New York City budget director Mark Page yesterday sharply criticized cuts in state funds for the city proposed in Gov. David Paterson’s state budget.

Paterson’s fiscal 2011 executive budget proposal would cut $302 million of aid to the city — 100% of its share of aid under the Aid and Incentives for Municipalities program. Other municipalities would see average cuts to AIM of 2%. 

Speaking at a luncheon in Manhattan hosted by the Municipal Forum of New York, Page called the proposed cuts “galling” and said the state had a “sort of Willie Sutton syndrome,” referring to the bank robber who famously said he robbed banks because that’s where the money is.

“People doing my job for the state obviously look at New York City and when they’re looking for money, guess where you go?” Page said.

If the cut is adopted, he warned that the local aid might not return to the city in future years.

“Once the pattern’s broken, it’s gone,” he said.

The state receives about half its revenue from New York City but the city gets back about $10 billion to $12 billion less from the state than it pays, Page said.

“The state of New York, without the City of New York, would be a serious poverty case,” Page said.

Not surprisingly, the state sees things differently.

“Gov. Paterson proposed across-the-board reductions to every single area of the budget and every single region of the state, which were targeted in a fair, equitable, and progressive manner,” state budget director Robert Megna said in a statement. 

Other cities have smaller cuts to AIM because they are more reliant on the funding, the state Division of Budget said in background information. AIM makes up 0.5% of New York City’s total budget whereas it constitutes 35% of Buffalo’s budget, 29% of Yonkers’ and 25% of Syracuse, for example.

Mayor Michael Bloomberg’s preliminary $63.6 billion fiscal 2011 budget proposal released last month did not include about $1.3 billion of cuts in state funding for the city that could trigger 19,000 layoffs.

Megna has called the city’s estimates of cuts “inflated” and calculated total cuts to the city at $748 million. The difference is how the city accounts for the cut in AIM funding and because the city does not include school construction aid, the Division of Budget said in background materials.

Even without the cuts, Bloomberg’s budget proposal would reduce the city workforce by 4,286, primarily through attrition. The number of layoffs the city might ultimately have to carry out if the cuts are adopted could be “whittled down” below 19,000, but head count reductions would be “where the money comes out as a practical matter,” Page said.

It’s still a mystery what has happened to the city’s $699 million allocation of qualified school construction bonds that the city budget is counting on for interest rate savings. QSCBs are a new tax-credit bond program created under the American Recovery and Reinvestment Act. New York City, Rochester and Buffalo all received individual allocations of QSCBs.

Under ARRA, allocations to individual municipalities in 2009 either expired at the end of the year or reverted to the state. The Division of Budget said that Rochester’s and Buffalo’s allocations were reverting to the state, but neither the state officials nor city officials have said whether New York City’s 2009 allocation had also reverted to the state.

Asked what happened to the city’s QSCB allocation, Page was silent, while spokesman Raymond Orlando said they had nothing more to say on the matter beyond Page’s comments last month that the city was looking to Congress to pass legislation to make QSCBs more marketable.

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