Paterson Says Proposed Cuts Necessary to Address $7.4B Deficit
Tuesday, January 19, 2010
New York, NY –
Gov. David Paterson is calling his spending plan for New York's next fiscal year a "budget of necessity." The $134 billion budget addresses a $7.4 billion deficit, with cuts of $1 billion each from education and hospitals, and $1 billion in new fees and taxes on cigarettes and sugary drinks. He says he has no choice.
"Our revenues have crumbled and our budget has crashed and we can no longer afford this spending addiction that we have had for so long," the governor says.
New York City would lose hundreds of millions of dollars, including $469 million in school aid and nearly $302 million in local government assistance.
The legislature is expected to strongly oppose reductions in school and health-care spending, arguing that they would hurt community hospital care and result in local property tax increases.
Listen to Paterson's full speech above.
Good government and fiscal watchdog groups praised the governor's plan for keeping the rate of spending increases below the two percent rate of inflation. But Paterson's budget address in Albany got a lukewarm response from lawmakers, 45 of whom didn't show.Education advocates say Paterson's plan to cut more than $1 billion in school aid would be a huge step backward. The state settled a lawsuit over school aid in 2007 by pledging an extra $5.5 billion for education over four years. Geri Palast is executive director of the Campaign for Fiscal Equity (CFE), which won the lawsuit. She says it'll now take 10 years for the state to live up to its commitment. "The purpose of CFE was to add more dollars, but it was really to add more dollars for those kids who are most in need," Palast says. "And by cutting foundation aid those are the kids you are cutting."
Billy Easton, of the Alliance for Quality Education, calls the cuts in school aid a colossal reversal from the state's commitment in 2007 to give the city more money because it was historically shortchanged.
"The governor is proposing to pry open our schoolhouse doors and extract $1.4 billion from our classrooms," Easton says. "Basically every dollar that Albany can get its hands on, the governor wants to take back from our school children."
Critics also say cuts in school aid will lead to higher local property taxes.
But the Paterson administration argues that cutting school aid by 5 percent statewide is necessary to close the deficit and that schools would bear a smaller share of cuts than they did during previous downturns in the 1990s and after 2001.
Representatives of the health-care industry are generally applauding the governor's proposal to add or increase taxes on sugary beverages and tobacco. But they’re also criticizing the governor’s proposal to cut the Medicaid system by a billion dollars.
The Greater New York Hospital Association, the health-care workers union 1199, and others say many institutions are already on the brink of insolvency, after a series of cuts in recent years. State Health Commissioner Dr. Richard Daines says with the state in a continuing fiscal crisis, cuts have to come from somewhere, and the $46 billion New York spends on Medicaid is the single biggest budget line.