The New Strategy: Punt and Pray

ALBANY—David Paterson stood beside Sheldon Silver in the Red Room of the Capitol to present a package of revenue increases, spending cuts and “sweeps” that will bridge the budget deficit in the remainder of this fiscal year. It will not do much more.

“Today, the legislature has accomplished again,” Paterson said a few hours before the bills were approved by Assembly and Senate. He spoke of sending a message to Washington that New York’s financial house is in order. That in this emergency situation, what needed to be done has been done, process be damned.

But just a few months ago, Paterson’s vision was much grander. He was calling excessive state spending the root of the problem, and proposing packages to reduce the deficit that featured large cuts to health care and education.

“We just have not been able to control spending,” Paterson said in November, as he proposed a package of cuts that delighted fiscal conservatives.

This package punts on the bulk of the most politically painful cuts. Most of the newly agreed package does not cut spending. Just under $700 million is derived from one-time measures, such as moving the payment of school aid to New York City to the next fiscal year, and another $350 million of revenue will be derived from increases in taxes on health insurance, and from increased S.U.N.Y. tuition.

“It’s a first step, but a small one,” said Elizabeth Lynam, an analyst for the non-partisan Citizen’s Budget Commission.

But large enough to wait for all-but-inked federal legislation that will send billions of dollars to New York from federal coffers. A large portion of those funds – one conservative estimate is $5 billion – will be dedicated to health care. Another chunk will be spent on education.

“We couldn’t pass the budget until we see the fiscal stimulus package. We could address the ‘08-‘09 package without it,” Paterson said at the press conference.

He was also facing some serious resistance. The state’s largest union and a hospital association went for Paterson’s jugular Monday in a media blitz against his proposed cuts. Silver said that “thousands” had traveled to the Capitol to make the case clear.

Paterson’s tune may also have shifted along with his position of power compared to Silver. The veteran speaker is now widely acknowledged to have the dominant hand behind closed doors, having essentially waited out Paterson’s bluster.

So with immediate financial demise once again postponed, Paterson (and the legislative leaders) must look to the federal stimulus package. It could spare them from taking on some of these powerful lobbying groups.

Or at least provide them with a carrot to offer opposite the stick.

The New Strategy: Punt and Pray