Posted by Gov. David A. Paterson said in an interview on Sunday that he would almost certainly seek billions of dollars in cuts to Medicaid, as well as midyear reductions in school aid, to address New York’s worsening fiscal condition.
He also said he expected to urge labor unions to reopen the contracts they have struck on behalf of public employees as a way to avoid or decrease layoffs.
Such a step is reminiscent of measures taken by New York City in the financial crisis of the 1970s or moves made more recently by the Big Three domestic automakers to reduce their labor costs after years of granting steady raises and comprehensive health and pension benefits.
Those same types of wage and benefit concessions have long weighed on New York, though the catalyst for the state’s current predicament has been the collapse in tax revenue from Wall Street.
The governor, who spent more than two decades as a state senator representing Harlem, said he would be forced to cut even programs he sponsored as a legislator, and he expected to preside over a turbulent period for the state government.
“There’ll be protests, and because of the drastic nature of the cuts, those who protest will have very valid points, for which I don’t have any answer, other than ‘What’s your idea?’ ” Mr. Paterson said. “We’re not going to close a $12.5 billion deficit with 5 percent cuts to health and education.”
Asked if the cuts for education and health care programs would be in the billions of dollars next year, he said, “Unquestionably.”
His comments, made during an interview between sessions at a conference held here by Latino lawmakers from New York State, put to rest any doubts about the depth of the state’s fiscal crisis.
Some of the cuts will be sought when lawmakers return to Albany on Nov. 18 for a special session to help close a $1.5 billion budget gap for the current fiscal year, which ends in March, and to get an early start on next year’s budget. Any cuts would need support from the Legislature. And the governor will have to propose far steeper cuts when he introduces a budget next month for the fiscal year that ends in March 2010 — that budget will need to close a $12.5 billion deficit.
Cutting school aid in the middle of the school year, if it comes to pass, will represent an about-face from the sharp increases undertaken by former Gov. Eliot Spitzer to end years of court challenges by advocacy groups that contended that New York City schools were being shortchanged by Albany. The state has not made midyear school aid cuts since the early 1990s, and schools in New York City and elsewhere are already feeling the pinch as municipalities cut their own budgets.
Since taking over in March, after Mr. Spitzer’s resignation, Mr. Paterson has been aggressive in sounding the alarm about the state’s fiscal woes, at times even suggesting that his predecessor’s staff should have moved more quickly to prepare for the recession.
But the governor, who has sometimes made his liberal base uneasy with his newfound mantra of cost-cutting, has by far his toughest fights ahead of him. Reopening labor contracts would prove difficult, because state law bars the government from unilaterally altering the terms of such agreements, though the unions might face the threat of layoffs if they refused.
“They realistically see that it’s one of the options that I would have to examine, and I realistically understand that that really is a place that they don’t want to go,” Mr. Paterson said.
“There is only a harm if the union sees it as a harm,” the governor added. “As long as the union sees that as a viable option in lieu of layoffs, then I think you have a partnership.”
Mr. Paterson said he had not broached the issue with labor leaders in so many words, though he believed they knew it was a subject on the horizon.
“No one actually has said it, but we say things to each other like, what we said back in September was, ‘If this gets any worse, we know what we’re going to have to do,’ ” he said.
How the Legislature will respond remains to be seen; Mr. Paterson must negotiate with the Senate amid significant leadership turmoil.
Dean G. Skelos, the Senate majority leader and a Long Island Republican, has vowed to block education cuts in the Nov. 18 special session — “New York State must not balance its budget by offloading its costs to schools,” he said recently, and he has been hailed by teachers’ unions for ruling out such cuts.
