The state needs to trim the fat from the budget expeditiously, Gov. David Paterson told regional and business leaders last week at a closed door meeting.
The state, which needs $6 billion available by December to pay its bills, will be out of money when they come due if Paterson”™s deficit reduction plan is not passed by the state Legislature.
Paterson announced the two-year, $5 billion deficit reduction plan Oct. 15, addressing the current $4 billion deficit and calling for legislators to get on board and plan for long-term fiscal stability. Now he”™s combing the state for support.
Paterson”™s plan calls for major structural reforms, including changing the state”™s Tier V pension and putting a cap on state spending ”“ something Paterson, when Senate minority leader, strongly opposed.
“In retrospect, I was wrong,” Paterson told a group of approximately 50 business owners, nonprofit leaders and heads of regional chambers of commerce at a private meeting Oct. 25 at Hudson Valley Economic Development Corp. offices at Stewart International Airport. Most of those who attended described Paterson as “sincere in his desire to get legislators to work together and put aside party differences.”
Components of the plan include across-the-board spending reductions that total $1.8 billion, $500 million in administrative agency spending reductions announced Oct. 6, as well as an additional $1.3 billion in cuts in local assistance spending.
The local assistance reduction would represent a 10 percent cut to all remaining, undisbursed spending in the current fiscal year, excluding education, STAR property tax relief program and those that represent direct mandated cost shifts to local governments.
Paterson cited statistics showing that even with cuts, school districts, through federal stimulus aid through Title 1 and IDEA programs, would still receive an additional $22 billion, or 2.5 percent increase compared with the 2008-09 year. Even after implementation of the deficit reduction plan, Paterson said school aid spending would represent a 46 percent increase compared with that given in 2003-04. He pointed to U.S. Census data indicating New York spends more total per pupil than any other state and 73 percent above the national average.
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Paterson also suggested creating a Tax Penalty Forgiveness Program. He predicts the limited forgiveness program ”“ taking place from Jan. 15 through March 15, 2010 ”“ would recoup approximately $84 billion of uncollected taxes and would encourage those at odds with the state to resolve their credit dilemmas and avoid costly legal action.
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Another source of income would be the $145 million the state assumes to collect from the winning Aqueduct Video Lottery Terminal bidder. The previous plan called for the payment to be made in 2010-11. The deficit reduction plan would move the date up to cover the current fiscal year.
Tier V pension reform would produce savings of up to $50 billion over the next 30 years for state and local governments and is a key component to Paterson”™s agreements with the CSEA and Public Employees Federation to avoid state layoffs.
When speaking of capping spending in the state, Paterson, in a bow to his former colleague, Sen. Bill Larkin, (R-Cornwall-on-Hudson) told the audience he had been wrong in fighting such a measure while he sat in the Senate chamber, according to attendees of last week”™s meeting.
Paterson fielded some questions from the audience, wrapping up his session in one hour and moving on to his next stop in his statewide appeal for support of his plan. The press was excluded from the meeting. The governor”™s spokeswoman, Marissa Shorenstein, said the governor had already “held a press conference for Westchester and the Hudson Valley in New York City on Sunday, October 18 to give the media an opportunity to discuss the issues. This meeting (at HVEDC) was strictly for Governor Paterson to meet with the community to have an open and frank dialogue with business and economic leaders.”
Among attendees were heads of local chambers of commerce, bankers, business owners and members of nonprofit organizations.
Charles North, Dutchess Regional chamber president, encouraged his members to contact their elected officials and let them know it was time to pull together. “The governor”™s current proposed budget includes many unpopular but needed cuts across the board… and while controversial, are necessary in order to go forward.”
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John D”™Ambrosio, head of Orange County”™s chamber, agreed. “The governor said it will be painful, but the only way to keep New York from going into default.”
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Ward Todd, Ulster County”™s chamber of commerce president, said Paterson had “legitimate concerns regarding the budget and deficit and expressed in no uncertain terms the state Legislature put a freeze or cap on spending; ideally, the deficit reduction plan he”™s proposing. Obviously, we need to do something. It is not a good time to attract business or encourage existing ones to expand in the current climate. We do hope the state reconsiders its decision about the Empire Zone; we need to grow the economy and be competitive with other states.”
Daniel Aronzon, CEO of Vassar Brothers Medical Center in Poughkeepsie, said the health cuts would be tough, especially as the unemployment rate continues to rise and more people are losing COBRA benefits and joining the ranks of the state”™s uninsured population. “The governor told us we are all going to experience some pain,” said Aronzon, “but that it would be evenly distributed. It”™s not just going to be health and education; it will be all agencies. For nonprofits, it”™s going to be an extraordinary challenge in this economy.”
The sting of the MTA mobility tax, hitting anyone earning a living wage in the Hudson Valley, was underscored to Paterson. He conceded the tax is “unfair to some” and pledged to revisit the issue as soon as the crisis had passed. “This is a hopeful sign,” said D”™Ambrosio, “because the business community is not going to give up the fight.”
Walden Bank CEO David Cocks said Paterson spoke of “New York”™s major problems. The spending plan he”™s proposing has to be a concerted effort to tighten our belts; not just in education and health or financial sectors, but every sector.”
Ann Meagher, president of Southern Dutchess”™ chamber of commerce, said she went “hoping for more and left disappointed…Ron Hicks (Rockland County”™s EDC president) really underscored the issues we are facing here in the region and expressed what”™s happening here very succinctly. I hope the governor was listening.”
