New York State - Budget Crisis

Working Men and Women Must Not Bear the Burden of NYS Budget Crisis

For Immediate Release - December 16, 2008

Statement by Alan Lubin and Bruce Ventimiglia,
Co-Chairmen of BALCONY: The Business and Labor Coalition of New York.

The Wall Street Meltdown was not created by working men and women and they must not be forced to bear the burden of New York State’s Budget Crisis.

Destruction of the public workforce, schools, state services and health care would leave our state with a terrible economy, hasten our decline and dramatically impact the ability of small businesses to survive.

New York State must be more realistic in its solutions to repair the budget shortfalls. Just as the federal government has moved quickly to support the financial sector with almost a trillion dollars, so too must Washington provide the assistance necessary for New York State and other states.

July 9, 2009

NYT Logo 300px

By Danny Hakim

Local governments in New York State face an unprecedented increase in pension costs that will force them to triple their contributions to the state pension system over the next six years, according to an analysis prepared by the comptroller’s office.

Read (or print) the entire article: Pension

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June 4, 2009

by James M. Odato and Rick Karlin, Capitol bureau

ALBANY -- Gov. David Paterson and public employee unions are closing in on a deal to avoid the governor's proposed 8,700 layoffs. Under the preliminary plan, the state would provide $20,000 "buyouts" to workers who voluntarily leave the payroll, people briefed on details said Wednesday.

The deal, the subject of serious discussions in recent days, calls for the unions to endorse a new pension package -- the governor's proposed Tier V -- with more modest benefits terms than those available for decades to public employees.

The deal calls for the governor to drop his layoff plan. But the departures would have to take place this year.

Officials with the Civil Service Employees Association and the Public Employees Federation declined to discuss the deal, and the governor's spokesmen would not take questions on it.

People briefed on details, however, said momentum for the deal has been building for days, and an announcement appeared imminent on a resolution to the layoff plan. But talks lost steam after news circulated Wednesday that the governor had vetoed a bill to extend expanded pension benefits for newly hired cops and firefighters.

The buyout offer would be for workers eligible for retirement, according to the people briefed, but details were still being sewn together. Initially, the deal would be an expense rather than a savings for the state. The costs could mount, into the tens of millions of dollars, to pay for the buyouts of almost 7,000 workers.

Savings from a Tier V package wouldn't be realized for several years. Nevertheless, Paterson would be able to boast that he accomplished a major pension change that no other governor could produce.

Paterson accomplished something along those lines Tuesday when he vetoed a generous but costly police and fire pension bill that critics called a symbol of the state's profligate spending.

The veto came without fanfare and took many in the Capitol by surprise. Noting that "state and localities are hemorrhaging revenue at an alarming rate," Paterson vetoed a measure -- identical to one approved by lawmakers and signed by the governor every year since 1981 -- that allowed police and firefighters to continue collecting a more generous pension even as other public employees saw their benefits reduced.

The veto could put police and firefighters on the same footing as other public workers. Currently, so-called "uniformed" workers can retire with half-pay after 20 years of service. Although other state employees also can retire in 20 years under the system, they receive less of a payout, around 40 percent of pay.

Only future hires are covered in the veto, which has no impact on anyone now employed in the public sector.Labor advocates weren't happy: "I'm kind of puzzled more than anything," said state Sen. Diane Savino, D-New York City, who co-sponsored the bill extending the fire and police benefit. "This is something you would think the governor would have let us know. ... If they're using this as a bargaining (tool), this is not the way to do it."

Budget watchdogs hailed Paterson's veto for breaking what they described as a woeful tradition that favored powerful unions but shortchanged taxpayers.

The veto "is sending a really strong statement," said Elizabeth Lynam, deputy research director at the Citizens Budget Commission, which studies state spending.

"Gov. Paterson made a gutsy decision," agreed New York City Mayor Michael Bloomberg.

The higher police and fire benefits force municipalities to put about 15 percent of their payroll toward retirement costs, compared to 7.5 percent for other municipal jobs.

As of March 2008, the average person enrolled in the police and fire pension program earned $88,440, while the average pensioner collected $37,030, according to data from the state comptroller.

Paterson's veto could be overridden if two-thirds of lawmakers in each chamber vote against him. But that could draw the Legislature into a potentially bruising and high-profile discussion of the state's growing public employee cost, and the influence that police and fire unions wield over the Assembly and Senate.

Moreover, the veto is a concrete move in a legislative session that's seen numerous calls for caps on spending as well as property taxes -- pleas that have been met with indifference in the Legislature.

James M. Odato can be reached at 454-5083 or jodato@timesunion.com; Rick Karlin can be reached at 454-5758 or rkarlin@timesunion.com.

State pension tiers

New York's pension system for public workers has changed over the years.

Current workers can fall into one of four "tiers," with benefits dropping from first to last. The tiers are based on the hire date of a worker:

Tier I: before July 1 1973

Tier II: July 1, 1973-July 26, 1976

Tier III: July 27, 1976-Aug. 31, 1983

Tier IV: Sept.1 1983

Police officers and firefighters fall into Tier I or II regardless of their hire date. Source: Office of the Comptroller

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May 27, 2009

by James T. Madore

Gov. David A. Paterson is unlikely to resort to widespread layoffs of state workers this summer to cut about 8,900 jobs, despite the tough talk between him and labor leaders.

The Budget Division said last week the state payroll had shrunk by around 1,200 positions since the job-cutting plan was drawn up. The reductions were because of a hiring freeze and people leaving for retirement or other reasons.

So, the positions on the chopping block now stand at 7,687 from a workforce of 136,490. These cuts will be achieved primarily through more attrition and wiping out unfilled jobs. At most, only a few hundred layoffs are expected, experts said.

Lowering the state's labor costs has been complicated by Paterson's weak position in negotiating with the powerful Civil Service Employees Association, Public Employees Federation and eight other unions. Besides having dismal poll numbers, he limited his leverage by not inflating the jobs at risk. Previous governors attempted to scare rank-and-file union members with higher numbers to lobby their leaders into making concessions, experts said.

Limited success in the past

Govs. Mario Cuomo and George Pataki had limited success in the 1990s, however. The unions refused to grant significant concessions and thousands of jobs were shed to close budget deficits. But this was largely done through attrition and early retirement incentives, not massive layoffs.

"Historically, these things tend to get worked out," said Robert B. Ward of SUNY's Rockefeller Institute of Government in Albany. "The conventional wisdom is that the level of vitriol is higher than ever this year . . . but my sense is that things may have calmed down a bit."

He added, "the number of actual layoffs is likely to be relatively small, if any."

E.J. McMahon of the conservative Empire Center for New York State Policy agreed, though he said the unions had been emboldened by Paterson. "He has shown no will power. . . . There is no reason to believe he will actually do anything," McMahon said. "He should have threatened to lay off 30,000; then you would have union members thinking their jobs were in danger and pressuring the [union] leadership to accept what Paterson is offering."

Experts pointed to California, Michigan, Wisconsin and other states that have compelled workers to take unpaid furloughs. New Jersey is calling for 14 furlough days from this month through June 2010.

Paterson so far has pushed for union members to skip this year's 3 percent raise and postpone five days' pay until they leave state service. He also wants to raise the minimum retirement age from 55 to 62 for new hires and require them to contribute more to their pensions.

A call for sacrifice

"We've offered a menu of ways that [the unions] could prevent the layoffs but they seem to want to try to vest the responsibility on me," Paterson told Newsday. "I think the responsibility lies with them. They have got to show us that they are willing to make some sacrifices."

Asked if he was committed to the job cuts, Paterson said he was, because otherwise $450 million in savings would be lost over the next two years. He also predicted the $131.8-billion budget would fall out of balance by $3 billion before the fiscal year ends in March because of plummeting tax collections.

Paterson's job cuts affect only unionized workers at agencies under his control. Those taking the biggest hits would be prisons, 2,021; mental retardation, 1,434; mental health, 1,054; transportation, 624; and the State Police, 386.

Long Island would be spared somewhat because SUNY, the largest state employer locally, isn't affected. Neither are the legislature and courts. There also aren't any state prisons here.

Still, reductions are probable at institutions caring for the mentally ill , such as Pilgrim Psychiatric Center and Long Island Developmental Center, each with more than 1,500 unionized workers.

CSEA, in advertising critical of Paterson, has highlighted services for the disabled. Spokesman Stephen Madarasz said, "We've offered the governor lots of ideas for ways of saving money without layoffs. But this isn't about money, it's about trying to extract concessions from us to boost him politically."

CSEA and PEF have called for using fewer consultants, hiring more workers to reduce overtime and expansion of flexible work schedules. Both have refused to amend contracts negotiated in better economic times.

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May 22, 2009

By Glenn Blain

More bad news out of Albany: The state's projected budget gap could more than double to nearly $6 billion by the start of next year's budget.

