Governor David A. Paterson has just proposed a two-year $5.2 billion deficit reduction plan that will eliminate the State's $1.5 billion current-year shortfall, provide an additional cushion to protect against further declines in revenue and begin the process of reducing next year's deficit which is estimated at $12.5 billion.

These actions would produce $2 billion of savings in 2008-09 and $3.2 billion in 2009-10. Governor Paterson is asking that the Legislature act on his proposals during a special session scheduled for November 18th.

"The deficit reduction plan I have put forward today represents a series of difficult choices across virtually every area of State spending," said Governor Paterson. "The only way we are going to overcome this unprecedented crisis is through shared sacrifice. I look forward to engaging in a productive dialogue with the Legislature about the actions we must take at next week's special session to address our State's record budget deficits."

The largest proportion of proposed savings (57%) came in the areas of health care ($1.8 billion) and school aid ($1.4 billion). Higher Education expenditures will decline by $350 million, largely on the basis of a $600 increase in tuition levels for SUNY and CUNY colleges. The Governor is asking public employee unions to reopen existing collective bargaining agreements to generate approximately $300 million in savings, including the elimination of negotiated salary adjustments.

Human Service Cuts

Human Services are being targeted for a total of $95 million in savings ($20 million in the current fiscal year and $75 million in 2009-10).

One third of this total ($28 million) will come from a 1% reduction in the Human Services Cost of Living Adjustments - (COLAs) for contract agency staff from 3.2 percent to 2.2 percent effective January 1, 2009.

An equal amount will come from a delay in the Foster Care Bridges to Health implementation until the 2011-2012 fiscal year.

One fifth of the Governor's human service savings ($18 million) would come through renewed proposals to "right-size" the Office of Children and Family Services' (OCFS) juvenile justice system. These actions include:

• Closing Six Underutilized Youth Facilities: The Adirondack Residential Center in Clinton County, the Cattaraugus Residential Center and Great Valley Residential Center in Cattaraugus County, the Pyramid Reception Center in the Bronx, the Rochester Community Residential Home in Monroe County, and the Syracuse Community Residential Home in Onondaga County.
• Downsizing Two Underutilized Youth Facilities: The Allen Residential Center in Delaware County and the Tryon Residential Center in Fulton County.
• Closing Three Underutilized Evening Reporting Centers: These include the Capital District Evening Reporting Center in Albany County, the Buffalo Evening Reporting Center in Erie County, and the Syracuse Evening Reporting Center in Onondaga County.

The facilities recommended for closure or downsizing have an average vacancy rate of 63 percent. Great Valley and Rochester have 100 percent vacancy rates.

Other proposals to reduce human service spending included the following:

• Elimination of Unified Services enriched funding provided to 5 counties including Westchester and Rockland;
• Reduced OASAS chemical dependency prevention funding;
• Across-the-board reduction by 50% for all legislative member items.
• Financing the costs of assistance to small businesses to implement Timothy's Law from insurance assessments.

Only Cutting Growth

The Governor stressed that many of his cuts - particularly in the areas of school aid and healthcare spending - represented only a reduction in anticipated growth in spending and not actual reductions from current spending levels.

No Income Tax Increase... For Now

The Governor also continued to reject calls to balance the need for spending reductions through increases in personal income taxes. "We think this has contributed to the reduction of our tax base as more and more New Yorkers move out of state," he stated.

The Governor's wording, however, did appear to leave at least some room for future concessions on the issue of an income tax increase. "At this time, we can not consider that," said Paterson. "Legislative leaders have uniformly decided not to have that in the special session."

Both they and the Governor will have another chance on December 16th when he submits an Executive Plan for FY2010 with its remaining $8.8 billion deficit.