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Cuomo seeks 1st drop in spending since '90s
Governor's first budget proposes cuts in state aid ranging from public schools to health care providers

Gov. Andrew M. Cuomo today is proposing the first year-to-year drop in spending for the overall state budget since the mid-1990s, and hitting everything from aid to public schools to services by hospitals and nursing homes.

The budget, which includes all state and federal revenues, would drop by several billion dollars from the nearly $137 billion in spending from the current fiscal year, sources with knowledge of Cuomo's first budget proposal as governor told The Buffalo News.

Cuomo is considering cuts of 2 to 3 percent in school aid and in Medicaid, and may propose as many as 10,000 state employee layoffs, according to a government source.

The budget cuts are expected to affect everything from aid to the City of Buffalo to the University at Buffalo's ambitious UB 2020 plan to expand its downtown campus.

The proposed reductions come as Cuomo on Monday attacked what he said has been a long fiscal sleight of hand in Albany driven by special interests to ignore the state's deficit problems by not actually cutting spending, but merely reducing the level of growth in annual expenditures.

For weeks, Cuomo had been warning of the state's $10 billion deficit, but he said Monday that most of the current problem was the result of spending promises from over the years that have been built into budgets for such programs as public education and Medicaid, two areas of the budget that are due to grow by 13 percent in the coming year if already approved state laws do not change.

The curious timing of his attack against "the real Albany sham," as he called the annual debates over deficits, left conservatives and liberals wondering whether Cuomo developed a last-minute change of heart about how deep to slash spending in his proposed budget for the 2011-12 fiscal year, which begins April 1.

"I think what he looked at was his proposed budget and that, in the end, he's going to end up spending more money than was spent last year, even though he has said there'll be a cut," said Assembly Speaker Sheldon Silver, D-Manhattan.

Cuomo's first budget proposal as governor is expected to contain year-to-year spending decreases for public schools. Thousands of state workers are expected to be fired, and health insurance for the poor, the elderly and the disabled will be on the chopping block.

Cuomo insisted that his budget plan is going to be painful for New Yorkers.

"It's going to require extra efforts on many people's parts," he said.

The governor said that "almost all" of the existing $10 billion in red ink is the result of past spending promises built into years of different state funding formulas for programs including education and Medicaid.

"We have to stop that cycle," Cuomo said of the structural deficits that do not get solved each year because of built-in spending requirements already in state law.

That Medicaid and public school funding would grow is hardly a revelation. It was all laid out as recently as last fall by the governor's own Budget Division, which also has noted that state government is on the hook to somehow make up the loss of nearly $5 billion in federal economic-stimulus money that the state has been getting in recent years, as well as the loss later this year of $1 billion from an income tax surcharge on wealthier New Yorkers.

The budget maneuverings came as the State Senate adopted a Cuomo-proposed bill -- his first after a month in office -- to place an annual cap on the growth that localities can raise in property tax revenues.

The cap -- at 2 percent or 120 percent of the inflation rate, whichever is lower -- applies to local governments and school districts, though the state's Big Five districts, including Buffalo, are not included because they do not have separate taxing authority. The City of Buffalo, though, would be covered by the cap.

The legislation faces an uphill climb in the Assembly, although Silver said of his chamber, "I believe we will come to a common ground with the governor and Senate on an appropriate property tax cap." He did not elaborate.

The tax measure would not actually cap an individual property owner's tax liability at 2.5 percent. It would apply to the overall levy by the locality. It also would include certain spending exemptions, such as large legal settlements and capital costs for items such as a new school building. And the caps could be exceeded if 60 percent or more of a locality's voters agree.

The Senate bill also does not address what localities and schools say is needed if there is to be a cap at a time when the state is expected to cut or reduce the growth in state aid: relief from state-imposed mandates.

"Passage of a property tax cap without first addressing out-of-control public work force costs, such as pensions and health insurance, will certainly fail and leave New York in an even less competitive position relative to other states," said the New York Conference of Mayors.

Senate Republicans, who have backed a tax cap for several years, say that any final deals should also include a mandate-relief package.

Richard C. Iannuzzi, president of New York State United Teachers, blasted the cap bill as "significantly more destructive to public education in New York State than any proposals circulated to date."

Earlier in the day, Cuomo released an op-ed article he was sending to newspapers across the state that calls the state's budget process a "sham" for creating structural deficits by building in funding formulas, trend factors and other drivers of future spending for items such as aid to public schools.

But such a system is hardly a "state secret," as Cuomo labeled it, and is not unlike those used in other states or in New York in the last several decades.

Cuomo called it "madness" that would allow him to close this year's deficit but still leave a $14 billion deficit for 2012.

"I wouldn't call it a scamming system," said Senate Majority Leader Dean G. Skelos, a Long Island Republican. He said state budgets every year have certain assumptions based on past provisions such as school aid that change from year to year based on the level of available revenues.

Silver noted that "real and defined" spending decisions are based on such factors as increasing student enrollments or added caseloads for Medicaid.

Steven M. Cohen, secretary to the governor, referred to the $10 billion in red ink -- which Cuomo highlighted as the number in his recent State of the State address -- as a "so-called $10 billion" deficit. He said the bulk of the deficit is the result of past funding formulas "baked" into state law.

"It's not the way it has to be done," Cohen said.

"What this governor wants to do is take this thing from the roots," he said, "and yank it out and fix the system so it's not a recurring problem."

e-mail: tprecious@buffnews.com

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