Published: August 20, 2008 05:24 pm            

WEDNESDAY: NY Gov. Paterson, lawmakers slash $1 billion from budget (5:24 p.m.)

ALBANY, N.Y. (AP) — While Gov. David Paterson and top lawmakers said Wednesday their cuts of more than $1 billion in state spending mark a turning point at the Capitol, Paterson said they aren’t celebrating since a $5.4 billion budget deficit still looms next year.

“These are very serious times,” Paterson said. He noted major losses in tax revenue from deeper declines than previously projected in Wall Street bonuses and capital gains. “It’s going to be a bumpy ride,” he said.

In an effort to smooth the bumps, Paterson called the Legislature back into special session Tuesday, reaching an agreement to cut $427 million from the current state budget and some $600 million the next year. That drops the current state budget to $120.9 billion, up 4.2 percent from the previous year, or equal to the inflation rate, he said.

According to the governor’s office, Paterson already administratively cut state agency spending by 3.35 percent, or $500 million, and on July 30 imposed “a hard hiring freeze.”

The governor also has directed agencies to cut another 7 percent, or $630 million, from their budgets. Those cuts are still pending, and the State Police and Department of Correctional Services have yet to reach agreement with budget officials on the first round of cuts.

Asked what he’ll do if tax revenues slip further, Paterson said some margins were built into their calculations, but if they have to do more they have proven they can. “It will not be a problem to get this legislature to come back and deal with it. We’ve crossed that threshold,” he said.

Senate Minority Leader Malcolm Smith, a fellow Democrat, said it was unprecedented for a governor to bring lawmakers back in an election year to cut spending. “This was not easy,” he said.

The Senate voted 51-6 twice Wednesday, approving package deals that were struck late Tuesday night and approved by the Assembly voting 128-10 and 131-7.

“I think the governor’s approach to share the pain, if you will, to cut a little bit across the board, is the right approach,” said Sen. George Maziarz, a western New York Republican, before voting in favor of the cuts Wednesday. All the lawmakers were aware of the New York’s impending bad economic news, he said.

The package includes 6 percent cuts from various programs, but Senate Republican Majority Leader Dean Skelos said they declined to cut education aid, shift costs to local taxpayers or make cuts affecting the quality of health care. He said Paterson established “a tone of civility” in negotiations.

According to the governor’s office, the package contains:

—More than $500 million in Medicaid and health care savings over two years, with reductions in some premiums to insurers by 1 percent or 1.45 percent.

—Sweeping $40 million of unspent money from the state’s wireless network project. That project is not dead, Paterson said, but he quoted Assembly Speaker Sheldon Silver saying it is “in critical condition.”

—$50 million reduction of pork-barrel spending — money that legislators can put toward projects in their home districts this legislative election year.

—Reducing state support to the City University of New York by $26 million, with CUNY transferring another $25 million in reserves to the state, bringing it in line with the administrative cuts ordered for the state university system.

—Cutting 6 percent from various unspent local assistance funding, with several exclusions, to save $257 million over two years.

—Cutting in half funding for new and enhanced programs or initiatives proposed by the governor and by 6 percent those proposed by the Legislature, with some exclusions, to save $55 million over two years.

Assembly Republican Minority Leader James Tedisco praised Paterson’s leadership, saying state spending has risen $52 billion or 71 percent over the past 10 years. He said the next step is a property tax cap.

Paterson said he got 70 percent of the $600 million in cuts he asked for in calling lawmakers to the special session. He said the Assembly and Senate have put forward their respective proposals for property tax relief, and he’ll push aggressively after Labor Day and the political conventions for talks about it.

        

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