GOV. DAVID A. PATERSON: “What I’ve noticed ... is just how much this state wants to ignore our current fiscal problems.”
Governor says state is ignoring grim economic realities
To Gov. David A. Paterson, the state’s multibillion-dollar deficits and a faltering economy present monumental problems. But something worries him even more.
Nobody is listening to his warnings.
“What I’ve noticed in those few moments that I get to reflect,” he said during a meeting Wednesday with editors and reporters of The Buffalo News, “is just how much this state wants to ignore our current fiscal problems.”
Paterson told the story of a legislator who had requested $1 million from the administration of Eliot L. Spitzer, Paterson’s predecessor, for a cultural center in his district and then upped the request to $7 million when Paterson took office a couple of months later.
That request was rejected, Paterson said, underscoring his point by noting that the new budget still grew above the rate of inflation.
New attitudes and approaches will be needed, the governor said, in view of a $5 billion deficit projected for next year and $21.5 billion over the next three years.
Because 25 percent of state revenues come from Wall Street, New York is bearing the brunt of the nation’s economic problems, he said.
“In other words, we haven’t really hit our recession,” he said.
During a daylong swing through Buffalo, the governor also:
• Addressed the annual meeting of the National Lieutenant Governors Association in the Hyatt Regency Buffalo, describing his own experience of unexpectedly succeeding Spitzer as governor in March.
• Said he had received assurances from Sen. Barack Obama that, if the Democrat is elected president, he will study adjusting the state’s Medicaid reimbursement formula to substantially increase federal revenues to the state.
• Defended his reorganization of the Empire State Development Corp., explaining that the old setup resulted in duplication and infighting, while the new organization — headed by Robert G. Wilmers, M&T Bank chairman — still will pay ample attention to upstate problems.
• Said he supports independent redistricting for the State Legislature and House of Representatives, hinting that connecting the idea to legislative and judicial pay raises presents possibilities.
• Signed new brownfields legislation during a ceremony in Niagara Square.
• Said he will let the courts resolve the legal battle over the Seneca Buffalo Creek Casino.
To ensure public safety, he said, the state will continue to maintain a law enforcement presence at the casino as long as it remains open.
Paterson, however, focused on educating New Yorkers about the necessity and inevitability of reducing spending.
The state’s top 20 corporations and banks paid $72 million in taxes for the last quarter of last year, he said, compared with $533 million for the same period the year before.
But the governor said his warnings continue to bring such responses as, “It’s not as bad as you say it is.”
“The fact is, I’m right, and it will probably be worse than we think it is,” he added. “I just don’t understand why we continually forestall the inevitable and pretend . . . that we’re not in the crisis that we’re actually in.”
Paterson said previous generations knew how to make sacrifices in lean times, while still producing canals, railroads and the New York City transit system. He called them “tougher” than today’s leaders, who he said cannot face the same decisions.
“They knew when to make sacrifices,” he said. “We, apparently, do not.”
Still, Paterson said he believes the overall business climate will improve if the state finds a way to reduce the tax burden.
He reiterated his support for a cap on property taxes but acknowledged that Assembly worries about the effects on education may require more discussion.
He also said lowering business taxes will produce results.
“Rather than throwing a billion dollars at some company to come in and create a certain amount of jobs,” he said, “what we have to do is lower the business taxes and create the kind of environment in which business will flourish. And at that point the market will take over.”
Paterson said raising taxes to solve the problems is “theoretically a possibility” but discounted the attitude of some who want to “refinance the account” rather than balance the budget.
“That’s why I would see taxes as a critical last resort to the point I don’t even want to talk about it,” he said.
The governor’s message elicited approval from leaders of public unions to business gurus and legislators, even if all offer different solutions.
Andrew J. Rudnick, president of the Buffalo Niagara Partnership, said he agrees “1,000 percent with [Paterson’s] prognosis and his concerns.”
The ebbs and flows of Wall Street, Rudnick said, leave the state without a consistent plan and serious problems are bound to result.
“He sounds like a business economist more than most business economists,” Rudnick said of the governor. “He clearly gets it.”
But Philip Rumore, president of the Buffalo Teachers Federation, said he thinks the problem could be solved by increasing taxes on the wealthiest.
“One reason we’re in financial straits is that the income tax on the wealthy has decreased in the last 10 years while taxes on the middle class have increased,” he said. “If we get the tax on the wealthy back to where it was, it will generate billions of dollars.”
State Sen. Catharine M. Young, R-Olean, said the state, without doubt, needs to reduce spending.
The Republican-controlled State Senate and Democratic governor, she said, maintain good communications on the issue.
She pointed to a Senate bill that would impose a constitutional cap on spending and said she thinks the concept of property relief and its limit on revenues naturally lead to a limit on spending.
“We’re taking action and would like to see some results in this area,” she said.
The governor also said he could not think of any more important legislation than the brownfields reform law he signed Wednesday in Niagara Square.
The bill increases tax credits for cleaning up such sites but limits credits for redeveloping them.
State aid no longer will cover all redevelopment costs.
Redevelopment tax credit will be limited to $35 million, or three times the cost of cleanup for nonmanufacturing projects, and $45 million, or six times the cost of cleanup, for manufacturing projects, whichever is less.
These amounts generally would be less than developers have been allowed in the past, but Paterson called the approach more fiscally responsible.
“This is the biggest shot in the arm to the area that we can possibly imagine,” he said.
He also said he expected the new bill to be much more effective than a similar bill, passed in 2003, in cleaning up brown-field sites across the state.
“There are many across the state who don’t know what brownfields are but see them every day,” he said. “So many of our great edifices of commerce have become these sites.”
News Staff Reporter Brian Hayden contributed to this report.
