Cold-Eyed Pataki Discards Allies, Impresses Bush

A month into his third term, Governor George Pataki unveiled a budget that has won him acclaim in national Republican circles for its strict adherence to a pro-growth, no-new-taxes philosophy. At the same time, he has deferred many tough budgetary choices, plugging the state’s $10 billion budget gap with temporary measures that will leave the state’s future budgets full of holes. And he has turned his back on many moderate and liberal friends who supported his re-election bid last year, shortchanging powerful labor unions who expected fiscal generosity in exchange for their endorsements, and humiliating allies like Mayor Michael Bloomberg, who has yet to receive any real financial help for the city in exchange for his unwavering loyalty last year.

While Mr. Pataki’s actions have made him something of a hero to conservatives across the country, critics closer to home say that he is sacrificing the state’s future to his own political ambitions. Some say that Mr. Pataki, who is said to covet a post in the Bush administration, is trying to re-establish his credentials as a fiscal hard-liner, no matter what the cost to the state.

“When you see a political leader who’s looking at a $10 billion deficit and talks about tax cuts as the main engine to deal with this, then you have to conclude that it’s partly ideological,” said Felix Rohatyn, a former investment banker and ambassador to France who, as chairman of the Municipal Assistance Corporation, helped steer the city through the fiscal crisis of the 1970′s.

Mr. Rohatyn, who was careful to note that he thought Mr. Pataki was a genuine believer in supply-side economics, added that Mr. Pataki’s recent actions had the added benefit of passing on politically tough decisions to others, or deferring them to an unspecified future date.

“What Governor Pataki seems to be doing is helping himself by hurting the city, by forcing the city to keep raising taxes,” Mr. Rohatyn said. “And when you look at some of the financing with these tobacco bonds, clearly those are deferrals. The problem doesn’t go away. I can’t read other people’s minds, but it is certainly pretty far removed from a long-term solution.”

Other observers go further, saying that Mr. Pataki’s actions indicate that he’d like to move to Washington before he may have to make truly drastic and unpopular decisions. “It’s clear that he wants to get out of the Governor’s mansion before the fiscal roof falls in,” said Dale Hemmerdinger, the incoming chairman of the Citizens’ Budget Commission. “It appears that he doesn’t intend to finish out his four-year term. The budget he’s proposing is full of stop-gap measures and one-shots that will come back and bite whoever will be running the state in three or four years, if not next year.”

Mr. Hemmerdinger added that politicians who intend to finish their terms often seek to make the tough choices at the start, such as James McGreevey, who has kicked off his first term as Governor of New Jersey by rescinding tax rebates and slashing or eliminating services.

“Unlike McGreevey, who’s making very difficult choices for his state early on so the finances will hopefully improve over his term, Pataki is sidestepping and deferring the real difficult fiscal choices that need to be made, in an effort to bide his time until he’s gone,” Mr. Hemmerdinger said.

It’s not a stretch to say that Mr. Pataki is staking his political future on his anti-tax stand. The Governor’s own supporters, when talking up his future national prospects, like to point out that his fiscal discipline is creating a buzz in national Republican circles. And he has alienated much of the coalition he so painstakingly assembled just months ago: His cuts to education have prompted protests from teachers’ union head Randi Weingarten, and his cuts to the budget for state hospitals and Medicaid have the powerful hospital-workers’ union, Local 1199, declaring that they will fight the Governor with all the considerable means at their disposal.

What’s more, Mr. Pataki’s recent actions have embarrassed one of his staunchest allies: Mr. Bloomberg. The Mayor went to huge lengths to protect Mr. Pataki politically during the campaign, suppressing talk of taxes that would have complicated his re-election bid, and the Mayor shielded the Governor from the political fallout that resulted from last fall’s tensions over lower Manhattan’s rebuilding and from the threatened transit strike. The assumption was always that Mr. Bloomberg would be rewarded after the election with some much-needed help from the state-perhaps in the form of a revived commuter tax or a generous aid package. Neither has been forthcoming. Mr. Bloomberg, so far, has bitten his tongue, but his poll numbers have plummeted.

“I think the Mayor is in a very, very difficult position,” Mr. Rohatyn said. “I can well understand that he feels he needs to stay on friendly terms with the Governor and try to work it out. But it’s getting late in the day for that.”

In Mr. Pataki’s defense, his fiscally conservative budget pronouncements are consistent with his political roots as a small-government tax-cutter. And even during last year’s gubernatorial campaign, when he was widely considered to have moved left in order to attract Democratic votes, he consistently rejected tax hikes as a solution to the state’s fiscal woes. His current proposal, he has said, is merely a refutation of Democratic tax hikes in the past. “Let others take that path,” Mr. Pataki said recently. “Let us choose jobs.”

His allies say that his decisions on the budget are based on his convictions, and that the politics are secondary to the results. “What happens during the crisis isn’t what matters,” said Kieran Mahoney, a top Pataki adviser. “What matters politically is the shape the state’s in at the end. If George Pataki turns out to be right and New York again bounces back stronger than ever, then he’s going to get a lot of political credit. At the end of the day, good government is good politics.”

“The Governor’s fiscal practices brought New York back from the brink of disaster in 1995,” added Kevin Quinn, a spokesman for the Governor’s budget division. “His record is a proven record that speaks for itself.”

The budget proposal that Mr. Pataki unveiled on Jan. 29 was merely the opening position in a long negotiating period between the Governor, the Assembly Speaker and the State Senate’s Majority Leader, during which many of the most severe cuts may be restored.

National ambitions

Whatever the outcome of the coming budget battles, Mr. Pataki’s own supporters are already saying that he has raised his stock among national Republicans. “He gets really good chatter in the [Bush] administration now,” said one longtime friend and supporter who is in frequent touch with senior White House officials. “He really held the line on the budget, and now some of the President’s people are saying that because of the job he’s done, Pataki is someone they’re going to have to keep in mind for the future.”

“I think that people are talking about him as a national figure now,” said Ed Hayes, another friend of the Governor’s.

Republican Congressman Peter King, who has squabbled with the Governor in the past, defends his actions on the budget, and says that New Yorkers have to understand that there simply isn’t enough money in the state’s coffers to make everyone happy. As for the Governor’s longer-term aims, “he might be looking at other things,” Mr. King said. “Maybe the cabinet or Vice Presidency or other things. Governor of New York is a great job, but you can only stay in one position for so long …. “