Gov. Paterson said Wednesday he's bracing for a more than $3 billion shortfall in state revenues this year, which would come on top of the $2.5 billion deficit already projected for the 2010-2011 budget, which begins on April 1.

"We are going to have to look at further cuts," Paterson said.

Paterson's warning came less than two months after lawmakers adopted a $131 billion budget for 2009-2010 that boosted overall spending by about 9% and included more than $4 billion in new taxes and fees.

"New York doesn't have a revenue problem, it has a spending problem," said Senate Minority Leader Dean Skelos (R-Long Island).

Paterson said his prediction was based on what happened to the state in the 2008-2009 fiscal year, when the state lost $3 billion in revenues.

"I guess I'm the eternal pessimist," Paterson said.

Paterson's pessimism was not shared by Assembly Speaker Sheldon Silver (D-Manhattan) and Senate Majority Leader Malcolm Smith (D-Queens).

Both said it was too early to predict the state's financial fate.

"There are hopeful signs of improvement," Silver said, referring to the economy.

Even Paterson's budget office said the latest estimates don't back up the dire predictions.

"What we see is that we are essentially in line with the financial plan," said Budget Division spokesman Jeffrey Gordon.

Gordon said Paterson was simply "voicing his concerns about the uncertainties in the economic climate."

State Controller Thomas DiNapoli warned this week that the state's budget year got off to a "poor start," collecting only $4.8 billion in revenues in April, about $239.1 million below projections.

Read more: "State's budget gap could hit $6 billion by next year, says Governor Paterson" - http://www.nydailynews.com/ny_local/2009/05/20/2009-05-20_states_budget_gap_could_hit_6_billion_by_next_year_says_governor_paterson.html#ixzz0GFEPQ5Nf&A

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April 2, 2009

State Comptroller Thomas P. DiNapoli Statement on 2009-10 State Budget

New York faced an extraordinary challenge to adopt a 2009-10 State Budget in the context of a daunting recession. My preliminary review of the budget indicates it does not adequately respond to today’s economic realities.

The budget is not a long-term solution to New York’s propensity to spend more than the state can afford. While the budget proposes to close an unprecedented gap, it does so by an over reliance on non-recurring federal stimulus funds and new tax revenues projected to materialize at a time of declining tax receipts.

This is essentially a buy-time budget, based on a hope that the economy recovers quickly. It’s a very fragile basket to place all the taxpayers’ eggs in. Instead of using the Federal stimulus to restructure the financial plan and match projected revenues to long term growth in spending, the budget uses stimulus funds as a short-term fix.

The danger is that New York could end up right back where we started, with huge budget gaps and an unsustainable level of spending. I will provide a more detailed review of the enacted budget shortly.

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April 1, 2009

State Budget Includes Major Access Victories for Uninsured New Yorkers

"During a very difficult budget year, the Governor and Legislature still managed to do several very positive things to help New Yorkers obtain good health care coverage during the current economic recession, and we appreciate those efforts," said Mark Hannay, Director of the Metro New York Health Care for All Campaign.

"These steps include streamlining public insurance programs to help uninsured people enroll in them, expanding the state's Family Health Plus program to cover more uninsured, strengthening accountability standards for charity care funding of services for the uninsured, and keeping premiums affordable within the state's Child Health Plus and Medicaid Buy-in programs. That said, we remain concerned about some budget provisions that will raise insurance premiums in the private market, and the state's failure to fully fund its stop-loss fund for the individual market. More New Yorkers may not be able to afford to buy or keep private coverage as a result and will become uninsured. We will be working with the Governor's office, State Insurance Dept., and Legislature on issues concerning the private insurance market as we move forward in this year's legislative session. We also are concerned about impacts of the budget on the New York City Health and Hospitals Corporation, since HHC serves many uninsured New Yorkers."

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March 31, 2009

"Legislators join Governor in Reckless and Irresponsible Budget Plan"

Statement of CSEA President Danny Donohue on state budget agreement.

"There's a lot to dislike in the budget agreement reached between Governor David Paterson and the leaders of the two houses of the legislature, but no one should have any illusion that it moves New York forward through 'shared sacrifice.' The agreement sticks it to state employees and undermines the future of the state's health care system beyond reason. "The budget agreement assumes $481 million in 'savings' from the unnecessary layoff of state employees making the legislature complicit in a reckless and irresponsible plan that is both impractical and nasty while eroding state services at a time when they are needed most. "Until now it has largely been the governor's responsibility to answer for his reckless plans. Should these plans move forward in the two houses, state Senators and Assembly members will have to answer for the consequences of their votes - New Yorkers deserve to know the who, what, when, where and why of these layoffs before this budget plan moves forward."

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March 30, 2009

Albany - “We are pleased the governor and Legislature have included some of PEF’s revenue raising suggestions such as, the millionaires’ tax, the Bottle Bill and empire zone reform in reaching agreement on a budget,” said state Public Employees Federation President Ken Brynien. “However, we are disappointed the financial plan still includes $481 million in cuts to the state workforce. “The governor has claimed to have only two choices to achieve the savings: union concessions or layoffs. There is a third choice: cut the enormous wasteful spending on private contractors. “Unfortunately, the governor continues to move forward with the most damaging choice, layoffs. “PEF will continue to press the governor to make the right decision: Cut the waste, not the workers.

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March 30, 2009

Governor David A. Paterson today announced that the Enacted Budget agreement achieves the key priorities he laid out for his administration beginning from his first day in office: strengthening the State’s long-term finances, enacting critical reforms to make government more accountable to taxpayers, and implementing significant, recurring spending reductions. Read the complete press release: March 30

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March 25, 2009

Governor David Paterson on Tuesday March 23, announced that New York State will layoff 8900 workers by July 1st in order to reduce the budget deficit of
$ 16.4 billion by approximately $481 million. Several key BALCONY members, including the Public Employees Federation, OMCE, and CSEA, would be directly impacted.

PEF president Ken Brynien and CSEA president Danny Donohue have issued statements condemning the Paterson plan to balance the state’s budget by laying off workers.

“We’ve been trying to give him the benefit of the doubt but if Gov. Paterson really believes putting nearly 9,000 New Yorkers out of work is a good idea, he really is out of touch with life on Main Street.” -- Danny Donohue, President CSEA.

‘There is absolutely no need to do layoffs. It will not save the money that the governor thinks it will.” -- Ken Brynien, President PEF.

Read the complete PEF statement: Layoffs

Read: New York Post story

Read: Albany Times Union story

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January 29, 2009

DiNapoli: Wall Street Bonuses Fell 44% in 2008
Securities Industry Losses Could Exceed $35 Billion

Cash bonuses paid by Wall Street firms to their New York City employees declined by 44 percent in 2008 in response to record losses suffered by the securities industry, according to an estimate released today by State Comptroller Thomas P. DiNapoli. DiNapoli noted that the federal Troubled Asset Relief Program (TARP), which infused billions of dollars into the financial system, helped prevent more institutions from failing. TARP placed restrictions on bonuses for top executives and many have voluntarily forgone bonuses, but it did not impose limitations for lower-level employees.

Read the entire press release: Bonuses

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January 21, 2009

In Albany, Higher Taxes for the Rich Expected

by Danny Hakim

ALBANY — Warning to rich New Yorkers: The tax man might be digging deeper into your pockets in the years ahead.

There is a growing sense in the capital that legislators are likely to turn to an income tax increase on the wealthiest New Yorkers to help close the state’s $15 billion deficit, now that Democrats control the Senate, the Assembly and the governor’s office.

The Assembly, where Democrats have an overwhelming majority, has long supported increasing taxes on the wealthy, and Sheldon Silver, the Assembly speaker, reiterated this month that there continued to be strong backing for the measure among his colleagues.

Gov. David A. Paterson, a Democrat, did not propose any income tax increases in his budget proposal, but acknowledged in last month that “taxing the wealthy is probably going to be part of the solution if the deficit gets any worse, and all indications are that it probably will.”

Read the entire article: Rich

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January 16, 2009

FPI’s annual briefing book presents the “big picture” on the Governor’s proposed 2009-2010 budget, explaining why spending growth is what it is and carefully examines New York’s economic and income trends.

View the entire Briefing Book (PDF file): Briefing Book

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DiNAPOLI: DISAPPOINTING DECEMBER COULD
MEAN EVEN MORE SERIOUS PROBLEMS FOR STATE

The economic slowdown continues to significantly impact state finances, according to reports released today by State Comptroller Thomas P. DiNapoli examining state finances for December and the third quarter of state fiscal year 2008-09. Because December marks the end of the state’s third quarter, it is a significant month for tax collections although the reports show that actual collections were weak.

“December is typically a big month for state tax collections,” DiNapoli said. “Shoppers buy holiday gifts and businesses pay quarterly payments. But this December, shoppers weren’t buying as much and business tax collections were weak. The Governor and the Division of the Budget projected a difficult fourth quarter and these numbers support that projection.

