ALBANY — Gov. David A. Paterson emerged from behind closed doors Monday to defend the state’s newly proposed $131.8 billion budget, but business groups railed against its massive tax hike package as education and health care special interests complained it does not spend enough.
Critics of the 2009 budget rushed to the Capitol and flooded lawmakers’ telephones to try to unravel support, especially those from upstate.
But Paterson, who in a session with reporters appeared to undermine some elements of the plan he had just negotiated, said there were few options for a government that saw its projected deficit leap by billions in just a couple weeks, to $17.7 billion.
“None of this makes sense,” he said of a plan that imposes record tax increases and cuts many popular programs. But he said the choices were difficult and a “shared sacrifice” by all New Yorkers. “This is in response to a crisis,” he said.
With Senate Democrats new to power this year and holding a razor-thin majority, critics fanned out trying, in the words of one lobbyist, to find “a hero” who would vote against the budget and, therefore, stall its passage today.
“This budget is a road to fiscal ruin,” said Kenneth Adams, president of the Business Council of New York State, one of a dozen business groups that tried to derail the budget.
But several Senate Democrats emerging from a caucus meeting said their 32-member coalition is holding steady and will back the budget despite GOP criticisms that it especially targets upstate for cuts and tax increases. With the GOP vowing to vote no, it would take only one Democrat to vote no, resulting in an unbreakable tie because the state has no lieutenant governor.
“We don’t like the things that are in there,” said Sen. William Stachowski, a Lake View Democrat. He said he would support the budget today. “We’ve never had to deal with a $17 billion budget hole,” he said.
Coming from a relatively conservative district and after having a re-election scare last fall, Stachowski is one of those being heavily targeted by budget critics to get him to break with his fellow Democrats. The pressure included phone calls, e-mails and, in the case of a group of New York beverage bottlers upset about new costs they will have with the expansion of the bottle bill, radio ads running on Buffalo stations beginning this morning.
“When you ran for the State Senate last year you promised to be independent and represent our interests. We trusted you and voted for you,” the radio ad states.
Under pressure from Republicans, the Democrats controlling the Legislature decided to forgo the usual budget adoption process: print thousands of pages of bills and rush them while still warm to legislators’ desk for approval before lobbyists, the media and even lawmakers have a chance to read them. This year, the bills have been in public view at the Capitol and on the Internet since Sunday morning.
The result has been an unprecedented window for special interests to try, one last time, to influence rank-and-file lawmakers.
It came from all fronts. Danny Donohue, president of the Civil Service Employees Association, said the budget contains $481 million in savings by eliminating 8,900 state workers through layoffs and attrition. He said that while Paterson has been responsible for the fight with labor over the cuts, the new budget makes lawmakers “complicit in the reckless and irresponsible plan” and threatened that if they approve the budget lawmakers will “have to answer for their votes.”
Education groups said flat spending for schools will force layoffs, while hospitals and nursing homes predicted facility shut-downs because of cuts.
Business groups complained of the tax hits on energy utilities, health insurance companies, farmers, the food and beverage industry and numerous other sectors that, in the end, will pass along the levies to consumers.
They also said Paterson and legislators failed to deal in any way with rising property taxes; instead, the budget cancels the STAR rebate check program, worth $1.5 billion to property owners. And they said the budget is silent on reforms needed to help control Medicaid costs or help localities in cutting expenses.
But, mainly, critics said the budget’s additional revenues — as high as $8 billion by GOP estimates— come at an especially bad time, given the economy. With the new taxes and the lack of economic development initiatives, the budget, in the words of one of the business lobbyists, shows a “disdain for the private sector.”
Health insurance taxes have soared $800 million in two years, officials said at a gathering near the Capitol that attracted representatives from small and big companies alike, while the new bottle deposit law will cost the beverage industry $230 million. Higher taxes on energy companies will cost consumers nearly $600 million this year.
The new budget, said Brian McMahon of the New York State Economic Development Council, “continues the death spiral” of the state’s economy.
Paterson and legislative leaders insisted the budget is not bloated. They said it is wrong to count up the overall budget because it includes nearly $7 billion in federal stimulus aid. They want the public to focus on the state’s general fund, which rises one percent.
“I would like to tell you that this budget brings about the end of our fiscal crisis. But I can’t do that,” Paterson said.
He then raised concerns that the income tax surcharge — on single taxpayers making over $200,000 and married couples making over $400,000—might not bring the full $4 billion the budget assumes. He noted, for instance, some of those people might move from the state to flee the higher taxes.
Paterson also said this is likely not the only time the budget is addressed this year. He said if the economy worsens, lawmakers will have to come back and push through more spending cuts and tax hikes. “That’s just how critical the situation is,” he said.
While Paterson defended the clandestine process that produced the budget, one of the three men in a room distanced himself from the secrecy.
“Is everybody happy with this process? I can’t say yes,” said Senate Majority Leader Malcolm Smith. “I can say we have made some very difficult choices in very difficult times, and I would ask the public to understand that we did the best we could under a difficult situation.”
The pressure to block the budget, as nearly impossible as it appears, was aimed at five upstate Senate Democrats. Unshackle Upstate, a business group, organized a series of events Monday in upstate cities, including Buffalo, to condemn the budget.
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