In response to the state’s bleak fiscal outlook, Gov. David Paterson has proposed a budget deficit plan that entails cutting school funding, college aid and hospital and nursing home funding.
State legislators, however, may have other ideas.
Many are opposed to spending cuts they say will be passed along to taxpayers in the form of higher property taxes.
“I agree that cuts have to be made,” said Assemblyman George Amedore, R-Rotterdam. “We spend too much, and we spend what we don’t have. A lot of money gets spent carelessly. But merely telling schools and local governments that they’re not getting their money — that’s picking the low-hanging fruit.”
He said the state should eliminate costly unfunded mandates before cutting school and municipal aid.
Paterson said his two-year, $5 billion plan will eliminate the state’s budget gap without raising taxes or laying off employees, and institute structural reform, such as a state spending cap. He will likely call a special session of the legislature by the end of the month to work on plugging the $3 billion deficit for this fiscal year. Another $2 billion would be eliminated the following year.
The governor’s proposal includes a mid-year, 4.5 percent cut in school aid, with wealthier districts absorbing deeper cuts, and a $120 cut to every grant to college students under the Tuition Assistance Program, as well as $200 million in revenue from awarding a video slot machine franchise at the Aqueduct racetrack in Queens. A tax amnesty program would offer scofflaws a chance to pay the money they owe without penalties.
Overall, the governor’s plan would cut $686 million from schools, $287 million from Medicaid, $184 million from other health and mental hygiene programs, $28 million from social service programs, $67 million in aid to municipalities, $125 million from transportation programs and $62 million from higher education. Spending in the current budget would be trimmed by $1.3 billion.
Amedore has his own deficit reduction plan.
Among other things, it calls on the state to eliminate $1.5 billion in extra spending added to this year’s budget by the Legislature, eliminate $900,000 in funding for body mass index reporting on school physical forms, and eliminate $4 million in funding for the Medicaid personal care program.
Lifting the state requirement that localities provide optional Medicaid services would save $1 billion, according to Amedore’s office, while streamlining state government by consolidating administrative agencies with overlapping functions would save $2.4 million.
Amedore also supports the pension reform and spending cap proposed by Paterson, and also proposes a property tax cap and tort reform.
NO EASY FIX
Amedore warned that there’s no easy fix to the state’s budget woes. “Everyone is always trying to find a big, giant gorilla that it can cut in half,” he said. “We need to plug the holes that are draining the system.”
Assemblyman Jim Tedisco, R-Schenectady, also has a number of ideas for how the state can reduce its deficit.
“I’d like to see the state of New York tighten up its services before it cuts Medicaid, before it cuts education,” Tedisco said.
He suggested the state refrain from purchasing new vehicles for the next five years — “instead of tuning up vehicles, they have a tendency to spend” — consolidate agencies, such as the New York State Banking Department and the New York State Insurance Department, and allow state workers to volunteer to work a four-day week.
He also proposed requiring prisoners earning over $40,000 a year to pay for part of their stay in prison. “I don’t see any reason why they shouldn’t pay a portion,” he said. “We’re not talking about people who are below the poverty line.”
The state, Tedisco said, “needs to start thinking outside the box.”
On his Web site, State Sen. Roy McDonald, R-Saratoga Springs, calls on the Legislature to return to Albany to deal with the budget. “We need to examine all sources of available revenue and new ways to maximize old revenue sources without tax and fee increases,” McDonald says on his site.
He says that cost-shifting from county governments and school districts is not the answer. Instead, the state should look to the long-stalled Aqueduct racetrack for new revenue and investigate Medicaid fraud to determine where money is being wasted.
He also said the state should study what happened to the federal stimulus money — where it has gone, if it has been properly spent and how much remains.
Outside observers said the state should be proactive and cut spending now, or else the problem will only get worse.
“It’s really important for them to get started,” said Elizabeth Lynam, deputy research director for the Citizens Budget Commission, a non-profit group that monitors state finances. “Right now there’s some time to put a plan in place. They have a chance to restructure, an opportunity to influence the outcome and mitigate potential harm.” Otherwise, the cuts to services will be “very abrupt and harmful.”
Lynam called Paterson’s proposal “a start. It’s definitely a discussion opener. Hopefully the legislature will step forward and exert some leadership.”
She said the Legislature should focus on finding “recurring savings,” rather than “one-shots and gimmicks. Gimmickry isn’t going to help.”
Bob Ward, the director of fiscal studies at the Nelson A. Rockefeller Institute of Government, said that the immediate budget problem is “very serious, but it pales in comparison to what we face a year or two down the road. We are likely in the early stages of a long, hard slog that will hurt everyone involved — people who depend on public services, taxpayers and public employees.”
Ward said that ideally budget-balancing steps would be made in ways that reduce costs or bring in new revenue, rather than reducing services or increasing taxes. He said that the State University of New York, for instance, is facing another round of budget cuts that will hurt its ability to educate future workers and contribute to the state’s economic growth.
“But such harm might be avoided if some of the proposals from the Commission on Higher Education were enacted — allowing campuses to lease or transfer property for economic development projects more easily, charge tuition based on program value and ability to pay, etc.,” he wrote, in an e-mail.
Ward also suggested extending the zero-raise policy applied to some state employees earlier this year to all state and local employees.
He noted that inflation is around zero, and Social Security recipients will not be getting a cost of living increase in the coming year.
“Eliminating 3 percent raises for all state and local employees for one year could save $1.5 billion or more,” he said.
“The governor is absolutely right that the more tough choices are punted to the future, the worse the ultimate damage will be,” Ward said. “We’ll see more poorly planned cuts in spending. We’ll see more cuts in aid to localities and schools, meaning higher property taxes. The earlier you address these issues, the more you can avoid the most harmful aspects.
“They have to do something by the end of the fiscal year, if only to balance the books,” Ward said. “If history is any guide, next year’s budget will be unsustainable.”
Unlike the federal government, states are not allowed to run deficits.