NY Legislature to vote on $2.8B deficit plan, Paterson says he’ll address rest of gap alone

NY Legislature to vote on deficit cutting plan

ALBANY, N.Y. — New York’s Legislature is scheduled to pass its $2.8 billion deficit reduction plan Wednesday, even as Gov. David Paterson said far more painful cuts will be necessary.

Paterson said he’ll take the extreme steps of delaying aid to schools and hospitals as needed to make sure the state has enough cash to pay its bills and avoid a costly downgrade of its credit rating. The aid could be delayed until the coming fiscal year beginning April 1, effectively resulting in at least a temporary school aid cut that legislators refused to approve.

A vote in the Senate was postponed from Tuesday night because of delays in printing the bills, although the Democrat-led Assembly planned to remain in Albany to take its vote.

That means final legislative approval could be made in the Senate’s session beginning Wednesday morning.

If passed, the deficit reduction plan shows the Democrat-led Legislature and the Democratic governor again failed to agree on how to address New York’s fiscal crisis.

Paterson refuses to even call the plan an agreement because he said it falls far short of addressing the full deficit, although he will sign the measures into law.

The Democratic governor says the budget gap is more than $3.2 billion, while state Comptroller Thomas DiNapoli estimates it at $4 billion. The deficit is a result of the gap between dwindling revenues in the recession.

“This is short-term focus, rather than thinking about a solution that would take some leadership,” said Elizabeth Lynam of the independent Citizens Budget Commission, a government watchdog group. “It buys them some time, but it won’t help them in two months when they face a $6 billion to $9 billion budget gap.”

Paterson says that court decisions support his plan to delay payments in a fiscal emergency.

Legislative leaders say the plan they’ll vote on avoids cuts that would force public worker layoffs, hurting school children and patient care or slowing an economic recovery.

Major elements of the plan include:

—$1.6 billion in cuts and temporary cash transfers from agencies to the general fund, already ordered by Paterson on Sunday. The cuts include 11 percent cuts to most state agencies, which are supposed to avoid layoffs.

—$391 million in federal stimulus funds for education that was supposed to be used in the 2010-11 fiscal year.

—$250 million projected to be collected under a new tax amnesty program.

—More than $600 million in cuts in several programs including health care that don’t reduce jobs.

The plan includes several tentative revenue raisers, including $200 million anticipated in upfront payments for the vendor yet to be chosen to build and operate video slot machines at Aqueduct race track in a long overdue project and $200 million from the Battery Park City Authority, which requires approval from Mayor Michael Bloomberg.

Paterson criticized the Legislature for rejecting the toughest measures of his $3.2 billion proposal made Oct. 15, but will accept them in bills expected to be passed Wednesday. He complained lawmakers were “afraid” of the powerful public employee unions protecting school aid and health care.

“I will accept what the Legislature has given me and move forward and make sure I keep this state out of insolvency,” Paterson told reporters.

Senate Finance Committee Chairman Carl Kruger shot back at the governor, saying he exaggerated the fiscal crisis and the Legislature’s $2.8 billion plan is more than enough to keep the state fiscally sound.

“The most graphic illustration of the whole fiasco is that we’re doing this tonight,” Kruger told reporters late Tuesday.