“The sky hasn’t fallen yet, but ‘yet’ is a very big word. The Governor’s budget is on the table. We have to use this crisis as an opportunity to fix what’s been broken for so long. And we have to learn to live within the parameters of what the state can afford.”

The projections noted in the reports are based on the Governor’s updated Financial Plan issued on December 16, when he released the state fiscal year 2009-10 Executive Budget.

Findings from the reports include:

General Fund

· In the General Fund, total revenues, including transfers, were $38.2 billion, $72.6 million below projections through December 31 but 7.5 percent, or $2.7 billion, above last year for the same period.
· Growth in Personal Income Tax collections continues to slow, but collections are still $114.8 million over projections and $2.3 billion over the same period last year, primarily due to estimated taxes collected in April on 2007 liabilities.
· Collections for consumption/use taxes, including sales tax ($95.1 million) and business taxes ($12.9 million) were below projections.
· General Fund disbursements, including transfers, totaled $39.2 billion, $122.6 million over projections through December 31 and $2.3 billion, or 6.3 percent, over last year.
· School aid expenditures are up $1.3 billion and Medicaid is also up $786 million over last year.
· The state spent $122.6 million more than estimated because State Operations and General State charges were $138.4 million over projections. In addition, support for Debt Service and State Capital Projects were $75.2 million over estimates. However, the state spent less than anticipated for local assistance grants.
· As a result of lower than anticipated revenues and higher than anticipated spending through December 31, the General Fund closing balance was $1.7 billion, $195.2 million below what the Division of the Budget projected for the fiscal year through December.

All Governmental Funds

· All Funds spending was $88.2 billion, approximately $591 million below projections through December 31, primarily due to lower than anticipated spending for local assistance programs ($489 million below plan) in addition to lower than anticipated spending for General State Charges ($93.3 million) and capital projects ($50.5 million).
· All Funds spending was $5.1 billion, or 6.2 percent, higher than the same period from State Fiscal Year 2007-08, primarily due to growth in spending for education, Medicaid, health and environment programs.
· All Funds revenues were $85 billion through December 31, $394.7 million below projections. The variance is primarily from lower than anticipated federal receipts ($228.4 million) and miscellaneous receipts ($181.9 million).
· All Funds tax collections through December were $45.4 billion in All Governmental Funds, $15.6 million higher than anticipated and $2.7 billion over last year.

The state’s finances are generally broken down by two main categories: General Fund and All Funds. The General Fund is the major operating fund of the state and accounts for all receipts that are not required by law to be deposited into another fund. All Governmental Funds includes General, Special Revenue, Debt Service and Capital Projects funds, as well as funds from the federal government.

The state’s finances are generally broken down by two main categories: General Fund and All Funds. The General Fund is the major operating fund of the state and accounts for all receipts that are not required by law to be deposited into another fund. All Governmental Funds includes General, Special Revenue, Debt Service and Capital Projects funds, as well as funds from the federal government.

Click here for the December 2008 Cash Report.

Click here for a copy of the report examing third quarter state revenues.

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January 14, 2009

Lawmakers hit governor's cuts
DEC chief defends moves as careful way to trim spending

By Brian Nearing, Staff writer

ALBANY — State lawmakers had harsh words Tuesday for Gov. David Paterson's plan to cut $50 million from an environmental fund and slash support in areas like a zoos, solar energy, waterfront revitalization and a breast cancer registry.

"These changes shock and disappoint me," said Assemblyman Robert Sweeney of Suffolk County, chairman of the Assembly's Environmental Conservation Committee, during a legislative hearing on the environmental aspects of Paterson's proposed $121.1 billion budget. "This is offensive to anyone who cares about these issues."

The hearings were the first of three weeks of joint sessions conducted by the Senate Finance Committee and the Assembly's Ways and Means Committee.

As part of an array of cuts and new fees to close a yawning multibillion-dollar budget deficit, the governor wants to reduce the Environmental Protection Fund from $255 to $205 million and cut several established projects, while shifting $38 million to balance budgets at the state Department of Environmental Conservation and the Office of Parks, Recreation and Historic Preservation.

For example, aid from the fund to the statewide cancer registry ($450,000 last year), solar energy initiatives ($2 million), zoos and botanical gardens ($9 million) and biodiversity programs ($1.5 million) would all drop to zero.

Waterfront revitalization would go from $27.2 million to $9 million, while programs to fight invasive species would drop from $5 million to $1.5 million.

At the hearing, DEC Commissioner Pete Grannis defended the governor's proposal as a "careful and calculated decision on where cuts could be accommodated." While saying that the fund had been scaled back to its "core mission," Grannis also admitted that the environmental fund — created in 1993 to pay for environmental projects — is the "most complicated and sensitive part of the budget."

Grannis and Parks Commissioner Carol Ash urged lawmakers to support Paterson's proposal to expand the state's bottle recycling law to cover sports drinks and other non-carbonated beverages. The governor is relying on $118 million from that switch to support the environmental fund .

State Sen. Carl Marcellino, a Suffolk County Republican who was the longtime chairman of the Senate Environmental Conservation Committee until Democrats took control last week, said Paterson's changes "dismiss a decade of hard work building up this fund. Now it is swept out the door."

Marcellino also reminded Grannis of his time as a state assemblyman, when he had resisted Gov. George Pataki's efforts to divert cash from the fund into the overall budget.

"These were raids, Pete, remember?" Marcellino said. "Are we ever going to get that money back? And you are going to add more to that pile?"

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December 16, 2008

GOVERNOR PATERSON'S EXECUTIVE BUDGET
ELIMINATES LARGEST DEFICIT IN STATE HISTORY, REINS IN SPENDING

Proposal Includes Reductions across Every Area of State Spending, Targeted Increases in Revenue;
Represents a Balanced Plan for a Balanced Budget.

Read the entire press release: BUDGET

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GCA responds to Governor Paterson’s budget with concerns for the lack of infrastructure help and the reduction of funds for the Capital Plan.
December 16, 2008 (New York, NY)- The General Contractors Association of New York applauds Governor Paterson’s efforts to close New York’s deficit. His budget plan reflects the State’s difficult fiscal condition and illustrates that now is the time all must come together to help New York get back on track. With the prediction of losing 225,000 jobs over the next two years, it is a necessity that we be fiscally responsible and make wise funding choices that mitigate the impact of the job loss in the financial sector.

Investment in transportation infrastructure sustains construction industry employment and serves as a catalyst for regional and local economic recovery. These difficult economic times require maintaining and increasing the state budget for infrastructure, not reducing it. The budget proposal fails to address short and long term needs of highways, bridges and transit infrastructure. In order to keep New York working, we need to be investing in infrastructure, not decreasing its funding.

“The need for infrastructure cannot be stressed enough. It is the foundation of New York and is relied upon by the entire state. Our roads, bridges, mass transit and water and sewer infrastructure are what has given New York its historical competitive advantage. This present economic crisis, while severe, is not justification for sacrificing infrastructure projects that will ensure New York’s future economic viability.” Managing Director of the GCA Denise Richardson said, “Improvement of infrastructure is no longer an option, it essential for New York to continue to thrive and prosper.”

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NYSUT: Students Shouldn’t Bear Brunt of Economic Crisis

ALBANY, N.Y. December 16, 2008 — New York State United Teachers, while recognizing that the darkening economy requires difficult decisions, today said Gov. Paterson’s proposed state education budget would ask students to shoulder the burdens of the state’s economic crisis, resulting in increased class sizes, cuts in academic services and eroded access to the state’s community colleges at a time when it’s most needed.

“Although we respect the governor’s efforts to craft a budget in these trying times, this spending proposal raises deep concerns about its impact on public education,” said NYSUT President Richard C. Iannuzzi. “The economic crisis is severe, but we cannot — and do not — accept this devastating $2.5 billion school aid cut as inevitable.”

“We give the governor credit for including new sources of revenue, but they don’t begin to go far enough to enable the state to meet its obligations to our students,” Iannuzzi added. “Deep cuts to education unfairly burden children, instead of asking the wealthiest to shoulder their fair share through a more progressive income tax. These deep cuts would represent a huge disinvestment in New York state at a time when equity and economic recovery depend on quality public education.”

NYSUT Executive Vice President Alan B. Lubin stressed that a proposed cut in community college funding would “create dangerous holes in a safety net that New Yorkers rely on more than ever in tough economic times.” Meanwhile, SUNY and CUNY have already been burdened with cuts and “the union will continue to be vigilant in defending the quality of and access to our public higher education institutions,” he said. Lubin further noted that proposed cuts to teaching hospitals would “shred a safety net that is essential for New Yorkers.”

NYSUT is stressing the need to increase revenue by creating a more equitable income tax that shifts more of the burden to those who can most afford to pay. “Restructuring the state income tax would actually reduce the tax burden for lower-income and middle-class families while ensuring everyone pays their fair share,” Lubin said. “Change is long overdue.”

