Public Employee Press

New year, new budget cuts
Governor chops aid to education

By DIANE WILLIAMS

In December, the New York State Legislature passed a $2.8 billion Deficit Reduction Plan with spending cuts, revenue enhancements and other measures — but few recurring savings initiatives — in an effort to close the $3.2 billion gap in the budget for fiscal year 2010, which ends in March.

The Legislature left it to Gov. David Paterson to find ways to recoup the remaining $300 million to $500 million shortfall in the state’s $120 billion budget. The governor said he would sign the plan, but on Dec. 13, he announced that he would also withhold $750 million in scheduled payments to schools and municipalities to avoid insolvency and protect the state’s credit rating.

Borrowing against the future, the Legislature’s plan taps $391 million of next year’s education stimulus funds, reallocating part of the one-time federal fix to pay this year’s remaining debts. State Senate Democrats pressed to make sure the fiscal plan avoided major mid-year cuts in public education and health-care funding.

But the governor withheld $84 million in aid to New York City and its schools that was scheduled for payment Dec. 15 and $107 million in disbursements statewide.

The lawmakers moved to cut government waste by contracting in computer services and initiating stricter oversight of contracts at the Metropolitan Transit Authority and other public authorities. The DRP also creates a Tier 5 pension plan with the retirement age raised to 62 from 55 for new state employees.

The DRP budget came days before the state would have run out of operating funds.

Cuts hit health, social services

It makes only half of the cuts Paterson recommended, but its 12.5 percent reductions to state health and mental hygiene agencies take $18 million from social service programs, $41.2 million from health care and aging programs and $112.5 million from mental health services for the disabled.

Legislators applied an 11 percent cut to all state agencies, saving $484 million, and called for revenue increases of $200 million each from the Battery Park City Authority and the Aqueduct Racetrack video lottery terminals.

While it protects financial aid for low-income and working college students, the DRP reduces higher education aid by $17.4 million, lops $36.9 million from education and arts programs and cuts $156.8 million from transit programs.

Although the DRP reduces state aid to local municipalities by $32 million, legislators protected $500 million in federal matching funds that preserve 12,000 health-care jobs statewide and averted a 10 percent cut to Social Security income for severely disabled residents.

Since New York State has the nation’s sixth highest unemployment rate, the lawmakers spared job creation and training programs.

With federal stimulus funds scheduled to expire at the end of 2011, the governor projects future deficits of $6.8 billion for 2011 and a whopping $14.8 billion for 2012.