“I am trying to avoid a problem so unimaginable that no one is talking about,” Gov. David A. Paterson told the Amsterdam News, after he announced his $5 billion deficit reduction plan. “If you go to California, they are closing schools and they are shutting down nursing homes. And the state is fighting off bankruptcy. I am very sympathetic to those who are going to have to endure the cuts. But it is the best course because the alternative is what’s going on in California and other states that New Yorkers don’t know about. I don’t want to minimize the pain in New York, but it’s a lot worse in other places.”
Declaring that he is “surviving” the verbal slings and arrows slung after the announcement of his budget, Paterson told the AmNews, “These are probably more painful cuts than the state has had to endure probably since the Great Depression. But, this time the cuts will be administered fairly so that everybody is hurt by the cuts; everybody will have to sacrifice.”
A statement from Paterson’s office outlined the two-year $5 billion deficit reduction plan (DRP), explaining that it “would have a current-year impact of $3 billion in 2009-’10 and a recurring impact of $2 billion in 2010-’11.
Stating that education is a priority for the governor, the reduction to school aid would be limited to 4.5 percent of remaining, undisbursed payments for the current fiscal year. Specifically the 2009-’10 programmatic impact of the $1.3 billion, across-the-board local assistance reduction includes: a $480 million state fiscal year cut to school districts ($686 million on a 2009-’10 school-year basis); a $287 million cut to Medicaid; a $184 million cut to other health and mental hygiene programs; a $28 million cut to social service programs; a $67 million cut to Aid and Incentives to Municipalities; a $125 million cut to transportation programs; a $62 million cut to higher education programs; and other reductions.
“We are not balancing the budget on the backs of the people, which is what we’ve done before,” Paterson insisted.
But how can the huddling masses and the working poor not be disproportionately affected by the severe cuts to education, Medicaid and public transportation via the MTA?
“We taxed New Yorkers who make over $300,000 a year one level, those who make over $500,000 a higher level, and those who make a billion dollars a year a higher level than that,” said the governor. “We cancelled the property tax rebate, which created a stampede of middle-class people leaving homes in New York City and all around the state. So if you look at all the cuts together, we hit everybody.”
There are those who still shout loud and often that it is the wealthy–the millionaires–who should bear the brunt.
Paterson said that had been tried, but, “The reason is the revenues are down. The people who we tried to tax, some of them are unemployed and others moved out of the state. So the tax resources aren’t available anymore. It got us some money, but it didn’t get s what we expected us to get. We hit them pretty hard. Believe me, they’ve been screaming about that. But, the recent cuts, 95 percent of the school districts have reserve funds that will cover this,” Paterson assured. “What we did with the school taxes that has really never been done before, is we apportioned the tax based on the ability of the school district to sustain it. And so for those school districts that don’t have any reserve funds, they will get minor reductions. For those wealthier school districts, they’ll take the brunt of the reduction plans.
“In health care, in Medicaid–not one patient will lose their services because of our cuts. They’ll come from facilities, they’ll come from all kinds of services. You know, we may have more overcrowding in terms of distributing resources, but what people must remember is that we are not cutting the budget because we feel like cutting it…We have to make about $five billion in payments to schools and local governments to not-for-profits in mid-December–and we’re $2billion behind because our revenues are down 36 percent.
“So the question is: How do you make up the difference?”
The Legislature and New York State dwellers are pondering the same thing.
“The $5 billion is three billion to cover this year’s deficit and two billion to reduce next year’s deficit; so I would think that if we get past this period; if the Wall Street revenues come in the way everyone is telling me–and I don’t believe them–but they say they’re coming in, then by next year, we should have the resources to replenish some of the cuts we’ve made.
“But if we don’t make the payments, then we’re going to go into default, which is the place where states like California, Arizona and Michigan are really fighting. The state of Massachusetts had to get a loan, the state of Pennsylvania couldn’t pay off their budget because the Legislature was fighting over it.”
What about the feedback he is receiving?
“I’m hearing about the feedback, but I asked for feedback six weeks ago–none of them have said how to cut the budget. They all said that what I’m saying is ridiculous and it’s hysterical, but if you go back and you read the newspapers in July of 2008 when I said, ‘We are about to go into the worst recession since the Great Depression,’ they said the same thing then and we are in the worst recession since the Great Depression, aren’t we?”
Asked if he thought we’d be out of the woods by next year, Paterson said, “No, no. Wall Street is temporarily up, but unemployment is still skyrocketing in this country. There’s no job creation. Wall Street may be up now, but it will be back down. The question is who do you believe?”
So when will this economic decline bottom out?
