NY Senate plans final OK for deficit-cutting plan, creates new pension plan for new hires

NY Senate plans final OK for deficit-cutting plan

ALBANY, N.Y. — New York’s Senate was poised Wednesday to approve a plan to reduce the budget deficit by about $2.8 billion, following the Assembly’s approval of the measure hours earlier in an overnight session.

The plan falls short of closing a deficit that Gov. David Paterson estimates at more than $3.2 billion and that Comptroller Thomas DiNapoli says is $4 billion. Paterson said the Legislature’s action will require him to reduce and delay payments for the last four months of the fiscal year, including school aid and funding to hospitals.

The Assembly approved a new, less generous pension plan for people yet to be hired into government jobs. The Assembly said the so-called Tier V plan will save the state $48 billion it would cost over three decades to continue the current level of pension benefits for future employees.

The Senate is expected to give the pension change final legislative approval Wednesday, and Paterson has supported the measure.

“The creation of a new public employee classification is vital to the state’s fiscal health,” said Assembly Speaker Sheldon Silver, a Manhattan Democrat.

The deficit reduction plan was promoted by lawmakers in recent days as totaling $2.85 billion, but once details emerged, it was clear the figure was less than that. Lawmakers now say the plan totals “more than $2.7 billion.”

“Although these cuts do not cover the full scope of the deficit — which may be has high as $3.9 billion — we remain committed to making the same sacrifices that everyday New Yorkers have been making already, without allowing the cuts to fall disproportionately on one segment of the population,” Silver said. “These were difficult choices to make but critical to the fiscal stability of our state.”

Paterson has criticized the Legislature for refusing to accept his cuts to school aid and health care, among Albany’s most protected special interests. He had proposed a 4.5 percent cut in school aid for the remaining half-year of funding, even as he cut state agencies by 11 percent. He argued that 70 percent of school aid goes to employee salaries and benefits. Teachers and other workers typically got raises of at least 3 percent this year.

“They dodged the bullet of midyear cuts,” said Republican Sen. John DeFrancisco of Onondaga County on the Senate floor Wednesday. But he added a warning: “Next year is going to be different.”

He urged schools to cut back spending now in preparation for harder times in the 2010-11 budget, which is due at the end of the fiscal year on April 1.

Legislative leaders say the plan they’ll vote on avoids cuts that would force public worker layoffs, hurt schoolchildren and patient care, or slow 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 Sunday by Paterson. 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 to several programs, including health care, that don’t eliminate jobs.

The plan includes several tentative revenue raisers, including $200 million anticipated in up-front payments for the vendor yet to be chosen to build and operate video slot machines at the Aqueduct race track and $200 million from the Battery Park City Authority, something that requires approval from New York City Mayor Michael Bloomberg.

Paterson criticized the Legislature for rejecting the toughest measures in the $3.2 billion proposal he made Oct. 15, but said he would accept them in bills expected to be passed Wednesday. He complained that 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.