Paterson’s budget cutting plan brings out the critics
ALBANY — Critics have vowed an all-out fight to curb Gov. David A. Paterson’s midyear budget cutbacks, which include sharply reduced aid for schools and health care, tuition increases for university students and cuts on everything from low-income housing groups to upstate job-creation efforts.
The governor, seeking to close a $1.5 billion deficit this year and get to work now on $12.5 billion in red ink for 2009, defended his package of cuts as a painful but necessary response to plummeting revenues from the nation’s economic collapse.
“We’re not going to get out of this quagmire we’ve built until we reduce our spending,” Paterson said Wednesday.
Although the governor said he would not turn to tax increases, his plan includes a $600 hike in state university tuitions, $120 million in higher taxes on health insurance premiums, pushing hundreds of millions of dollars in state-funded health programs off to private insurers, and a new nickel deposit on containers for noncarbonated beverages. Cities such as Buffalo also are in line for aid cuts.
Highlights of the governor's $2 billion cut and savings package
• Reduce aid to 700 school districts by $840 million, between 3 percent and 10 percent per district.
• Raise SUNY tuition $600, including $300 in spring semester
• Cut hospital and nursing home by $572 million
• Tax health insurance premiums by $120 million
• Impose nickel deposits on non-carbonated beverages
• Close six youth detention facilities, including two local centers
• Reduce aid to community colleges, private schools, libraries and arts
• Cancel $65 million in pork barrel spending, including business marketing and law enforcement in Buffalo area
• Defer pay for five days pay for state workers by April
• Impose salary freeze in 2009
• Raise health insurance costs for new government retirees
• Raid off-budget authorities for $226 million
• Cut environmental funding by $50 million
Democratic legislative leaders were uncharacteristically vague in their reaction to Paterson’s plan. But Republicans in the Senate raised several key concerns that could doom or seriously amend it. Lawmakers are due in town Tuesday to consider the package, though there are signs they may seek to delay any major action.
Schools, facing $840 million in state cuts, and health care groups, looking at nearly $600 million in cuts, protested the loudest. Hospitals and nursing homes said the reductions would force staffing cuts, thereby limiting access to care by the closure of clinics and fewer home care options for the elderly. They said his cuts are especially damaging because for every $1 in state Medicaid reductions, providers lose $2 because of matching federal aid.
Public schools will see their state aid cut — in the middle of the fiscal year — by up to 10 percent. Wednesday, districts were warning of teacher layoffs, larger class sizes and after-school programs being canceled.
“That’s a number way too big to deal with midyear,” Robert W. Christmann, superintendent of the Grand Island School District, said of the proposed 7.1 percent aid cut that his 3,400-student district is facing.
Senate Majority Leader Dean G. Skelos of Nassau County, whose Republican Party loses its majority status Jan. 1, said his party is not interested in midyear cuts in school aid, calling them a “break of faith” with school districts.
The governor portrayed many of his actions not as cuts, but as reductions in funding growth. He said that overall school aid will still rise by 5 percent. But many districts, especially in the suburbs, will actually see year-to-year funding reductions under the Paterson plan.
Paterson refused calls to tap into the state’s rainy day fund, now totaling $1.2 billion, to help balance the budget but said schools can use their reserve funds to cope with his funding cuts.
“We can’t possibly be spending down our reserves knowing what lies ahead,” Timothy Kremer, executive director of the New York State School Boards Association, said of even bigger cuts looming next year.
The governor did not list any layoffs of the 240,000-employee state work force. Instead, he is asking them to voluntarily defer five days’ pay between now and the end of the fiscal year March 31 and to not take raises scheduled for next year. Unions quickly rejected the idea.
Paterson said he also would seek — and does not need union permission — to require future state workers who retire to pay a greater share of their health insurance costs, which the state now covers at 90 percent. The work force savings would total $137 million this year.
Danny Donohue, president of the Civil Service Employees Association, the biggest state workers union, called the cutbacks “an assault on services at every level.”
Paterson’s plan reduces aid to arts groups, libraries, private schools, community colleges, sheriffs, environmental programs, legal aid groups, literacy groups and drug treatment providers. Not-for-profit agencies that provide everything from care for the developmentally disabled to alcoholism treatment would take funding hits.
State university tuition would rise by $600 a year, to $4,950, with $300 of that coming in the spring semester.
University at Buffalo President John B. Simpson said Paterson’s overall education plan is “not going to help bring 10,000 new jobs and an additional $1 billion in annual economic impact” to the Buffalo area under an ambitious program known as UB 2020.
Local governments will not see their state revenue sharing reduced this year, but it would be frozen next year, costing localities $61 million in 2009. Also, 51 cities — including Buffalo and Niagara Falls — will not get a total of $6 million in additional funding that had been promised this year.
Buffalo Finance Commissioner Janet E. Penksa estimated that the city would lose $1.4 million this year and nearly $18 million in 2009. City officials, however, said Buffalo will earmark $35 million from its surplus to a rainy day fund. Officials said they envision no service cutbacks this year because the type of money being cut funds future expenses, not current operations.
Still, concerns were raised. “We’ve squirreled away money for labor contracts, and any time we have to use money to [offset] cuts, it means less money we have for these other things,” Penksa said.
Legislators would find their pork-barrel projects scuttled, affecting hundreds of programs statewide, including an economic-development effort in Western New York and a local law enforcement consortium.
The cuts were supported by business groups, such as Unshackle Upstate, which said that now is the time to “restructure state government programs” to bring their costs in line with revenues.
In all, the plan envisions $5.2 billion worth of savings over the next 17 months that, with the recurring nature of the cuts, would reduce next year’s estimated deficit from $12.5 billion to $8.8 billion. “We recognize that all areas of government are going to have to suffer some of these cuts, and they will be painful,” Paterson said.
Paterson’s plan relies on fiscal maneuvering. For instance, he wants $226 million shifted from authorities, such as the Power Authority, to the state’s general fund.
The actions need legislative approval.
Many lawmakers and groups said the depth of the cuts surprised them. They complained that he avoided less painful steps, such as tapping the rainy day fund. They said he should collect taxes on Indian cigarette sales — which he said Wednesday is “a priority” but did not say how he might try — or raise taxes on wealthy residents, or press Washington harder for a bailout.
Health care programs face big cuts in rates they get to care for Medicaid patients. Kaleida Health, the big Buffalo-area provider, said the cuts would devastate care.
“This attack on hospital and health care providers would result in substantial curtailment of services, loss of jobs and an inability to implement needed capital investments,” Kaleida said. “These draconian cuts will be a step backwards for quality of care, meaning fewer staff, longer waits, and hospitals and nursing homes reducing services, or potentially, having to close.”
Two youth-detention facilities in Cattaraugus County and a youth evening facility in Buffalo, which officials say are underutilized, would close. They employ 58 people.
Wednesday, Christmann, the Grand Island school superintendent, shuddered at the prospect of having to cut $1.1 million now. This would mean, if schools could tax their way out of the problem, a 5 percent hike on property taxpayers, he said. With the tax rate already approved, that leaves student programs in the cross hairs. “That’s a number so large,” he said, “that there will be a tidal wave across New York State.”
News Staff Reporter Brian Meyer contributed to this report. tprecious@buffnews.com
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