In Budget, Paterson Looks to Smokes, Soda and Big Cuts

Governor Paterson’s 2010-2011 executive budget is out, a proposed $133  billion plan that would close $7.4 billion in gaps through major cuts to health care and education. The poll-challenged governor also is looking to bring in revenue from cigarettes once again, proposing a $1-per-pack tax, in addition to a planned tax on soda and other “sugared beverages.”

In all, the $133.9 billion budget would raise spending by 0.6 percent from the current year, and still leaves gaping holes in the future. Over the next four years, the state is projected to have a cumulative deficit of $29 billion. (The state budget is still propped up by $4.4 billion in stimulus money for the coming year, a pipeline of free cash that is slated to sunset at the end of the fiscal year in 2011.)

The $4.8 billion in cuts are spread across the budget. Health care and education represent much of the budget and take the biggest hits, though there are also hundreds of millions in cuts from streamlining and consolidating government agencies.

On the revenue side, Paterson is looking mainly to sin taxes (if drinking soda can be called a sin), pitching them as part of his administration’s broader focus on health. The soda tax mirrors the governor’s failed proposal from last year’s budget, but it has gained a bit of momentum nationally since, as a number of other public officials have tried to install it around the country. It would bring in $400 million for the year, and $1 billion a year after that.

An extra $1 a pack in cigarette taxes, currently at $2.75 a pack, would bring in $210 million for the year. At $3.75 per pack, the tax rate would be the highest in the nation

Now begins the dance—or brawl, perhaps—with the Legislature, which has shown little willingness to make painful cuts and has, up until this point, shown no appetite for new taxes, making for a fun budget season. The budget is due at the end of March.

ebrown@observer.com

In Budget, Paterson Looks to Smokes, Soda and Big Cuts