NYSUT, the state’s largest union, represents more than 600,000 classroom teachers and other school employees; faculty and other professionals at the state’s community colleges, State University of New York and City University of New York, and other education and health professionals. NYSUT is affiliated with the American Federation of Teachers, National Education Association and AFL-CIO.

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CSEA Slams Gov. Paterson's budget - Proposal hits middle class hardest

ALBANY- Services, jobs and communities will all be hard hit and middle income New Yorkers will bear the brunt of the cost under Governor David Paterson’s proposed 2009-10 state budget. The massive cuts will undermine education, health care and localities along with further cuts in hard hit state operations.

“The middle class will have to pay more and get less while the wealthiest New Yorkers slide by under the Governor’s proposal,” said CSEA president Danny Donohue, “There is no sharing of the sacrifice here – it’s working people getting stuck with the bill.”

Donohue vowed that CSEA will fight the proposal in every way available, in every part of New York. The union has already scheduled the March for Main Street when the Governor delivers his State of the State message on January 7 at the state Capitol.

CSEA also takes exception to the Governor once again calling on the union to reopen its state contracts even though we have repeatedly told him no and offered numerous other money saving suggestions.

A number of gimmicky tax and fee increases will not adequately address the state's deficit and will hit working New Yorkers hardest. At the same time the proposals will likely lead to significant loss of services at a time when New Yorkers need them most and will also result in layoffs and property tax increases.

“CSEA does not question the importance of bold and serious action to address the unprecedented fiscal challenges facing our state,” Donohue said. “We do question Governor Paterson’s approach – it represents ‘death by a thousand cuts’ to middle class New Yorkers.”

“For whatever reason the Governor seems fixated on the idea of not raising taxes on the wealthiest New Yorkers,” Donohue said. “Yet his proposals for cuts in aid to health care, schools and local governments will only lead to job loss and drastic reductions in services in those areas, along with local property tax increases that will hurt real people in real places.”

“CSEA is extremely disappointed in what Governor Paterson has put forward,” Donohue said “It flies in the face of everything he claimed to have stood for throughout his more than 20 years in elected office. What’s most disturbing is that at a time when we need leadership that inspires us, all we’re getting are political knee-jerks and scapegoating of public employees.”

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PEF President responds to proposed State Budget

Albany - “We agree with the governor that our economy is shrinking and people are suffering, but his
proposed 2009-10 budget includes destructive cuts in state services and the state work force while ignoring
cost-cutting options that can save the state billions,” said state Public Employees Federation (PEF) President
Ken Brynien.

“We are disappointed to learn the governor continues to rely on savings from state-worker givebacks that
amount to far less money than the savings that can be realized by cutting the use of high-priced consultants.
“Many of the proposals, particularly regarding benefits, do nothing to address the fiscal crisis, but appear to be
decisions based more on ideology rather than the need to provide immediate savings.

“Make no mistake, reopening our contract is not an option. We will not ask our members to give up a hardearned
3 percent raise when spending on consultants increased during the first 7 months of this year by 13.5
percent. Now, more than ever, the state needs to rely less on costly consultants and more on state workers who
can do the work for less, even when you take into consideration the cost of benefits.

“The governor’s proposal would have a disproportionate impact on some of the neediest residents. Cutting 450
beds from the state Office of Mental Health would poke a hole in the safety net for the mentally ill. His budget
would abandon many of our troubled youths by eliminating needed services with the closure of state Office of
Children and Family Services facilities. And those closures would be realized before the governor’s own task
force on the future direction of the juvenile justice system even has a chance to make recommendations.

“The governor’s attempt to streamline and improve the delivery of economic development services is a good
idea, but goes in the wrong direction. If there is a merger, it should be the Empire State Development
Corporation (ESDC) and the New York State Foundation of Science, Technology and Innovation (NYSTAR)
that merge into the state’s Department of Economic Development. This would ensure that New York has a
transparent economic development program run by professionals selected through the merit system, not run by
an unaccountable shadow agency staffed with political appointees making much more money than civil
servants.

“We believe there are better, less damaging ways to address the state’s budget deficit and we will take the
governor up on his stated willingness to accept advice and adjustments to his proposal. Therefore, we will
continue to offer better options to close the budget gap, including increasing the income tax on the wealthiest
New Yorkers, relying on the rainy day fund and reducing the use of costly consultants.”

PEF is the state’s second-largest state-employee union, representing 59,000 professional, scientific and
technical employees.

~ ~ ~

FPI Reaction to the Proposed Executive Budget

The state’s plan should use all available resources—certainly including funds set aside precisely to meet unplanned end-of-year deficits. In proposing actions to close this year’s $1.7 billion deficit, the governor unaccountably ignores balances available in the Tax Stabilization Reserve Fund. This reserve fund is specifically designated for unplanned end-of-year deficits. It cannot be used to cover already anticipated deficits. The Tax Stabilization Reserve Fund should be an important component of the plan to close this year’s deficit.

The governor’s proposal hurts low- and moderate-income New Yorkers while requiring little from wealthy New Yorkers. Cuts in state programs disproportionately affect New York’s working and poor families, who have not prospered in recent years and who will suffer greatly in this recession.
“Shared sacrifice” should mean that all New Yorkers contribute to help solve this problem. The budget should not be balanced on the backs of low- and moderate-income people.

The governor’s proposal would cause needless harm to the state economy. It relies heavily on cuts to essential programs and services. Taking away a dollar in government spending on transfer payments or vital community services has a far more contractionary impact on the economy than does taking a dollar from a high-income family. During a recession, the least damaging kind of budget balancing action is an increase in the tax on the portion of family income over a relatively high level.

Dozens of economists from all over New York State have written to the governor to say, [S]teep state budget cuts will exacerbate the economic downturn and harm vulnerable low- and moderate-income New Yorkers. Constrained by a balanced budget imperative, states face only difficult choices in balancing their budgets during recessions. Economic theory and historical experience gives a clear and unambiguous answer: it is economically preferable to raise taxes on those with high incomes than to cut state expenditures. Full text of the letter is available at

www.fiscalpolicy.org/FPI_Release_EconomistsOnFiscalPolicy_December2008.pdf.

The governor’s proposed budget also relies on increases in consumption taxes and fees. While such revenue increases may do less damage to the economy than some expenditure reductions, they are clearly more harmful than a progressive increase in the income tax.

The lessons from 2003 show that New York can successfully close large budget gaps—without disproportionately hurting low and middle-income families, or causing undue harm to the economy. The last time New York dealt with budget gaps of this magnitude was after 9/11. At that time, in addition to spending cuts, the legislature placed a temporary income tax surcharge on high-income filers. Employment in the state grew each year that the surcharge was in place, and the number of high-income returns grew steadily from about 245,000 in 2002 to an estimated 420,000 in 2007. Moreover, a recent Princeton study concluded that no net out-migration of the rich resulted from New Jersey raising income taxes on households with incomes over $500,000. The governor’s concern that the wealthy will choose to leave New York is overblown.

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Economists to Governor:
Raise High-End Income Taxes To Help Close Budget Gaps

More than 100 economists from throughout New York State joined together this week to send a message to Albany: steep cuts in state spending will weaken the already struggling New York economy, and will hurt poor and middle income New Yorkers. In a letter to the governor, the economists urge him to take “a balanced approach” to closing the gap in the state budget between revenues and spending—that is, an approach that includes raising taxes on high-income households.

Read the entire letter: Letter

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December 15, 2008

POLL: Raise Personal Income Tax

Most New Yorkers are in favor of increasing the personal income taxes on relatively wealthy people — but they want that done in concert with budget cuts to remedy the state’s fiscal woes, says a poll to be released today by the Working Families Party.

The results of the Nov. 23-25 inquiry by Kiley & Co. show that most of the 600 voters contacted last month favored major surgery on state spending. But they backed off a bit when the cuts are in health care and public education.

By a spread of 76 percent to 26 percent, voters favor a combination approach — an increase in income taxes with budget cuts.

Fifty-five percent favored major cuts, but just 9 percent wanted to reduce Medicaid by $1.7 billion over the next year and a half; 84 percent favored a 5-cent deposit on bottled water; 56 percent supported requiring public employees to forfeit a 3 percent pay raise; and 75 percent favored increasing personal income taxes on people earning $200,000 or more.

The latter will be a primary point in the WFP’s lobbying effort. Executive Director Dan Cantor says the polling was independently conducted. “These are not surprising numbers,” he said. “What is surprising is this is not what the government is doing. You can’t cut your way out of (the deficit), you can’t tax your way. You need a balanced approach.”

Indeed, when Gov. David Paterson puts out his 2009-2010 budget on Tuesday, and when Senate Republican put out their plan today, don’t expect to see the tax hike included in the proposed remedies to cure a $14 billion shortfall over the next 15 months. The Assembly Democrats have been the most vocal proponents of raising the personal income tax, although they wanted it applied to millionaires back when there were so many Wall Street employees in the seven-digit club.

