NY Governor Proposes $5 Billion Deficit Reduction Plan

October 16, 2009 Updated: October 1, 2015

New York Governor David Paterson has proposed a $5 billion deficit reduction plan for the state of New York. (Spencer Platt/Getty Images)
New York Governor David Paterson has proposed a $5 billion deficit reduction plan for the state of New York. (Spencer Platt/Getty Images)
NEW YORK—To turn around New York’s ailing finances, Gov. David A. Paterson on Thursday outlined a two-year, $5 billion deficit reduction plan that would eliminate the state's current-year budget gap without raising taxes.

The plan calls for a 10 percent cut to the budgets of every state agency. Average New Yorkers will most easily feel the cuts in the areas of public education and health care.

“During a time of uncommon difficulty, we need to work together for the common good and enact a consensus plan that helps us avoid the severe consequences faced by other states that failed to swiftly address their budget problems,” said Gov. Paterson. “This will mean hard and painful choices, but that is exactly the type of leadership New Yorkers deserve from their public officials.”

Paterson's budget reduction plan will have to be approved by the State Legislature, which will have a chance to vote on it in a special session scheduled for Oct. 27.

New York City Mayor Michael Bloomberg commended the governor for being fiscally responsible.

“One of the most serious threats to New York City’s future is the possibility that the state will not get its fiscal house in order quickly. We’ve witnessed the impacts California’s budget crisis has had on Los Angeles, and we cannot afford a similar fate here,” said Bloomberg.

Cuts include $480 million from school districts, $287 million from Medicaid, $184 million from health and mental hygiene programs, $28 million cut from social service programs, $125 million cut from transportation programs, and $62 million cut from higher education programs.

The governor’s office noted that in recent years money for schools has increased dramatically. Even after implementation of the cuts, the 2009–10 school year school spending of $21.2 billion still represents a 47 percent increase compared to 2003–04. Also, based on census data, New York spends more in total per pupil than any other state and 63 percent above the national average.

The state’s tax department is partially forgiving accrued penalty and interest on long-outstanding state tax liabilities in order to encourage individuals to resolve unpaid claims. For assessments between three years and six years overdue, penalties would be reduced by 50 percent. For assessments overdue more than six years, penalties would be reduced by 80 percent.

Paterson’s plan also includes pension reform that the state says could produce savings of nearly $50 billion over the next 30 years for the state and local governments.