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Paterson Proposes Austere Budget to Close Deficit
Gov. David A. Paterson discussed an austere budget plan on Tuesday in Albany
ALBANY — The Paterson administration, working to close the largest deficit in state history, unveiled an austerity budget on Tuesday that would include 137 new or increased taxes and fees, loosened restrictions on gambling and $9 billion worth of spending cuts.
Education would be particularly hard-hit, with an actual cut of $700 million in state aid in the next fiscal year, not just a reduction in projected spending growth. Increased aid for operating expenses and pre-kindergarten, which had been expected as part of a settlement in a long-running lawsuit, would be delayed by four years under the plan. Tuition at the State University of New York and the City University of New York would also be increased.
Medicaid spending would rise by about 1 percent under the plan, although the projected spending for hospitals, nursing homes and other health care providers would be cut by more than $1 billion.
Gov. David A. Paterson’s spending plan also calls for closing or merging seven smaller state agencies, eliminating property-tax rebate checks, curtailing general municipal aid to New York City and closing 13 prison camps or detention centers.
The governor, addressing the Legislature, acknowledged that getting lawmakers to pass his budget would not be easy.
“The other day somebody threw a pair of shoes at President Bush,” he said. “At the end of this budget presentation, if that’s the most severe punishment I get, I’ll sign for it now.”
New York City would be hit hard by the proposal, which would eliminate more than $600 million in general purpose aid over the next two years on top of reductions in education aid.
Mayor Michael R. Bloomberg said the budget cuts would deprive the city of about $1 billion, potentially forcing him to order layoffs beyond the 500 he has already announced. “We can’t print money,” he said. “At some point, there is only labor left.”
Mr. Bloomberg, who took pains to praise the governor for “acting responsibly,” nevertheless criticized him for cuts that he said would affect New York City disproportionately.
Some Democrats said the budget plan would weigh too heavily on poor and middle-class New Yorkers by ending property tax rebates and increasing licensing fees for a wide variety of workers with modest incomes, including barbers, bail enforcement agents, home inspectors, notaries public, manicurists and cosmetologists. Republicans said there were too many tax increases.
Loosened restrictions on gambling would allow more retailers to sell Quick Draw tickets, expanded hours at gambling facilities across the state and the installation of hundreds of video slot machines at the Belmont Park racetrack on Long Island, a controversial plan opposed by Assembly Democrats.
The total state budget, including federal matching funds, would be $121.1 billion. Spending of state funds would increase by only half a percent under the plan, a turnabout from years of spending rates well above the rate of inflation.
Mr. Paterson’s plan would close a $15.4 billion deficit for the balance of the fiscal year that ends on March 31, and the next fiscal year. He is introducing his budget more than a month early as the state grapples with twin calamities — the collapse of Wall Street, its main financial engine, and a deepening recession.
Mr. Paterson’s budget is sure to touch off a contentious fight with the Legislature, which must approve it, and with labor unions across the state that have strong ties to lawmakers. Negotiations will be hampered because no clear leader has emerged to guide the Senate next year after elections last month left Democrats with a narrow majority in the chamber.
“We simply cannot raise taxes when our economy is struggling,” said Dean G. Skelos, the current Senate majority leader and a Long Island Republican. “The governor’s budget does not appear to include any plans to create new jobs and strengthen our economy.”
The Assembly speaker, Sheldon Silver, a Democrat, was more supportive, pointing out that education and health care constituted more than half of the budget.
“There is no way we can address a deficit of the magnitude that we are facing without finding savings in those two major areas,” he said.
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 tax proposals are likely to touch almost every New Yorker in some way. The most notable new tax is an 18 percent levy on sugary soft drinks. But many other existing taxes would increase. The tax on car rentals would rise to 6 percent from 5 percent. Taxes on beer and wine would more than double. Taxes on gasoline, cable and satellite TV service, cigars and flavored malt beverages would also go up. And the cost of owning and operating a car would rise significantly, with 16 fee increases. The governor also proposed allowing wine sales in grocery stores and drug stores, which is expected to raise $105 million in the next fiscal year, mostly through licensing fees.
While the plan did not include an income tax increase for the wealthy, an idea pushed by Assembly Democrats, the state expects to raise $120 million next year by limiting the amount that millionaires can deduct from their state taxes.
Unions braced for a battle.
“Kids did not create this crisis, and they should not bear the burden of it,” said Randi Weingarten, president of the United Federation of Teachers, the New York City teachers’ union.
In a joint statement, George Gresham, the president of 1199 S.E.I.U. United Healthcare Workers East, and Kenneth E. Raske, president of the Greater New York Hospital Association, said, “Today is a dark day for health care in New York.” They added, “These are staggering cuts that would shatter New York’s health care infrastructure.”
Mr. Paterson, for his part, said his plan sought shared sacrifice and included reductions across virtually every area of government.
“Adjusting our state budget to reflect this new fiscal environment will be an extraordinary challenge,” Mr. Paterson said. His budget, he added, would begin “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.”