The poll found that 61 percent desired tapping into the state’s $1.2 billion “rainy-day fund,” something Paterson is averse to doing.

Matthew Shelter of Kiley & Co., which has been polling for the Democratic Assembly Campaign Committee for 25 years, said the poll covered New York randomly: 33 percent from New York City, 26 percent from its suburbs, and 41 percent upstate.

Espada’s salary

If the personal income tax rises on wealthy New Yorkers, Sen.-elect Pedro Espada Jr. would likely be affected, unless he cuts ties with the nonprofit organization paying him as its president. The most recent IRS filing for Comprehensive Community Development Corp., a Bronx group that lists itself as a provider of a broad range of health services to a “largely medically under-served population” in Manhattan and the Bronx, paid Espada $379,507, in 2006, including $41,356 in deferred compensation. The money came from $12.14 million in revenue.

Espada said he may walk away from the pay depending on the outcome of the leadership struggle in the Senate, where members receive a base pay of $79,500 but are eligible for stipends based on assignments won from the leader.

“Those are discussions I will be having with my board of directors,” Espada said. “The issue of what position and the level of responsibility I will have will determine (that).”

“This was never about economics, it was never about power,” Espada said about his quest to be majority leader. “It was about empowerment of the fastest-growing population in the state, and changing the culture of the Senate.”

Capitol Confidential was compiled by James M. Odato.

~ ~ ~

New taxes, cuts in budget plan

Paterson sees $404M tax on non-diet soda; higher levies on health care

By James M. Odato

New taxes, deep cuts to education and health care, and a restructuring of the state’s economic development programs will be hallmarks of Gov. David Paterson’s first budget plan to be released in two days, according to interviews of people briefed on components.

The plan will come with a host of revenue raisers — increased taxes on hospitals and insurance policies, for instance — and at least one new assessment, a so-called obesity tax on non-diet soda to raise $404 million. The governor also is contemplating requiring new license plates to raise cash, reviving sales tax on clothing purchases, removing the tax cap on gasoline and threatening to require Indian retailers to collect taxes on sales to non-Indians by signing into law a bill passed earlier this year by the Legislature.

Paterson will unveil the spending plan, aimed at closing a $12.5 billion deficit for next year, on Tuesday. The total size of the Paterson budget is unknown.

There is no word on Paterson’s plans for the state work force, although he has said he will adhere to a strict hiring freeze while looking to consolidate some components of government.

The cuts will be across the board and will build upon a deficit reduction plan Paterson proposed in November as he attempted to close the $1.5 billion shortfall in the $120 billion budget negotiated for this year. The plan was inherited from the executive budget introduced last January by Gov. Eliot Spitzer.

The health industry will be particularly upset, although Paterson’s cuts will raise blood pressure throughout. He will call for about $3.53 billion in health care cuts, not including federal share of matching Medicaid dollars, which could be another $2 billion in cuts.

The biggest hits will be to insurance companies, which will be asked to come up with about $855 million in extra assessments. Those amount to more taxes on health insurance plans, increased sales tax on hospital discharges and more shifting of general fund costs to the Insurance Department so that insurance companies pay for programs such as Timothy’s Law, the mandated coverage of mental health treatments.

Further, the governor also will propose a new tax on some physician services to raise $50 million.

The bottom line will be a net increase in costs that ultimately get paid by subscribers, thereby increasing the cost of coverage at a time that most upstate insurers are struggling.

Hospital cost saving initiatives will amount to $700 million next year and $50 million this year. Some of that will come from a 0.7 percent tax on gross receipts and Medicaid rate reductions. Graduate medical education funds will be redirected to save $141 million and another $23 million will be cut through reforming reimbursement.

Nursing homes will be cut by $4.2 million this year and $420 million next year. Home care will be cut $190 million next year.

A number of other public health programs will come with savings by, for instance, taxing non-diet sodas under an “obesity tax” that will raise $404 million. Prescription drug costs, a hit on pharmacies and drug makers, will cut by $111 million.

Among the reductions in education spending, public colleges will be directed to raise tuitions. But despite the cuts, Paterson will try to make it easier for SUNY schools to partner with private developers who want to build on campus property. The public/private initiative is seen as a way to stimulate construction of private housing for campus residents.
The Empire Zone program will be cut by at least 50 percent, saving the state tens of millions by not extending benefits as liberally.

The budget will come a day after Senate Republicans vote on a bill to stimulate the economy by phasing out the Empire Zone program through 2011 and using the savings as tax breaks for companies.

The governor has contemplated instituting a different pension system for new employees, but the so-called Tier 5 program may not make it to the budget. He is also expected to reiterate a call for greater health care payments from retirees and the closure of some juvenile detention facilities.

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Pain, Gain in Budget Figures

Paterson proposal calls for hike in welfare payouts, billions in cuts to health care, education

By Irene Jay Liu, Capitol bureau

ALBANY — Gov. David Paterson will propose millions of dollars in increased state spending to programs serving poor New Yorkers — including an increase in welfare payouts for the first time in 18 years — when he unveils his first budget Tuesday. But the plan also will include billions of dollars in cuts to health care and education to address the state’s looming $15 billion budget deficit.

“The nation and the state are in the midst of the greatest economic crisis we have endured since the Great Depression, and there are families struggling to provide basic needs for their loved ones,” the governor said in a statement released Sunday. “Even in the face of dwindling government revenues, we need to make critical investments to ensure that people don’t go hungry and families receive proper health care that is centered on prevention.”

Paterson’s proposals include: increasing the welfare grant to poor families by 30 percent over the next three years; expanding eligibility and reducing application requirements for the state’s health insurance program; calling for increased federal dollars to pay for expanded health insurance for adults, indigent care at hospitals and community health clinics; and increasing funding for food pantries, soup kitchens, cancer screenings, lead poison prevention, obesity prevention and services for veterans.

Paterson’s proposals come at a time when the state faces an estimated $15 billion combined deficit in this and next year’s budget. Paterson attempted to address this year’s $1.5 billion deficit in November, but instead of working together to make cuts, the governor and legislative leaders held a public meeting that amounted to little more than partisan bickering and finger-pointing.

Paterson’s budget proposal for the 2009-2010 fiscal year is expected to address the multibillion-dollar shortfall, including about $3.5 billion in cuts to health care. Additional cuts will be across the board and will build upon a deficit reduction plan Paterson proposed in November to amend the $120 billion budget negotiated for this year.

“Really, no area is without reduction” in Paterson’s proposal, said Kristin Proud, the governor’s deputy director for state operations, speaking on a conference call to reporters Sunday.

The most expensive aspect of Paterson’s plan is the increase in the welfare grant. If implemented, it would increase 10 percent each year for three years, beginning in January 2010.

When fully implemented, the average family of three on public assistance would be eligible to receive a basic monthly allowance of up to $387, up from the current allowance of $291. The basic monthly grant has remained the same since 1990, while inflation has increased by more than 65 percent, according to estimates from the governor’s office.

The annual cost to the state of this increase would be $8 million in 2009-10, increasing to $109 million in 2012-13, when it is fully implemented. The increase will cost counties an additional $76 million annually when fully implemented, as counties are responsible for a share of the costs of public assistance programs.

Assembly Speaker Sheldon Silver’s office declined to comment on the current budget plan, but the Assembly has included a welfare grant increase in its budget resolution every year since 2006. It has never passed due to opposition in the Senate, which has been under Republican control for decades.
“While we are concerned that New Yorkers are finding it more difficult to make ends meet and provide for their children during these challenging economic times, we will weigh each of the governor’s proposals within the context of an overall balanced budget that will not be released until Tuesday,” said Senate GOP spokesman Scott Reif.
The Senate will meet in special session today and is expected to vote on a bill that would phase out the Empire Zone program through 2011 and use the savings to provide tax breaks for companies, a move Senate Republicans say will stimulate the economy.

The Assembly will return to Albany on Tuesday to receive the governor’s budget proposal, but is not expected to gavel into session.

The fate of Paterson’s proposals is unclear, especially given the uncertainty over which party will control the Senate in January. Democrats won the majority in November, but three Democrats have withheld their support from Senate Democratic Leader Malcolm Smith.

Smith’s office declined to comment on the governor’s proposed budget until it is released Tuesday.

The cost of Paterson’s proposed spending increases are a small fraction of the state’s expected budget deficit, but some fiscal conservatives are saying that now is not the time to expand programs.

“Our role during the best and worst of economic times, in any budget process, is first of all to think of taking care of those most in need,” said Assembly Minority Leader James Tedisco, R-Schenectady. “But I also think that we have the Cadillac of welfare services in New York state. We have services galore for people in need. I don’t think now’s the time to expand them.”

Tedisco also noted that because counties share the cost of public assistance programs, property taxes might increase as a result of Paterson’s proposals.