“We’re looking at a year away from coming out of the recession–around this time next year,” the state’s chief executive predicted. “The question is going to be: Which state will be in the [best] fiscal condition to rebound from the recession and go into prosperity? If we have a $10 billion budget deficit because this Legislature didn’t deal with our problems, if we are in default because we didn’t pay our bills….well, what happens to individuals who can’t pay their bills? They get their cars taken away from them, they get their homes taken away from–and that’s what’ll happen to this state.”
Next Monday and Tuesday in Manhattan and Farmingville, respectively, the New York State Senate Finance Committee will hold two public hearings to review the fiscal consequences of the deficit plan.
Senate Majority Conference Leader John L. Sampson said, “The Majority Conference is opposed to any new taxes or fees as a means of closing the current budget deficit. While we appreciate that the governor avoided making such proposals, we must also mitigate the impact of potential cuts and keep vital services intact. This budget will not be balanced on the backs of the state’s most vulnerable residents. Our hearings will ensure that the public’s concerns and alternative proposals are heard before any deficit reduction plan is finalized and voted on by the Legislature.”
Senate President Malcolm A. Smith said, “New York was among the states hit hardest by the national recession, and any plan to balance the budget must be deliberated with an eye toward our economic future. While our staff is reviewing the implications of the governor’s proposals, we’re also bringing the public into the legislative process to hear what these cuts would mean to programs and services and determine if there are better ways to close the budget gap.”
Senator Carl Kruger, chair of the Finance Committee said, “I look forward to listening to valuable testimony that will guide us in formulating a prudent deficit reduction plan that accomplishes the goal of maintaining essential services while imposing no new taxes on already-overburdened residents.”
“These are tough cuts. I’m not going to lie. I’m not going to play games like other legislators and say, ‘I’m not going to do it.’ But if we don’t do it, a year from now, you’ll know [what will happen],” retorted Paterson. “They don’t know what a state in default is like. That’s when they close the school down. Where are the children going to go then? If you close the nursing homes down, where are the seniors going to go then?
“The worst-case scenario is coming to California, is coming to Arizona, who sold off some of their properties to try to pay their debts. Michigan has a 16 percent unemployment rate. The state of Michigan has closed 90 percent of their libraries. The state of Illinois opened up their jails and let offenders out early to save money. And we in New York, we don’t realize how drastic the recession has been.
“I don’t even know why we’re still calling it a recession, but did you notice that the head of the Feds said the recession is over? How can the recession be over when 10 percent of the country is unemployed? And remember about unemployment: We don’t count the people who are no longer on the unemployment rolls. In this country, there is 15 percent unemployment.”
In New York, said Paterson, “850,000 people are unemployed. What I am saying is that the real problem here is that no one is telling the public the truth about where the economy is.
“I don’t think people think that the end ever comes, but all you have to do is walk around the neighborhoods of this state and you see empty homes where people used to live and high unemployment rates because nobody can create jobs any more. Now, what I want to do is use the state resources to create jobs, and we’re still trying to do that even in the midst of a recession. But if everyone looks at the problem based on how things were five years ago, they can get angry at government, they have a right to.
“But it was the Wall Street people–the same people who they are saying are going to bail us out, who lost money in these scams like predatory lending–that got us into this mess. I don’t know why people are pointing the finger like they are going to get us out of it. Believe me, they’ve got their own problems; they’re working on themselves. What we have to do is work together as a state to emerge from this crisis.”
As for the voracious attacks upon him from the tabloid press, Paterson said, “I hear these things, but you know what they say, ‘Know the source.’ I don’t think anybody likes it [when they are criticized like this], but when I run for office next year, we’ll see what my popularity is.”
So he’s definitely running for governor in 2010?
“Absolutely,” he assured.
So he’s not going for Charlie Rangel’s congressional seat?
He denied it like it is the most preposterous idea–ever–in life.
“Rangel never came up with that idea and neither did I,” said Paterson adamantly. “That is the type of rumoring coming from people who don’t want your message to be put out. It’s nothing that I’m interested in, and why is everybody talking about it? Who’s the person who suggested this in the first place?”
No one spoke to him or Rangel about it, he maintained, “and neither one of us has talked to each other about it. So, it’s another vicious rumor that somebody created because they want me to not run.”
Dodging the verbal slings and arrows is made easier, he said, because, “I’m working for the people of the state of New York and when I run into them, they are very encouraging.”
Could the upside of all this be that this $5 billion is the last of the draconian cuts?
“If the revenues stop falling, but we don’t know whether they are or they aren’t,” said a blunt Paterson. “It is still going to be challenging. But if we make the reductions now and we balance the budget now, we would reduce next year’s budget to about $3 billion–we can manage that.”
So the recession could get worse, actually?
“It could. We should pray that it doesn’t. But as governor, I have to plan for the worst type of situations. But what I can say is that within a year, I think that we would be escaping this crisis. But right now, it is going to be very, very tough.”