Cuomo proposes programs to rev up New York economy in annual address.

ALBANY -- In his 10th annual State of the State Address yesterday, Gov. Mario M. Cuomo of New York again lambasted the Bush administration for lack of action on the ailing economy, but said the state must act now and proposed programs to prime the pump of the state's economic engine.

"The national government, which first denied the recession, then ignored it, then said it had ended -- and now says it will end soon -- must enact a comprehensive economic growth plan for the nation," Gove. Cuomo said. "In the meantime, however, we can't wait for Washington. We must pump confidence, capital, and jobs into our Empire State economy. We must build a new New York, with our hands."

For the most part, lawmakers and state officials welcomed Gov. Cuomo's package of economic development programs. However, Senate Majority Leader Ralph J. Marino, R-Muttontow, in an address following Gov. Cuomo's speech continued to press for major reforms in the state's Medicaid and welfare programs.

Although the governor's message to the state legislature did not contain an overwhelming supply of new ideas or expansive programs, Gov. Cuomo proposed a number o initiatives to stimulate jobs growth and economic development in the recession-bitten state.

The cornerstone of this economic development package is an $800 million bond act that would require voter approval. Proceeds from the bond act, which is called "Jobs for the New, New York," would be used to finance infrastructure investments in economically distressed areas of the state. The bond act would provide low-cost loans to businesses and finance projects in economic development zones.

Mr. Cuomo said his office and the state's budget division are exploring the creation of a mini-bond program that would enable New Yorkers to purchase tax-exempt bonds by offering them in small denominations -- as low as $250.

The proceeds from the program would be used to finance reinvestment in urban areas of the state. The state would not incur any additional debt for this program because its public authorities would handle the financings and target the urban areas.

James A. Lebenthal, chairman of the New York municipal brokerage firm Lebenthal & Co., has been promoting mini-bond programs in meetings with New York state officials. Mr. Lebenthal has also tried to convince New York City officials of the merits of a mini-bond program. Yesterday, he said the state's mini-bond program would likely become a reality before the city's.

In the area of housing, Gov. Cuomo proposed the consolidation of the finance, development, and management functions of the state's housing agencies. He also called for extending the State of New York Mortgage Agency's authority to issue bonds for its low-interest program, which serves mostly first-time home buyers. The agency's bonding authority for this program expired last year.

He also called for giving the state's housing finance agency the authority to issue bonds to pay for infrastructure improvements on Roosevelt Island in New York City. Gov. Cuomo said this bonding program would enable the state to develop 2,000 units of housing, half of which would be offered at below-market rates.

In addition, Gov. Cuomo composed a number of small programs including a $300 million financing package for the state's parks and a revolving loan fund for local governments and not-for-profit corporations and hospitals. The revolving loan fund would finance energy efficiency investments in schools, hospitals, local governments, and state facilities.

He also proposed creating an environmental assistance fund to assist local governments and finance initiatives to protect the environment, including solid waste management, recycling and land protection programs.

In one of the more dramatic proposals, Gov. Cuomo called for a state consitutional convention to attempt to amend sections of the state constitution. His proposal would require voter approval, and he would appoint a panel to study and report on constitutional issues that must be addressed by delegates to the constitutional convention.

In the area of fiscal reform, Gov. Cuomo once again proposed changing the start of the state's fiscal year to June 1 from April 1, to allow for more time to estimate revenues and examine state spending decisions.

He also proposed that the governor, lieutenant governor, the comptroller, and all state legislators forfeit their pay for every day the state budget is late.

To contain the state's burgeoning debt service costs, Gov. Cuomo proposed a cap on long-term debt service.

Also yesterday, Lt. Governor Stan N. Lundine told municipal market participants in New York City that "the heart of the governor's message is that you can have confidence in the state of New York."

Mr. Cuomo, who is in his third term in office, presented his proposals in the wake of a Moody's Investors Service downgrading of $14.2 billion state appropriation debt to Baal from A; a possible downgrading of state GO debt; and a fiscal impasse with lawmarkers on closing an $875 million budget gap in fiscal 1992, which ends March 31, and a $3.7 billion budget gap for fiscal 1993.

Earlier in the week, Gov. Cuomo suggested that the state may have to borrow over $400 million in deficit notes to close the fiscal 1992 budget gap because Senate lawmakers have not agreed on a deficit reduction plan. The governor had originally proposed a $95 million deficit note sale. If the state has to borrow more, if could trigger a downgrade of the state's GO bonds by Moody's, which has warned the state about the deficit borrowing.

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