Meanwhile, a broad range of advocacy groups are preemptively calling for “shared sacrifice” in anticipation of Tuesday’s budget proposals. Today, a statewide coalition of hundreds of nonprofit, labor and faith-based organizations will release a letter signed by 100 economists calling for an income tax increase on wealthy New Yorkers. On Sunday, 152 religious leaders, in collaboration with the Greater New York Hospital Association and the powerful health care workers union SEIU 1199, published an open letter to the governor and legislative leaders.

“A solution to our state’s budget deficit must not fall on the weakest and most vulnerable,” the letter reads.

Staff writer Irene Jay Liu can be reached at (518) 454-5081 or iliu@timesunion.com.

Paterson’s proposals

Paterson’s safety net initiatives for vulnerable populations

Increase the welfare grant to poor families by 30 percent over the next three years.

Request federal funding to pay for increased indigent care at hospitals and community health clinics, and to expand the Family Health Plus program to cover adults who earn up to 200 percent of the federal poverty level.

Increase funding for food pantries, soup kitchens, cancer screenings, lead poison prevention, obesity prevention, and services for veterans.

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NYT Logo 300px

Taxes and Fees to Rise $4 Billion in New York Budget

By Danny Hakim and Jeremy W. Peters

ALBANY — Gov. David A. Paterson will propose a $4 billion package of taxes and fees on a range of items, from sugary soft drinks made by Coca-Cola and Pepsi to luxury items like furs and boats, when he unveils his plan to close a deficit that has ballooned to $15 billion, people with knowledge of the plan said on Sunday.

Higher taxes will also be imposed on health insurers and a sales tax exemption on clothing and footwear under $115 will be eliminated, though the administration will propose a two-week holiday for goods under $500, under the budget the governor will introduce on Tuesday.

A number of fees will be increased, with users of the Department of Motor Vehicles and the state parks bearing much of the burden, people with knowledge of the plan said. Tuition at the State University of New York and the City University of New York will also be increased.

The governor’s executive budget, which is subject to approval by the Legislature, is sure to touch off months of protests from an array of interest groups, as well as battles with lawmakers.

One element that Mr. Paterson left out of his budget was any broad-based tax increase affecting people in higher income brackets, a measure that some in Albany believed would be part of the plan. But ever since taking over as the state’s chief executive in March, Mr. Paterson has steadfastly opposed raising income taxes as a way to prop up the state’s worsening finances.

Mr. Paterson said his plan is meant to fill a budget gap totaling $15 billion for the rest of the current fiscal year, which ends March 31, and the following fiscal year. State law requires that the budget be balanced.

Mr. Paterson’s plan relies most heavily on cuts — roughly $9 billion, with the largest amounts aimed at state aid to education and Medicaid. The governor will also propose rollbacks of benefits for state workers, a measure that will almost certainly lead to a standoff with powerful public-employee unions.

The administration is also expected to propose eliminating the controversial Empire Zone program, which offers tax incentives for business development across the state, but has often been criticized for failing to deliver promised job growth.

“It is just prohibitive and it’s painful to have to make some of these decisions,” Mr. Paterson said at an appearance on Sunday night in Manhattan. “I’ve been forced to veto legislation that I’ve sponsored.”

He called tuition increases at state schools “a very hard step to take.”

“We’re going to try to remediate that with some other services to the colleges and universities, but when a person whose whole career has basically been for the advocacy of higher education, such as myself, has to take that kind of step, it gives you an idea of what kind of a number $15 billion is.”

Trying to put the best face on what will be a bleak budget year, the Paterson administration gave a limited budget briefing on Sunday in which administration officials discussed a small number of social initiatives whose financing would be increased. Several of the initiatives were aimed at helping the poor through what is certain to be a trying economic future. “The nation and the state are in midst of the greatest economic crisis we have endured since the Great Depression, and there are families struggling to provide basic needs for their loved ones,” the governor said in a statement on Sunday.

The most significant move was a proposed increase to welfare grants for the first time in 18 years, though more money would not be made available until the beginning of 2010. The administration plans to seek a 30 percent increase over three years, with the eventual cost of the increase exceeding $100 million a year.

The basic welfare grant would eventually rise to $387 a month from $291 for a family of three, or $3,492 per year, where it has remained since 1990.

That the administration was pushing the measure foretold how little money was available this year; the increased welfare grants will have little impact on the budget for the coming fiscal year, which ends in March 2010.

The administration also said it would expand a state-financed health insurance program, Family Health Plus, to cover 19- and 20-year-olds who no longer live with their parents. Enrolling in such programs would also be made easier by, among other things, ending requirements for face-to-face interviews.

Those who provided details about Mr. Paterson’s plan did so on condition of anonymity because the plan has yet to be made public. In describing the fees on nondiet soft drinks, those familiar with Mr. Paterson’s plan called them an “obesity tax.”

Expecting a protracted battle with lawmakers and interest groups, the governor is introducing his budget more than a month earlier than is traditional. Assembly leaders were expected to push for broader-based tax increases to offset cuts to social programs, and spent much of last year advocating tax increases for the richest New Yorkers.

The governor’s executive budget, which is subject to approval by the Legislature, is sure to touch off months of protests from an array of interest groups, as well as battles with lawmakers.

He called tuition increases at state schools “a very hard step to take.”

The basic welfare grant would eventually rise to $387 a month from $291 for a family of three, or $3,492 per year, where it has remained since 1990.

One of the biggest obstacles Mr. Paterson will have to overcome is a Senate narrowly divided between Democrats and Republicans that has yet to settle on a leader for next year, amid continued wrangling among Democrats.
Hospitals, nursing homes and other health care centers, already pinched by the first round of budget cuts earlier this year, are bracing for a fight.

“I expect it to be an unmitigated disaster for health care institutions in New York,” Kenneth E. Raske, president of the Greater New York Hospital Association, said in an interview on Friday. “I expect we will see a significant downsizing of the health care delivery system, and it’s at a time when people can least afford the cutbacks.”

Layoffs among health care workers are seen as likely. A recent survey by the Health Care Association of New York State found that 18 percent of hospitals are considering letting employees go to cope with their financial problems, 30 percent are weighing service cuts and 68 percent are contemplating scaling back improvement projects.

“Our hospital system is already short nurses, lab technicians and physicians,” said Dan Sisto, president of the health care association, a hospital advocacy group. “So it’s very difficult to cut back on a labor force that is already complaining about being shorthanded.”

Education advocates offered a similarly bleak view.

“We understand there will be cuts,” Randi Weingarten, president of the United Federation of Teachers, said on Friday. “The real question is, will there be cuts, not just cuts against growth, but real cuts that will turn back the clock?”

Billy Easton, executive director of the Alliance for Quality Education, an advocacy group, agreed. “School districts now have to plan that they’re not going to get the money that’s due to them.”

Education advocates are particularly concerned that the depth of the expected cuts will risk core educational programs and not just extracurricular activities, which are often the first to be slashed when budgets tighten.

“It takes a lot to help make sure there’s programs for kids,” Ms. Weingarten said, “but it takes very little to have this whole thing collapse.”

November 24, 2008

DiNAPOLI REPORT: WALL STREET’S TRANSFORMATION WILL
LEAD TO LOWER TAX REVENUES; CONTINUED JOB LOSSES

Wall Street’s Shift from Investment Banking Model Will Lower Industry Profits

The financial crisis could cost New York State and New York City 225,000 jobs and $6.5 billion in securities industry-related tax revenue over the next two years, according a report released today by New York State Comptroller Thomas P. DiNapoli. The Comptroller noted that the Governor and Mayor have been proactive in dealing with the crisis, but New York, like other states, may require federal assistance given the magnitude of the projected budget gaps.

“Wall Street is the engine that drives the economies of New York State and New York City, but the global credit crunch has slowed that engine down,” DiNapoli said. “This year is on pace to be one of the worst years ever on Wall Street. Through the first half of this year, broker dealer operations of New York Stock Exchange member firms reported a loss of nearly $21 billion.

“These numbers are translating into job losses. The securities industry in New York City has lost more than 16,000 jobs and the industry could lose a total of 38,000 jobs by next October, with another 10,000 jobs lost in banking, insurance and real estate. And those job losses translate into more job losses in other industries.

“The financial crisis highlights the need for greater transparency and oversight, but there has to be a balance. Overregulation could hurt the securities industry, which is vitally important to the State and the City.”

“This important report captures the substantial damage inflicted on New York by the collapse of global financial markets and underlines the importance of stabilizing the banking system in order to maintain our position as the world’s financial capital,” said Kathryn Wylde, president & CEO, Partnership for New York City.

Over the past year, the securities industry in New York City has lost 16,300 jobs. DiNapoli predicts the securities industry could lose a total of 38,000 by October 2009 and another 10,000 jobs could be lost in banking, insurance and real estate. The Comptroller estimates total private sector job losses could reach 175,000 in New York City but losses could be greater if the economic downturn is deeper and longer than currently forecast. In total, New York State could lose 225,000 jobs during this period.

