ALBANY—Still unable to reach agreement with the legislature on how to bridge a roughly $3 billion mid-year budget imbalance, David Paterson announced he is acting unilaterally to do $1.6 billion worth of things to strengthen the state’s balance sheet in the middle of this “fiscal emergency.”
“I feel that we have to start making the deficit reductions on our own hoping that the legislature will join us,” Paterson told reporters on a conference call.
Most of the proposals he is putting forward are items that were included in the $3 billion worth of actions Paterson proposed in October, and most are not painful direct cuts. They are transfers and, in some cases, merely accounting changes were revenue projections are tweaked or added. This $1.6 billion includes a $500 million reduction in state agency spending, including things like reducing the number of printers in state offices.
Paterson wants legislators to come up with another $1.5 billion of cuts. This does not represent any type of progress in negotiations. In fact, Paterson blasted the State Senate –”the Senate in particular doesn’t know that we’ve run out of time, or knows that we have run out of time and apparently is more concerned with the short-term politics than the long-term realities”–and did not rule out the possibility of a two-way agreement with the Assembly.
“Well the Assembly and the administration have never completely agreed. Now that’s, you know, we really want this to be a three-way agreement. It just helps in so many other ways in order for us to legislate this into a law. Now, I have not had any conversations with the speaker about that,” Paterson said. “Three-way is most preferable, but we are running out of time, and therefore there’s not option that I wouldn’t consider if a legislative leader was open to it, but that is not a discussion we have had yet.”
Austin Shafran, a spokesman for the Democrats who control the Senate said they “agree there are administrative measures the governor should take to provide immediate relief while a sensible solution to the budget gap is negotiated. We will continue to work with all sides on a bipartisan and fiscally prudent deficit reduction plan that protects jobs, prevents tax hikes, and saves critical funding for our schools.”
Here’s the official breakdown of what Paterson proposes to do:
Agency Reductions ($500 million) – Governor Paterson ordered an 11 percent reduction in each State agency’s non-personnel services budget. All of these cuts, except for those to the City University of New York ($53 million), can be achieved without legislative approval.
Medicaid Fraud Targets ($150 million) – Governor Paterson will set more aggressive Medicaid Fraud recovery targets for the Office of Medicaid Inspector General (OMIG), which is an Executive Branch agency.
Debt Management ($100 million) – The State will realize savings compared to its debt service estimates from refundings, the use of Build America Bonds (“BABs”), and relatively low interest rates on its variable rate bonds. The State’s overall debt management policies are overseen by the Division of the Budget, which is an Executive Branch agency.
18-A Assessment Reestimate ($45 million) – Reflects an upward reestimate of the amount of revenue that will be collected from the increased 18-A utility assessment enacted in the 2009-10 budget.
Workers Compensation Surplus Recapture ($49 million) – Certain insurers have indicated their intention to remit excess funds under legislation enacted as part the 2009-10 budget.
Other Administrative Actions ($300 million) – An additional $300 million in administrative savings will be achieved through a number of potential actions, including reflecting a reduction of Medicaid and EPIC pharmacy reimbursement rates pursuant to the terms of the First Data Bank litigation settlement; further controls on specific agency activities; delaying scheduled HEAL NY spending in the current year, using funds currently earmarked for debt management purposes; reflecting a reestimate of health care costs, and other initiatives.
VLT Franchise Payment ($200 million) – The DRP assumes that the winning Aqueduct Video Lottery Terminal bidder will make a franchise payment of at least $200 million in the 2009-10 fiscal year. Statutory authorization for the operation of video lottery terminals at Aqueduct was previously enacted by the Legislature.
Battery Park City Authority (Up to $250 million) – In April, the 2009-10 Enacted Budget authorized a transfer of up to $250 million from the Battery Park City Authority to the State’s General Fund. Reducing the size of the General Fund transfer to $200 million and providing $100 million for New York City affordable housing efforts is currently under consideration. The Enacted Budget, however, provides the Executive Branch authorization to transfer up to $250 million.