New York Gov. David Paterson released a budget proposal Tuesday that seeks a 5 percent cut in school aid, as well as $1 billion in new taxes and fees.

The $134 billion budget also addresses a $7.4 billion deficit. In addition to a $1.1 billion cut in school aid, Paterson wants $1 billion cut from health care spending, much of which goes to hospitals and nursing homes.

LINK: More Information on the Budget
LIST: New Tax, Fee Proposals in Paterson Budget Plan

He is also proposing another reduction in spending on higher education that would cut $95 million from four-year colleges operated by the State University of New York and $47.7 million from the City University of New York.

He would also allow SUNY and CUNY to set their own regular tuition increases, which could vary by campus, without legislative approval. And public and private college students would see a $75 cut in their Tuition Assistance Program financial aid.

New York City would lose $469 million in school aid, nearly $302 million in local government assistance, $53 million in funding for social services and nearly $4 million for transportation.

“The mistakes of the past – squandering surpluses, papering over deficits, relying on irresponsible fiscal gimmicks to finance unsustainable spending increases – have led us to a financial breaking point,” Paterson said. “There are no more easy answers.”

The Legislature is expected to strongly oppose the measures, in part because lawmakers believe that health cuts will harm community hospital care and that school aid cuts are likely to prompt school boards to raise local property taxes and cut programs.

The Legislature traditionally adds 1 percent to 2 percent to the state budget, but few executive proposals have cut aid to levels proposed by Paterson. He and the lawmakers will try to agree on a budget by the April 1 start of the fiscal year.

Also among Paterson’s proposals is extending the income tax benefits of filing as a married couple to same-sex couples married in states where gay marriage is legal.

New taxes include a $1 increase in the tax on a pack of cigarettes, restoring New York as the state with the highest tax on cigarettes. Paterson said the revenue will be dedicated to health care. It would raise the state tax to $3.75 per pack.

He also wants to offset health care cuts, in part with a new excise tax on soft drinks and soft drink beverage syrups, a cost that could be passed on to consumers. He said revenue would fund health programs that combat obesity, diabetes, cancer and other maladies. Other increases involve civil court fees and a planned tax on natural gas extraction from the Marcellus Shale formation in the Southern Tier and in central New York.

He would also allow the Quick Draw lottery game to be played every hour that a tavern or restaurant is open. The law now restricts the gambling to 13 hours a day.

Paterson’s budget, the second in a historic fiscal crisis, would increase state spending 0.6 of 1 percent, less than the inflation rate of about 2 percent. It further cuts agencies in the executive branch by $1 billion.

Paterson, a Democrat, also proposes to:

– Allow the sale of wine in grocery stores, which advocates say will increase sales and tax revenue.

– Delay the next class of state police recruits, in addition to trimming the force this fiscal year.

– Eliminate $320 million in annual aid to municipalities, much of it for New York City, which could drive up local taxes.

– Cut the state work force by 675 workers, to 195,700 by the end of the year. But that’s expected to be through attrition and a retirement incentive Paterson agreed to with unions to avoid layoffs and preserve their 4 percent raises. Management workers will lose their 4 percent raises for a second year.

– Close the Lyon Mountain minimum security prison in Clinton County and the Butler minimum security prison in Wayne County by January 2011. By April 2011, he would close the Moriah Shock facility in Essex County and the Ogdensburg medium security facility in St. Lawrence County. Those closings, following a decline in prison population, would eliminated 650 jobs.

Source: AP