As Gov. David Paterson plans a rare televised address this afternoon to again promise to cut state spending and address sinking tax revenues, watchdog groups and even a lawmaker say the governor and legislative leaders must finally act decisively to shore up the state’s finances.
Paterson’s latest warning and promise to act — including possibly calling a special legislative session this summer — comes after a token trim in the increase to state agencies’ spending in the current state budget adopted in April. Thirteen states have already reduced their enacted 2008 budgets, according to a June survey by the National Association of State Budget Officers and the National Governors Association.
Meanwhile, Senate Majority Leader Dean Skelos said today that the state Senate will convene a special session Aug. 8. Skelos said the special session will be focus primarily on enacting the governor's property tax cap proposal and passing other legislation to reduce costs for schools and ensure adequate resources for students.
After saying in the spring that economic forecasts for state revenues weren’t as bad as in the recessionary 1970s, Paterson is expected to make that comparison today based on new data. But for a low-water mark, state officials said in 2001 that revenues after the Sept. 11 terrorist attacks dropped more than even during the 1929 stock market crash and Great Depression.
Despite Paterson’s repeated calls for urgent action since he took office in March, New York has made only small cuts after annual increases in spending that have historically been nearly double the rate of inflation. The current budget includes further increases sought by unions representing teachers and public workers.
Paterson in the spring also discounted calling the Legislature back to a special session unless closed-door deals on legislation were reached first. He hasn’t wanted to cross the Legislature this election year, saying the gridlock of former Gov. Eliot Spitzer’s administration showed force doesn’t work.
The result has been that even one of his top priorities — a cap on local property tax growth — wasn’t even introduced in the Legislature. And even with the steady diet of bad economic news, the Assembly’s Democratic majority has no plans to return to a special session.
“They were able to postpone some action and make some small cuts, but they aren’t going to be able to avoid it any more,” said Elizabeth Lynam of the independent Citizens Budget Commission. “And they can’t afford not going to the public employee unions ... the state can’t afford it anymore. The state taxpayer is picking up the tab for these generous pay and pension packages.”
In January, while Albany was still trying to figure out if hard times were ahead, New York City Mayor Michael Bloomberg ordered agency heads to cut expenses by 2.5 percent this fiscal year and 5 percent the following year.
The same month, California Gov. Arnold Schwarzenegger called for a 10-percent cut in state agency spending across the board, to help contend with a $16 billion shortfall. His proposed $141 billion budget would make some of the most difficult choices in politics: 10 percent less money for schools, releasing 22,000 inmates, shutting down 48 state parks and cutting or freezing funding for children of welfare recipients, the elderly, blind and disabled people.
By contrast, Paterson in April asked agency heads who work for him to trim their increased aid by 3.35 percent. He’s expected to seek another cut in spending Tuesday.
“We were a free wheeling, runaway train for the last five or six years,” said Senate Minority Leader Malcolm Smith of Queens, the successor to Paterson as leader of the Senate Democrats. Earlier this year, Smith had called for Albany to make harder fiscal choices but got no support from Paterson or legislative majority leaders. Smith had called for $2 billion in cuts through a hiring freeze, elimination of “nonessential” capital spending, taking cash from public authorities left over from the past fiscal year, and requiring technological efficiencies.
“Every one jumped up and down on us for that, but we thought it was pretty firm,” Smith said Monday.
“I would probably call for less spending,” Smith said. “But I think the governor is doing the right thing. He’s saying the candy store is no longer open. He’s telling the Legislature to be tough with special interests who have been running Albany. It’s no longer about special interests.”
Nationwide, states are taking more drastic and politically difficult steps. Many states are considering the elimination of some health care coverage for poor children, disabled and the elderly and school aid.
Paterson in March took an extraordinary step, calling for an $800 million cut in the proposed state budget increases. Then the legislature did what it historically does: It restored most of the cuts and, with Paterson’s agreement, adopted a $122 billion plan that increased spending more than 4.5 percent. It included nearly $200 million pork-barrel spending split between Paterson and the Senate and Assembly this legislative election year.
The budget closed a $5 billion deficit. Paterson projects $20 billion more over the next three years.