According to DiNapoli, while top executives may not receive bonuses, lower level employees will still receive payments although the size of the bonus pool will be much smaller than in prior years. In the early 2000s, bonuses fell by 50 percent over a two-year period in the years following the bursting of the dot-com bubble and the events of September 11, 2001. According to the Comptroller, recent developments suggest that a decline of a similar or even greater magnitude could occur this time. By January of each year, the Comptroller issues an estimate of cash bonuses paid in the prior year.

“Top Wall Street executives ought to forego bonuses during this difficult time; it’s inappropriate to reward poor performance,” DiNapoli added. “But the public must keep in mind that bonuses paid to lower level employees are often used to purchase goods and services in other industries, which benefits the overall economy. New York will feel a lot pain from a shrunken bonus pool.”

The DiNapoli report also found:

Broker/dealer operations of New York Stock Exchange member firms reported near record profits of $20.9 billion in 2006 but a record loss of $11.3 billion in 2007. These firms reported a loss of $20.7 billion in the first half of 2008 and New York City’s financial plan projects a loss of $25.5 billion for the entire year, but the Comptroller’s report warns that losses could be even greater.

Securities industry revenues fell from $70.3 billion in the first half of 2007 to $32 billion in the second half of 2007. According to the report, total compensation averaged an unsustainable 97.4 percent of net revenues for the first half of 2008 (compared with an average ratio of 53 percent from 1990-2006).

For the six largest securities firms headquartered in New York City, revenues fell by 63 percent in the second half of 2007 and by another 48 percent during the first three quarters of 2008. These firms reported write-offs of more than $140 billion during this period.
As Wall Street contracts, the Comptroller estimates that jobs will be lost throughout the rest of the City economy due to the industry’s multiplier impact on jobs. DiNapoli’s multiplier effect estimates that for each financial sector job lost, two more jobs will be lost in other industries in New York City and 1.3 jobs will be lost elsewhere in the State.

During the 2001-2003 recession, New York State lost 329,600 private sector jobs, of which Wall Street directly and indirectly contributed a loss of 173,500, or more than half of the decline. New York City lost a total of 232,100 private sector jobs during this period.
The average securities industry salary reached a record high of nearly $400,000 in 2007 paying approximately 6.8 times the salary of all nonfinancial jobs in the City. Salaries averaged $150,640 in credit intermediation and insurance and $62,060 in real estate and related industries.
Tax collections (personal income and business taxes) from Wall Street-related activities could drop by $4.5 billion for New York State and $2 billion for New York City by 2010. Wall Street activity generates a disproportionate share of State and City tax revenue because of high levels of compensation, profitability and capital gains.

Wall Street-related activities account for 12 percent of New York City tax revenues and up to 20 percent of New York State revenues. Prior to the current crisis, the securities industry accounted for five percent of the City’s employment but nearly 25 percent of the wages.
Hedge funds and private equity firms, which have also been hit hard by the crisis, play an important role in the securities industry and have a strong presence in New York City. According to a survey of large hedge funds and private equity firms conducted for the Comptroller by The Partnership for New York City, respondents leased nearly 1.5 million square feet of office space in New York City and paid more than $100 million in unincorporated business taxes to the City.

Click here for a copy of the report or visit http://www.osc.state.ny.us/osdc/rpt7-2009.pdf.

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Tackling NYS' growing budget deficit a grim task

By James T. Madore

Gov. David A. Paterson is warning that next year's budget will be "grim," with retrenchment virtually everywhere, from schools and hospitals to building projects and social welfare agencies.

The cuts will probably be deeper because of last week's failure by Paterson and lawmakers to close a $2-billion hole in the 2008-09 spending plan. That red ink now must be rolled into the projected $12.5-billion deficit for 2009-10, precipitating reductions in spending rather than slowing its growth.

With the Wall Street meltdown pinching state revenue, Paterson and his fiscal advisers are racing to craft budget proposals by Dec. 16, five weeks earlier than the usual deadline. They are expected to include a scale-back of the promised increase in education aid, overhaul of Medicaid to emphasize outpatient clinics, consolidation of state agencies and asking state workers to pay more for health insurance, according to sources.

Long Island has a lot at stake in the 2009-10 budget. Area public schools received $2.6 billion in aid this year and a future reduction would probably spark a hike in school property taxes. The region's hospitals rely on billions of dollars in Medicaid reimbursement, nearly $2.9 billion in 2005.

And Long Island Rail Road customers are facing possible fare hikes and service cuts as the cash-strapped Metropolitan Transportation Authority struggles with little hope of help from the Capitol.

"This is going to be an extraordinarily difficult budget that is actually unprecedented in the lifetimes of most of us," said Assemb. Robert Sweeney (D-Lindenhurst). "The governor probably will call for cuts across the board. I don't know if he will propose any new revenues, but I think it's inevitable."

Seeks early budget adoption

Paterson isn't ready to show his hand. But as talks collapsed last week over his fix for this year's $120.8-billion budget he spoke about next year's.

"It is grim," he told legislative leaders. "All segments of society are going to feel pain. This is not your regular budget-cutting procedure."

The governor is lobbying for budget adoption by March 1 rather than the April 1 start of the fiscal year. Such a move would save 8 percent, he said.

New York traditionally has had late budgets. A 20-year string of tardiness was broken at the end of Gov. George Pataki's 12 years in office. But the past two fiscal plans missed the April 1 deadline by 11 hours and nine days, respectively.

Paterson said he would reluctantly target education and Medicaid for trimming because they account for 52 percent of state expenditures this year. He dismissed the suggestion that schools and hospitals be spared by putting a surcharge on the income of millionaires, as was done in 2003 to close an $11.5-billion deficit.

"Raising taxes right now would diminish the number of people who live in this state," Paterson said.

Fiscal experts were divided over whether Democrat Paterson would succeed in shelving the millionaires' tax, given strong support for it among the Assembly's Democratic majority. But even if Albany were to soak the rich a bit more, the experts said, only about $2 billion would be produced, far short of closing the two-year, $15-billion deficit.

"They can't close this gap by raising taxes because the gap is too big," said Republican John Faso, who ran unsuccessfully for governor in 2006. "We need to reduce the cost of state and local governments and school districts because we can no longer afford them."

Not much federal aid seen

Federal aid, probably in the form of up to $2 billion in additional Medicaid reimbursement, also won't remedy the shortfall significantly.

"The billions and billions from Wall Street that the state relied on in the past simply aren't there anymore," said Robert Ward of SUNY's Nelson A. Rockefeller Institute of Government. "Washington is likely to help New York ... but it's certainly not going to bail us out entirely."

Some lawmakers and economists were hopeful that budget director Laura Anglin would advise Paterson to use the huge budget deficit as an excuse to reinvent government. Some suggested merging agencies and authorities with overlapping responsibilities such as the Transportation Department and Thruway Authority.

"If you just craft a budget from the point of view of cutbacks without looking at the opportunity for reform, you may not be in the strongest position to leverage support for what's going to be some very tough medicine," said state Comptroller Thomas DiNapoli.
State Sen. Craig Johnson (D-Port Washington) agreed, adding that adoption of a lean budget wouldn't be effortless just because Democrats will control both houses of the legislature and the governor's office come January. "You are going to have a better working relationship between the three parties," he said, "but there are going to be challenges."

Budget imbalance

In his 2009-10 budget proposal, Gov. David A. Paterson must close two huge deficits and reduce spending because of declining tax revenue.

DEFICITS:

Nearly $15 billion in the next 16 months

2008-09 fiscal year:

$2 billion

2009-10 fiscal year: $12.5 billion

REVENUE DROP:

5.8 percent

less than in 2008-09, including:

PERSONAL INCOME TAX:

Down $2.5 billion

MANDATED SPENDING:

Up 11.9 percent

over 2008-09

SOURCE: NYS Budget Division; Compiled by Albany bureau chief James T. Madore

~ ~ ~

November 20, 2008

By Malcolm A. Smith

Recovery means a hand from D.C.

Gov. David Paterson's proposals for significant cuts to the state budget are a prudent acknowledgment that our nation's economic problems and the continuing crisis on Wall Street will force big changes in the way we do business in Albany.

We're going to have to slash state spending. We're going to have to find unprecedented new efficiencies in government administration.

And we won't be able to avoid cuts to some programs that provide valuable services. There's simply not enough money available to pay for everything state government has funded in recent years.

But most of all, we'll need bigger and stronger state-federal partnerships than ever.

The economic stimulus package that Congress is about to consider offers a chance for New York's new state-federal team to work together and make some progress. We're counting on our experienced and powerful congressional delegation to create opportunities for new jobs all over the state.

I have written to House Speaker Nancy Pelosi, Senate Majority Leader Harry Reid and President-elect Barack Obama to express my support for their mutual efforts to develop and pass a stimulus package to revive our economy.

