ALBANY - Lt. Gov. Richard Ravitch proposed Wednesday a plan for getting the state out of its

financial mess, including a massive new borrowing of $6 billion over the next three years. If

that happens, New York would have $16 billion on the books to cover deficits run up over the

years.

The long-awaited road map by Ravitch, who warned of a fiscal "cataclysm" if steps are not

taken now to drive down the state's worsening deficit, also includes an advisory board with

only review powers to declare a budget in balance or not, and a structured ability for

governors to impound money in emergencies.

In turn, the State Legislature would agree to put the state budget into balance over the

next five years — though, legally, lawmakers today cannot bind future legislative

action.

"We have to have a way of getting out of this mess," Ravitch said.

Some lawmakers said the borrowing component —

$2 billion to help close the upcoming $9.1 billion deficit this year — would make it

affordable to reduce some of Gov. David A. Paterson's plans to cut education, health care and

other popular programs in an election year.

"I want to make sure people understand that this is not about avoiding cuts. It's about

mitigating cuts," said Assembly Speaker Sheldon Silver, D-Manhattan.

But fiscal critics derided the plan as providing political cover for the Legislature to

drive the state further into debt and force higher taxes.

"I don't see it instilling that much more discipline," said E.J. McMahon of the Empire

Center for New York State Policy, a conservative fiscal watchdog group.

"The missing elements are either a spending cap or a revenue cap," added Assemblyman Robin

L. Schimminger, D-Kenmore.

Paterson this morning praised the Ravitch plan.

"As a holistic document, I think its spectacular, Paterson said on a morning interview with a New York radio station.

Paterson was not asked in the interview, nor did he volunteer, any thoughts on the large amount of borrowing envisioned in the Ravitch plan.

The governor said the proposal would give him and future governors more power to be able to impound state money during deficit periods. He called those "extraordinary powers a governor has never had before.

Paterson said he embraces the Ravitch plan and is "ready to go right now with passage of it. He noted Ravitch briefed the Democratic conferences of the Assembly and Senate on Wednesday evening.

"It wasnt laughed out of the arena, but they have some concerns and we understand this, he said.

Painful cuts will still be necessary, Ravitch said, though he did not offer any specific

ideas. He called for special conditions to be placed on any borrowing — known as

covenants — that could place bonds into default if the budget goes out of balance. But

the state could refinance any such borrowing to erase those covenants.

"If you want to manipulate any system, you can," he acknowledged.

But he insisted a fiscal reckoning is upon the state. The state faces a total deficit

— defined as the shortfall if all the spending already promised stays in effect and

revenues continue as expected — of $60 billion in the next five years.

The lieutenant governor said state budget spending has grown annually at an average of 7.5

percent the past eight years, while revenues to pay for that growth have increased by only 4.5

percent. In the same period, New York has experienced the greatest loss of residents of any

state.

The Ravitch plan calls for producing a budget according to what's known as Generally

Accepted Accounting Principles, or GAAP, a more fiscally pure way of accounting for revenues

and expenses used by many states and corporations but shunned by Albany for decades.

A key component calls for a review board to assess the state's finances on a quarterly

basis. If finances go into the red, and a governor and lawmakers can't resolve the problem,

governors could impound funds. Practically speaking, though, governors have long controlled

spending by merely delaying payments, a course taken in December by Paterson and many times by

former Gov. George E. Pataki.

While Silver on Tuesday characterized the panel as a state control board to oversee

finances, the Ravitch panel would be advisory. Unlike local control boards, it would have no

voice in matters like collective-bargaining agreements with state unions. Ravitch said a

control board for the state would not be constitutional.

"It has no power to force any action," Ravitch said of his advisory panel, which would be

composed of two people chosen by the governor, one by the comptroller and one apiece by the

leaders of the Legislature. All those offices are now occupied by Democrats.

Borrowing to cover operating expenses during deficits has become an addiction over the

years, fiscal critics say.

State Comptroller Thomas P. DiNapoli told The Buffalo News earlier this week that taxpayers

now pay $1.1 billion a year servicing $10 billion worth of past debt issued only to cover

deficits. That doesn't include another $50 billion in state-backed debt for things like

capital construction programs.

The new borrowing plan calls for up to $2 billion this year to deal with the state's

projected $9.1 billion deficit in 2010 and another $4 billion over the following two years.

But critics say the Legislature is likely to not only embrace the Ravitch borrowing plan

but also add onto it. McMahon, from the fiscal watchdog group, said there is already a

built-in financial power that can be used to control spending: the governor's line-item veto.

Even if the Ravitch borrowing idea is not adopted, New York by 2014 will be spending $7.7

billion a year just to pay for debt service — up 32 percent from 2009.

Besides more borrowing, Ravitch would weaken certain powers of the governor for crafting a

budget that were won over legislative objection in past court cases.

Ravitch walked away from Paterson's call that a spending cap be part of any deal to permit

more borrowing. He also called for changing the start of the fiscal year from April 1 to July

1 to better take into account the flow of tax revenues, an idea kicked around Albany for

decades.

Senate Democratic Conference Leader John L. Sampson of Brooklyn said the Ravitch plan is a

"replica of what he did in the '70s," a reference to Ravitch's role in a fiscal rescue of New

York City, which included a massive borrowing.

Ravitch said that without a plan to address the next five years, Albany will have to turn

to dramatic cuts and tax hikes just to afford essential government services.