New York’s budget gap talks continued with little apparent action yesterday afternoon after Gov. David Paterson on Sunday announced he would act administratively to close $1.6 billion of the state’s $3.2 billion fiscal 2010 deficit. Both chambers of the Legislature met in special session to deal with the budget deficit but neither the Senate nor Assembly had taken up any legislation at press time.
As the legislative deficit deadlock entered a fourth week, some observers have said part of the problem is fears that painful cuts could make Senate Democrats vulnerable in next year’s elections.
Travis Proulx, spokesman for the Senate Democrats, said that the votes simply weren’t there for some of Paterson’s proposed cuts to education and other measures.
“The governor can propose taxing unicorns but if the votes aren’t there, unicorns won’t be taxed,” Proulx said. “It’s time for the governor to be willing to negotiate in good faith and close the deal.”
Proulx said that the Senate and Assembly Democratic leadership was in agreement with the governor on “just under $3 billion” of the deficit reduction plan, but he complained that the governor has dismissed legislators’ alternative proposals, including a tobacco bond refinancing that he said would create $500 million of immediate revenue.
Comptroller Thomas DiNapoli said in a report last month that the state could face a $1.4 billion cash deficit in December if corrective action is not taken.
Most of the Paterson’s actions had been previously announced. While the actions do not require legislative approval, nearly a third of the revenue increases require the consent of other parties. Some of the revenue increases come from new estimates rather than new revenue sources.
The previously announced or ordered actions included an 11% reduction in agency operating budgets totaling about $500 million; $100 million of savings on debt service realized through the use of taxable Build America Bonds, refundings, and lower interest costs on variable-rate bonds; $150 million of additional Medicaid fraud collections through tougher enforcement; $45 million higher estimated collection of an assessment on utilities; and $49 million of surplus workers’ compensation contributions from insurers.
“We kind of were waiting for some movement from the Legislature to move forward on some of those things, but because we don’t need legislative authority to do some of these, the governor decided just to go, because we can’t really wait,” said Paterson spokeswoman Lauren Passalacqua.
Moody’s Investors Service analyst Emily Rames said the rating agency was paying more attention to what the Legislature did than whether the governor carried out previously announced gap closing measures.
“We were looking at those as a done deal and looking at the gap that existed on top of those,” Rames said. “The governor is looking for solutions where he can find solutions. We are just going to be looking at what actually gets done.”
Moody’s last month said in a report that the state could face rating or outlook action if steps were not taken to address its deficit, or if such moves relied too heavily on one-shots.
Paterson on Sunday added an additional $300 million of administrative savings, though details were sketchy yesterday.
The state Division of Budget did not return calls or e-mails yesterday.
The governor’s revenue actions also included a $200 million expected payment from a yet-to-be-chosen firm to develop and operate a video lottery terminal facility at the Aqueduct Racetrack in Queens. The state plans to sell bonds to finance developments at the facility and would in turn receive an up-front payment from the operator. That deal requires approval of the governor and the majority leaders of the Senate and Assembly.
Also included in Paterson’s measures was a plan for the Battery Park City Authority to sell bonds and transfer up to $250 million to the state’s general fund. This requires approval from New York City Mayor Michael Bloomberg and the city’s comptroller.