Congress should pay particular attention to job creation, tax cuts for working families and fiscal assistance to state governments, including an increase in the Federal Medical Assistance Percentages.

I support President-elect Obama's recommendation for a job creation tax credit of $3,000 for expanding businesses. I'd like to see a matching credit for New York State taxes.

Federal funding for infrastructure initiatives will also drive new job creation, and I have recommended that new infrastructure funding for the stimulus package be targeted at projects already developed by state and local governments.

New York has 40 shovel-ready infrastructure projects, 390 clean water projects and mass transit expansions that could provide an immediate burst of employment with new federal funding. These include 36 separate highway and bridge projects in upstate New York, from the Route 22 bridge over Kinderhook Creek in Rensselaer County to resurfacing of I-690 in Syracuse and replacement of the Route 31 Bridge over the Erie Canal in Monroe County. The multiplier effect of these projects would help boost the prospects of dozens of communities, and would provide crucial help upstate.

The state and federal governments must do more to provide tax reliefs for middle-class families. I share the Obama-Pelosi-Reid commitment to reducing the tax burden on working families. I also agree with Speaker Pelosi's recommendation of an immediate tax cut rather than rebate checks as a method for boosting take-home pay and helping families quickly. I'm committed to working with my colleagues in Albany to implement similar reforms to state taxes.

There are also steps the federal government can take to help reduce budget pressures at the state level.

New York and nearly all other states are under tremendous fiscal pressure. We face an immediate deficit of approximately $2 billion for our current budget and a gap of $12.7 billion for the 2009-2010 budget.

Fast action by the federal government to help New York and other states through counter-cyclical fiscal measures could help limit service and job cuts while boosting the economy. I support Governor Paterson's recommendation for a 5 percent increase in FMAP support for Medicaid and related health care programs over the next two years, and urge that it be included in the upcoming stimulus package.
There's no one magic bullet that will get the New York and national economies working again. But coordinated policies and funding at the state and federal levels are an essential element in the equation.

~ ~ ~

Paterson makes small dent in lowering deficit

By James T. Madore and Juliann Vachon

Unable to reach agreement with lawmakers on the budget deficit,
Gov. David A. Paterson said yesterday he would act unilaterally while preparing next year's fiscal plan.

"There are some ways that I can still undertake, and will, to try to save the state further money," he said in Washington.

"But we're talking about a few hundred million dollars, perhaps topping out at a billion dollars. The problem is that there are 14 billion dollars to go," he added.

Paterson pegged the budget shortfall at $15 billion over the next 16 months - a sum requiring action by the legislature.

In Albany, budget office spokesman Matt Anderson said the governor will permanently move a STAR payment for New York City from December to June, saving $93 million this year and $20 million in 2009-10. He also will end a program that allows state workers to exchange vacation time for cash,
saving $5 million this year.

Fiscal experts, including state Comptroller Thomas DiNapoli, outlined a range of other budget-cutting options that Paterson could deploy before lawmakers reconvene in seven weeks. These include cuts to discretionary spending by large state agencies, tapping $1 billion in reserves, laying off employees and pushing expenditures into 2009-10.

"Managing expenses with some of those other options will help in the short term to address the gap, recognizing the legislature will be back in the first week of January and presumably will help," DiNapoli told Newsday.

Anderson replied that "everything is on the table" in terms of spending reductions, but that the governor would only agree to trim the state payroll and put off payments "as a last resort." The 2008-09 budget totals $120.8 billion.

Anderson warned against dipping into the $1-billion reserve fund, which Albany also uses to finance cash flow.
If the fund is exhausted, the state would have to borrow more and its credit rating could be undermined.

"Given the size of the deficit, we need a partner in the legislature to close it," Anderson said.

Such cooperation was absent Tuesday as Paterson and lawmakers bickered publicly over his deficit-reduction plan.
He was forced to cancel the special legislative session.

In Washington yesterday, the governor sought to reassure congressional leaders that Albany's gridlock would end in January when Democrats take charge of the State Senate for the first time in 43 years. He made the trip with business executives, labor leaders,
Assembly Speaker Sheldon Silver (D-Manhattan) and Sen. Malcolm Smith (D-St. Albans), who is expected to become Senate leader.

Paterson repeated his earlier calls for state aid to be included in a second stimulus package now being debated on Capitol Hill.

He has blamed Republicans, particularly Senate Majority Leader Dean Skelos (R-Rockville Centre), for scuttling the special session.
Skelos wasn't formally invited on the Washington trip, though Paterson said Tuesday that all leaders were welcome. The trip was initiated by Silver.

Skelos spokesman Scott Reif said, "While Senator Skelos has been outspoken regarding the need for additional federal funding to assist
New York in overcoming our extraordinary fiscal challenges, this trip was arranged by the governor."

Separately yesterday, Marist College released a poll showing Paterson's approval rating has slipped since the budget crisis intensified. Fifty-one percent of the registered voters surveyed Tuesday said Paterson was doing an "excellent" or "good" job, down from 57 percent last month. The poll of 613 people had a margin of error of 4 percentage points.

~ ~ ~

By Rick Karlin

Purchase of Turkish carpet takes taxpayers for a ride?

Amid crisis, state pays $21,000 for mansion rug

Gov. David Paterson's energetic response to the state budget crisis has been the hallmark of his tenure, but even as he was ordering state agencies to cut their spending and warning of even tougher times ahead, his Office of General Services was buying a $21,000
custom-stitched 10-foot-by-15-foot antique carpet for the governor's mansion.

News of the purchase, from a New York City firm that had contributed at least $8,000 to the Spitzer/Paterson campaign, was seized upon by critics who have questioned some of the governor's budget-cutting plans.

"They should cut the waste first before they come and ask us for concessions," said Darcy Wells, spokeswoman for the Public Employees Federation, a state workers union.

Paterson wants state workers to forego next year's 3 percent raise and accept a "lag pay" plan in which they give up five days salary until retirement; Paterson has warned the eventual deficit could swell to $15 billion over the next 14 months.

The rug, ordered from Stark Carpet on Third Avenue in New York City, was shipped July 31, according to payment records and invoices.
Earlier that week, Paterson ordered a second round of cuts for state agencies, bringing the reduction to 10 percent.

In a statement, OGS spokesman Brad Maione noted the building, also known as the Executive Mansion, is a kind of museum as well as the residence for Paterson and his family when they're not in New York City.

"It serves as a public space that in many ways is a museum — open to thousands of visitors and school children each year," said Maione, who added that more than 6,000 people have visited the mansion during the past few years.

"This historic landmark requires ongoing maintenance and upkeep," said Maione, who added that a total of four rugs were purchased for the building this year at a total cost of $37,741.

That's not to say that people can wander into the 19th-century mansion as if it were the State Museum: When the Times Union on Wednesday asked permission to get a photograph of the carpet, the request was denied — with Paterson spokesman Morgan Hook citing security reasons.

Unless there is a designated event, the Eagle Street mansion is generally off-limits to the public, and guarded by State Police officers.

Blair Horner, legislative director for the New York Public Interest Research Group, said the mansion may have needed a new rug — but the larger question centers on the symbolism of such a purchase.

"Does this send the wrong signal? I think the answer is a resounding yes," Horner said. "When the state is tightening its belt, I think that should apply to expensive rugs, no matter how useful. At the same time that the governor is proposing cuts to education and health care, the symbolic decision is a bad one."

Described as a "Turkish patchwork collection (made of antique rugs in Turkey)" the carpet sold for $16,811.25, according to an invoice obtained from the state Comptrollers Office.

There was an additional $4,350 for labor, supplies and decorative stitch work.

Stark Carpet Corp. contributed $3,000 to the Spitzer/Paterson gubernatorial campaign in 2005 and 2006. The firm also gave $5,000 in 2003, according to state records.

While stressing that she was not familiar with the mansion's rug, Lucille Laufer of the Oriental Rug Importers Association, a New Jersey-based trade group, said that Turkish rugs have been in vogue lately.

"It's a warm look, and people are really migrating toward that now," she said.

~ ~ ~

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

New York Times Logo

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

New York Times Logo

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.

~~~

New York Times Logo

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

New York Times Logo

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.

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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.

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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)

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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."

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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.

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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."

Governor Paterson Delivers $5.2 Billion, Two-Year Deficit Reduction Plan

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

Governor David A. Paterson today announced a comprehensive, two-year $5.2 billion deficit reduction plan that will entirely eliminate the State’s $1.5 billion current-year shortfall, protect against further declines in revenue in a volatile economic climate, and make a substantial down payment on next year's deficit.

Governor Paterson’s proposed reductions are spread across virtually every area of State spending, including education, health care, human services, the State workforce, and others. These actions would produce $2 billion of savings in 2008-09 and $3.2 billion in 2009-10.

Read the entire article: Reduction Plan