ALBANY, N.Y. — In a defining moment for Gov. David Paterson, the Democrat proposed Thursday a rare midyear school aid reduction as well as cuts to hospitals, nursing homes and aid to college students, all to contend with the state’s growing deficit.
“It’s pain that is indescribable, but it is the only way to keep this state from going into default,” Paterson said. “I would expect I will come into harsh criticism.”
Read: Paterson tackles huge deficit
He said he will likely call a special session of the Legislature by the end of the month to work on stemming the estimated $3 billion deficit for this fiscal year “because we don’t have any more time to waste.”
The proposal to trim the state’s deficits by $5 billion over two years requires the Legislature’s approval. It includes a 4.5 percent cut in school aid that has yet to be sent to districts, a $120 cut in every grant to college students under the Tuition Assistance Program, less money for hospitals and nursing homes, and some transfers of surpluses from state authorities. It also counts on $200 million in revenue from awarding a video slot machine franchise at Aqueduct race track in Queens, a project that has already been delayed for years.
A tax amnesty program would offer delinquents and cheats a brief period to pay up without penalties; Paterson budgets $250 million for it. He also resurrected his idea for a spending cap tied to inflation that would result in flat spending this year.
The proposal calls for no layoffs or tax increases.
In all, spending in the current $132 billion budget would be trimmed by more than $1.3 billion. The proposal also calls for hundreds of millions of dollars in new revenue and use of surplus funds. Most of that would produce recurring savings in the 2011-12 fiscal year.
Paterson’s reductions in this year’s remaining school aid would impose the deepest cuts on wealthier, suburban districts. He also wants a new, less expensive pension for newly hired state employees to reduce pension and benefit payments. About a third of the school aid cut will hit New York City schools, cutting about $223 million from the state aid the city schools expected to get in the 2009-10 school year. In all, the plan would cut $686 million over the school year that ends July 1.
“What the governor released today serves as the discussion-opener for what the Legislature must realize is inevitable: More reasonable state spending,” said Elizabeth Lynam of the independent Citizens Budget Commission.
The state Business Council called the plan bold and realistic and said Paterson was courageous.
“While the ‘spending lobby’ will surely attack this plan with hysteria, Gov. Paterson is right to demand that New York end its culture of unsustainable taxing and spending,” said the council’s Kenneth Adams.
Others attacked the cuts as too much or too timid.
“If there are midyear cuts, there’s no question there will be cuts in programs, there will be layoffs in schools,” said Billy Easton of the Alliance for Quality Education, an advocacy group for public schools statewide.
Paterson, however, said he felt schools had adequate reserves to absorb the loss of aid if that’s needed to avoid layoffs and school tax increases.
E.J. McMahon, director of the Empire Center for New York State Policy, part of the fiscally conservative Manhattan Institute, said the plan doesn’t provide enough fuel for an economic recovery.
“The promise not to raise taxes would be reassuring if it wasn’t from the person who said exactly the same thing a year ago before agreeing to the largest tax increase in state history,” McMahon said.
For Paterson, mired at 20 percent approval ratings in polls as he seeks a full term in 2010 without his party’s support, a career is riding on what comes next. Legislative leaders who refused to provide their own proposals for cuts — usually the governor’s task — issued statements that they would work with Paterson, without lending support to the proposal.
Paterson’s plan includes the tough talk that has usually served governors well with the public, which wants the talk followed by agreements.
“I think the voters are going to want to see a lot more tough talk and, even more importantly, a lot of positive actions before they start to dramatically change their current views of the governor and his job performance,” said Steven Greenberg of the Siena College poll.