Cuomo's Fiscal Challenges

When Andrew Cuomo becomes governor Saturday, he faces a formidable challenge of closing the multibillion dollar budget gap. And already, he’s upped the ante by promising to freeze spending and taxes.

The new governor will not be bailed out by an improving economy, as has been the case in the past. Experts, including Governor David Paterson’s budget director Robert Megna, say Cuomo will have to make some very hard decisions, perhaps even eliminating some government services altogether.

“There are certain things it’s not going to be able to do anymore the way it’s been done in the past,” said Megna. “The numbers just don’t allow it.”

Megna says budget makers have already made deep cuts. The state raised taxes on the rich, and the past two state budgets were cushioned by billions of dollars in federal stimulus funds, which are unlikely to be renewed.

E. J. McMahon, with the think tank The Empire Center, says Cuomo is in for a complicated political battle, comparing it to a “multilevel chess game.” McMahon predicts he will have to make cuts to schools, health care and local governments, which represent the largest parts of the budget.

Cuomo is sure to face a backlash from groups that benefit the most from the budget, in the education and health care industries as well as municipalities. Already, school boards as well as local governments are demanding mandate relief to bring down employee benefit costs for health and pensions. Unions have already warned against making drastic cuts. New York State United Teachers President Dick Ianuzzi says schools have been cut by $1.86 billion a year already, and he says teachers will look to the legislature to restore the cuts.

“I expect good people in the Assembly and the Senate to push back on that,” Ianuzzi said.

Polls show that Cuomo may not have that much support from the public for these cuts. A recent Siena College survey found that while voters want a balanced budget, they balk at spending reductions for health care and education.

In the past, groups including the health care workers union 1199 have spent millions of dollars in negative TV ads against former governors Spitzer and Pataki. Both governors proposed deep cuts, and both later backed down. Cuomo has been preparing for a repeat of those tactics, and has begun his own fundraising campaign, chaired by business interests, to counter the ads if necessary. Ianuzzi calls that class warfare. He says some of Cuomo’s supporters are trying to drive a wedge between what he calls the “haves” and the “have-nots.”

“My goal and the goal of the union movement is to speak truth to that power,” said Ianuzzi.

Cuomo will also need the support of the legislature, if he is to succeed.

The Senate Majority Leader, Dean Skelos, has endorsed Cuomo’s fiscally conservative plans, which he says mirror the GOP’s call for less spending and lower taxes.

“Since Governor–elect Cuomo has run for office, he’s been singing the same song,” Skelos said.

Assembly Speaker Sheldon Silver leads a Democratic conference that has traditionally held more liberal values and has not wanted to make deep spending cuts. The Assembly Democrats have also not been averse to raising taxes on the wealthiest in society. Speaker Silver, while noncommittal about specific proposals, says he hopes to enjoy a good working relationship with Cuomo.

“I have no problem with Andrew Cuomo,” said Silver. “I think we will accomplish a lot together.”

The state’s current governor, David Paterson, had a famously difficult time getting his proposed spending cuts through the legislature. He also feuded bitterly with state worker unions. Paterson says he believes he was pilloried for abandoning his traditional Democratic Party values that he’d held throughout his two decades in the State Senate.

“It looks like the person has acted as a traitor,” said Paterson.

Paterson says at least Cuomo has been very upfront about what he intends to do.