Paterson calls for hiring freeze and $1.2 billion in budget cuts
Governor summons legislators for special session as financial outlook darkens
ALBANY -- A week after saying the state's current year budget is in balance, Gov. David A. Paterson said this morning that New York is facing $630 million in red ink -- which is forcing him to turn to a hiring freeze and other actions to save money in what he calls a financial crisis.
The governor said he expects the State Legislature to join him in trimming $1.2 billion in spending when it returns on Aug. 19 for a special session. The package will include $630 million in cuts to state agencies that he can put in place on his own and another $600 million in actions done in concert with the Legislature.
The governor will have state agencies cut spending another 7 percent, which comes on top of an earlier 3.35 percent trim enacted after the fiscal year began April 1.
The plan also includes an immediate "hard" hiring freeze, with only "mission critical" hiring permitted. All hiring will have to be approved by the governor's budget office.
It was only a week ago that the governor stood before reporters and said that the current fiscal year was still in balance. What changed in a week was unclear this morning.
"As painful as it is, we are going to find a way to professionally address our budget woes," Paterson said this morning at briefing on the budget. Curiously, he brought his top budget team down from the Capitol to his midtown Manhattan offices instead of making the presentation in Albany before a press corps that covers the state budget.
Until this morning, the focus had been on sharply rising budget deficits projected between 2009 and 2011. The administration in the spring projected a three-year deficit beginning next year of $21 billion; on Tuesday, it significantly upped that figure to $26.2 billion.
The Legislature, facing re-election this fall, is not leaping to join Paterson in trimming potentially popular spending programs next month.
In an interview with an Albany radio station this morning, Assembly Speaker Sheldon Silver said he would be willing to start dealing with the deficits projected for 2009 and beyond. "As far as recalculating this year's budget, I think we can still take a bit of a wait-and-see approach," Silver said.
On Tuesday Silver, a Manhattan Democrat like the governor, went so far as to draw up a list of programs — the biggest items in the state budget — that should not be cut. It included education and health care, which, together, account for 63 percent of the budget.
State Senate Majority Leader Dean G. Skelos, a Republican from Rockville Centre on Long Island, said cutting school aid would be “wrong.”
In a statewide television address Tuesday, Paterson said he was summoning the State Legislature back next month for a rare, midsummer special session.
He issued the call for greater fiscal discipline just three months after he approved the current state budget, which provides for raising spending at twice the rate of inflation projected by state officials.
“New York’s families are already making the tough choices — New Yorkers are prioritizing spending every day,” Paterson said Tuesday in the five-minute address. “Now, your government is going to follow your lead. We are going to end legislative vacations and bring them back to Albany to reprioritize the way we manage New York State’s finances.”
Although Paterson billed the return to Albany as “an emergency economic session,” the only two major items that he specified to be on the table — a possible cap on property taxes and a measure to help low-income residents with heating bills next winter — would not do anything to slow state spending.
For months, state leaders had debated those two issues, with no results.
The governor made no mention of education or health care. Nor did he discuss the state’s ballooning debt levels and other rapidly rising costs, such as pension and health care benefits for state workers. Under the current budget, the state work force is projected to add 1,400 positions to 201,000 workers.
The state’s worsening fiscal problems are twofold: spending that has risen 45 percent over five years to $122 billion in this year’s budget and a softening economy that is evaporating tax revenue to pay for these costly programs.
Paterson did say that, in coming weeks, he will look at the size of the work force, which immediately raised red flags among some state worker unions.
Danny Donohue, president of the Civil Service Employees Association, the state government’s biggest union, called any talk of trimming the work force “a sham.”
“We will not stand by for knee-jerk political solutions that diminish our quality of life and create more misery,” said Donohue, whose union has major leverage with legislators, especially in an election year.
And Skelos, who is battling Democratic attempts to take control of the State Senate, called on Paterson to work with the unions to “minimize any disruption to the state work force to protect workers and their families.” He also urged Paterson to embrace the Senate Republicans’ plan for a constitutional limit on state spending and to get Assembly Democrats to accept a property tax-reduction package that the Senate plans to adopt when it returns to Albany on Aug. 8.
The governor, meanwhile, said he would consider cuts in state agency spending and selling some state assets to raise money. He called on leaders from the private and public sector, including public employee labor unions, to work with him.
“Now government will do what families have done when their incomes have fallen: We will cut spending. Government will learn to do more with less,” he said.
Paterson noted that last year, the state received $173 million from the 16 banks that pay the most in taxes; this year, that amount has plummeted to $5 million.
Fiscal watchdogs say the state is not prepared to deal with the economic decline because it already has built in too many spending promises, not only in this year’s budget but also in future years.
State Comptroller Thomas P. DiNapoli called the situation a “perfect storm,” caused by excessive spending and lowering revenue estimates, the bitter impact of a souring economy.
