Paterson’s $5B Deficit Reduction Plan Bites Schools, Health Care

GOVERNOR PATERSON: Act to avert severe consequences. Governor Paterson Oct. 15 proposed a two-year plan to close an estimated $5-billion deficit by enacting Tier 5 pension reform and instituting a state spending cap as well as slashing spending by $1.8 billion for the second half of the year.

These spending cuts include the $500 million across-the-board admin- istrative agency spending reductions announced Oct. 6 and $1.3 billion of cuts in local assistance spending that would most affect education and health care. The Tier 5 legislation is expected to bring $50 billion in savings over the next 30 years.

‘Hard, Painful Choices’

“During a time of uncommon difficulty, we need to work together for the common good and enact a consensus plan that helps us avoid the severe consequences faced by other states that failed to swiftly address their budget problems,” Mr. Paterson said. “This will mean hard and painful choices, but that is exactly the type of leadership New Yorkers deserve from their public officials.”

DANNY DONOHUE: ‘Drastic cuts counterproductive.’ Union leaders expressed reservations about the plan, however, ranging from the overall impact on both their members and vital services to the difficulty of cutting education budgets midway through the school year.

United Federation of Teachers President Michael Mulgrew sounded the alarm about a proposed $223-million cut in state aid to city schools, saying, “While we all recognize the state’s fiscal condition, the children in New York City’s classrooms should not have to bear the brunt of these cuts.”

Assembly Speaker Sheldon Silver, the UFT’s strongest ally in Albany, was noncommittal about the plan, while State Senate Finance Committee Chairman Carl Krueger went no further than to say that his priorities would be to preserve services without raising taxes.

CSEA: Keeps Squeezing Us

Civil Service Employees Association President Danny Donohue said, “State employees have repeatedly been squeezed by multiple rounds of cutbacks that are making it harder to do the job. But most CSEA members work for localities and school districts across the state and these latest proposed cuts will create challenges in every community in the state.”

Mr. Paterson said at a press conference in Albany that “everything is on the table” as far as cuts, but he indicated that the state has done well reducing the workforce through attrition. “With the amount of attrition we have been able to achieve, we would probably accomplish as much [savings] as layoffs,” he said.

The local assistance reduction of $1.3 billion would represent a 10-percent cut to all remaining, undisbursed local assistance spending in the current fiscal year—except for school aid, which would be limited to 4.5 percent. Reductions to the STAR property tax relief program as well as cuts that represent direct mandated cost shifts to local government would be excluded.

Higher Ed., Medicaid Cuts

This year schools would face a $480 million cut to their budgets statewide or $686 million for the entire school year, based on local fiscal capacity, student need and residential tax effort. Higher education could see a reduction of $62 million in its budget. Medicaid may face a $287 million cut as well.

“CSEA urges local government and school district officials to work with their employees to find better ways to get the job done and achieve savings rather than unilaterally impose drastic cuts to positions and services that are counterproductive,” Mr. Donohue said.

He also said the state could find savings by implementing a Canadian mail-order prescription drug option for state employees. “Numerous municipalities across the state have already implemented this program and are already saving millions of dollars,” he said. “Many other localities and schools could also save from this approach, too.”

The Governor’s plan must go before the State Legislature, which has scheduled public hearings for Oct. 21 and Oct. 23.