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Paterson outlines state budget crisis

July 30, 2008

Despite Gov. David Paterson’s warning yesterday that the state faces serious financial problems, Mayor Phil Amicone and City Council President Chuck Lesnick held out hope for increased state education aid to plug the city’s own looming budget problem next year.

Paterson called the state Legislature back to session on Aug. 19 to deal with a $6.4 billion budget gap in the upcoming fiscal year, and he warned that the state faces a $26.2 billion budget gap over the next three years, 22 percent more than estimated less than three months ago.

Amicone has said Westchester’s biggest city faces a fiscal problem so severe that he likened it to a cliff in the city’s path, with hundreds of layoffs likely unless the state revamps its education-funding formula to provide the Yonkers school system with similar state aid as Syracuse and other upstate cities.

In his five-minute speech, Paterson offered no specific spending cuts, but said that state job cuts and agency funding would be on the table.

Amicone ruled out cuts in the $893 million budget for city and school services that was approved in early June.

“Why would we do that? We’ve already funded this year’s budget, and the people are entitled to the services,” Amicone said.

Yonkers would be unable to use savings from this year’s budget to ease the financial crisis envisioned for next year, Amicone said, because state rules delay the spending of that money for one year. The restriction was enacted because of the city’s past financial troubles.

“If we go off the cliff next year, what good does that do us?” said Amicone, a Republican.

Yonkers would get an additional $80 million to $85 million if the city received the same state educational funding per student as received by Syracuse, the mayor said.

Lesnick, a Democrat, said the city should continue to push for more state educational funding and that it was too soon to talk about job cuts.

“Gov. Paterson has shown he understands the situation in Yonkers and that he will be sympathetic to it,” Lesnick said. “I’m still expecting a revamp on that educational formula.”

Assemblyman Mike Spano, D-Yonkers, said he did not think that Yonkers or any local government in the state should expect a major increase in state aid. He said municipal officials needed to face the sharp drop-off in tax revenue from the nation’s declining economy.

“If they fail to take the approach that Gov. Paterson is taking and bring their spending in line with revenue, then they are being reckless and irresponsible,” Spano said.

Two Yonkers City Council members, Dee Barbato, R-6th District, and Joan Gronowski, D-3rd District, held out little hope that Yonkers would see an infusion of state education funding.

They said the city needed to begin making budget cuts now to prevent more serious problems in the future.

In fiscal 2009-10, which begins April 1, Paterson said the state budget deficit will have reached $6.4 billion, up $1.4 billion from previous projections.

“Our economic woes are so severe that I wanted to talk to you personally this evening on where we stand,” he said in the five-minute address. “The fact is, we confront harsh times. Let me be honest: This situation will get worse before it gets better.”

Paterson called on lawmakers to return to Albany to find remedies to the state’s fiscal problems, which also are affecting the current year, 2008-09, which runs until March 31.

He said he hoped the Legislature also would take up helping people pay for high home-heating costs in the winter and approve a school-property-tax cap, something the state Senate indicated yesterday that it would do when it returns to the Capitol on Aug. 8.

“For too long we have done less with more and paid more for less,” Paterson said of state government. “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.”

Paterson made the unusual move of giving a statewide address to discuss how the national economic slide is hurting New York, especially its revenue from Wall Street - which represents about 20 percent of all state income.

He said, for example, that the 16 banks that pay the most in taxes on their profits remitted $173 million to the state in 2007. So far this year, they have given only $5 million, a 97 percent decrease.

The state is experiencing the most serious budget shortfall since 2002, when the deficit was more than $10 billion after the Sept. 11, 2001, terrorist attacks.

In fiscal 2003-04, the state had to close an $11.5 billion gap.

Some lawmakers warned that slicing the budget could lead to services being cut and more burdens being put on local governments and school districts.

“We need to attend to the realities of the funding that we need to provide for essential services in New York state,” said Assemblywoman Ellen Jaffe, D-Suffern.

Source: LoHud

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