Gov. Paterson's budget...

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SweetTooth
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Gov. Paterson's budget...

What do we all think?

No STAR rebate checks.
Higher taxes on soda?
Cutting back aid to schools?

Paterson Unveils Plan for Closing Budget Deficit
By DANNY HAKIM

ALBANY — Gov. David A. Paterson’s administration unveiled an austerity budget on Tuesday that laid out a painful plan to close the largest deficit in the state’s history, including 137 new or increased taxes and fees and what is sure to be a controversial reckoning with the state’s workforce.

Education aid would be particularly hard hit, with an actual cut of $700 million in state education aid next year, not just a reduction of projected spending growth. Increased aid for operating expenses and pre-kindergarten that had been expected as part of the settlement of a long-running lawsuit of school aid would be delayed by four years under the plan.

Medicaid spending would not be as hard hit; it would still rise by about 1 percent under the plan, although the projected increase for hospitals, nursing homes and other health care providers would be cut by more than $1 billion.

The governor’s spending plan also calls for eliminating or merging seven smaller state agencies, cancel property tax rebate checks, curtail general municipal aid to New York City and close 13 prison camps or detention centers.

“Adjusting our state budget to reflect this new fiscal environment will be an extraordinary challenge,” Mr. Paterson, a Democrat, said in a statement, adding that his budget “begins the difficult process of fundamentally re-evaluating both how we manage government and what the state can afford to spend in a time of plummeting revenue.”

The total state budget, including federal matching funds, would be $121.1 billion under the plan. Spending of state funds would increase by only half a percent under the plan, a turnabout from years of spending rates well above inflation.

Mr. Paterson’s plan would close a $15.4 billion deficit for the balance of this fiscal year, which ends on March 31 of next year, and the following fiscal year. He is introducing his budget more than a month early as the state grapples with a twin calamity — the collapse of its main financial engine, Wall Street, and a deepening recession.

Mr. Paterson’s budget is sure to touch off a contentious fight with the State Legislature, which must approve his budget, and with labor unions across the state that have strong ties to legislators. Negotiations will be hampered by the fact that no clear leader has emerged to guide the Senate next year after last month’s elections left Democrats with a narrow, one seat majority in the chamber.

“It’s an illustration of just how difficult the situation is with the economy and the budget deficit,” said James Tedisco, the leader of the Assembly Republican caucus.

“The good is that he is holding the line on spending,” Mr. Tedisco added. “The bad is that there are $4 billion in new taxes and fees and that will hit the middle class right in the solar plexus.”

While there were no broad-based income tax increases, there were all manner of new taxes, fees, fines or other assessments, expected to raise $4 billion next year.

The new taxes are likely to touch almost every New Yorker in some way and potentially every day, if you like Coke or Pepsi.

The most notable new tax was an 18 percent levy on sugary, non-diet soft drinks. But there were many others. A tax on car rentals would rise to 6 percent from 5 percent. Taxes on beer and wine would more than double. Licensing fees would increase for private investigators, barbers, bail enforcement agents, home inspectors, notary publics and cosmetologists.

Taxes on gasoline, cable TV, satellite television and radio service, cigars, flavored malt beverages would also increase. And the cost of owning and operating a car would also increase significantly, with 16 fee increases for the Division of Motor Vehicles.

While there was no increase in income taxes on the wealthy, as has been pushed by Assembly Democrats, the state expects to raise $120 million next year by limiting the amount of money that millionaires can deduct from their state taxes.

Mr. Paterson also proposed that the state should begin to take the kind of steps that Detroit automakers and other corporations began to take with their unionized workers years ago.

His proposals include 521 layoffs — a modest figure in a workforce of almost 200,000. But he would also eliminate a scheduled 3 percent salary increase for state workers, increase retiree contributions for health care coverage and have state workers defer a week’s pay until they retire. He would also like to create a pension classification for new employees that does not have many of the attractive features that current state workers enjoy. Among other things, it would restore the minimum retirement age to 62 instead of 55.

Unions were bracing for a battle.

On Tuesday morning, before the governor had even spoken, the Web site of the Civil Service Employees Association called Mr. Paterson’s budget “possibly the worst in recent history” that “will hit working New Yorkers hardest.”

In a joint statement, George Gresham, the president of 1199 S.E.I.U. United Healthcare Workers East, and Ken Raske, president of the Greater New York Hospital Association, said “these are staggering cuts that would shatter New York’s health care infrastructure, severely threaten the ability of patients to get access to care, and cause serious harm to communities across the entire state.”

Mr. Paterson, for his part, said his plan “seeks shared sacrifice” and “includes reductions across virtually every area of government.”

SOURCE

Message edited 12/16/2008 12:15:57 PM.

Posted 12/16/08 12:15 PM