $225 billion in subprime mortgage loans that banks have written
off,
enabling them to take that money off their bottom lines.
"It's
a fairly dramatic shift," Anglin said. "We don't think it's done."
~~~
PEF recommends alternatives to rebuild economy
Albany
– The New York State Public Employees Federation (PEF),
the state’s largest white-collar union, today responded to Gov. David
Paterson’s
concern that the state tax revenue is anticipated to be lower than expected
with a longer economic downturn time.
“We
understand there will be hardships for the citizens of New York State
as a result of the economic downturn, but the state workforce or state services
should not bear a disproportionate amount of the burden,” said PEF President
Ken Brynien.
“State
agency budgets have already been cut by a half-billion dollars as steps were
being taken
to restore the state’s ability to provide services to its citizens.
There needs to be a balance
between cost cutting and additional revenue,” Brynien said.
A significant reduction in spending during an economic downturn is not the right way to go.
The
union leader said he was encouraged Gov. Paterson was seeking the counsel
of Joseph Stiglitz,
the noted economist and 2001 Nobel Prize winner in Economics, to explore alternatives
to service cuts.
“An
alternative previously suggested by Stiglitz to safeguard our workforce, yet
address the economic downturn, is to place a temporary surcharge on the wealthiest
New Yorkers,” Brynien said.
“People in New York whose income exceeds a half-million dollars only
pay 6.5 percent
of their income in state and local taxes. The rest of the taxpayers pay 12
percent.
We can address this issue by temporarily raising taxes on millionaires which
would generate
up to $3.75 billion dollars a year.”
The
state could also save almost a billion dollars by reducing the use of overtime
and consultants,
according to Brynien.
“The
proposal for public private partnerships will not address the immediate fiscal
crisis and selling
public assets has been a spectacular failure in many other states including
Virginia, Texas, Florida
and California,” Brynien said.
~~~
July 29, 2008
Statement
by CSEA President Danny Donohue
"Governor
Paterson's talk of reducing the state work force to solve New York's fiscal
problems
is nothing but a sham. When the governor talks about families who can't afford
to heat their homes,
can't afford to put gas in their cars and can't afford groceries, he is describing
his own workers and their families who will only be hurting more after he
takes away their jobs.
"At a time when we need better and bolder solutions, the governor is relying on failed policies from the past. There are better ways to address fiscal challenges than laying off working people in a troubled economy.
"New Yorkers deserve better ideas than this. CSEA is willing to work with Gov. Paterson and other state leaders to come up with solutions to the fiscal challenges we face that will have a real and lasting impact on the future of this state. Responsible, long-term solutions must include creative ways of increasing revenue instead of simply cutting jobs and gutting services.
"We
will not stand by for knee jerk political solutions that diminish our quality
of life and create more misery."