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Paterson stance against borrowing leaves lawmakers in lurch ; Deficit deadlock puts budget accord at risk

Lawmakers grappled Thursday while trying to gauge the severity of Gov. David A. Paterson's threat to block a final 2010 budget deal if it includes any borrowing to close the deficit.

As the finishing touches were being negotiated on transportation and economic-development portions of the budget, the governor took to the radio airwaves -- part of his Thursday scheduling ritual -- to repeat his new pledge from a day earlier to stop lawmakers from borrowing their way out of the $9.2 billion deficit.

The governor told an Albany radio station that the idea of adding to the state's debt load is "dangerous" and amounts to "pushing inevitable decisions off to the future."

"I'm not going to have any borrowing in this budget plan," he later told a New York City station, adding that he is getting "a little miffed" that lawmakers keep bringing up the issue.

Some lawmakers were hoping to use borrowing -- $1 billion or more -- as a final step to nail down the delayed budget for the fiscal year that began April 1.

Without borrowing, and with more than half the budget already appropriated over the course of 11 weekly emergency bills, lawmakers are fearful they will be forced to accept Paterson's plan to cut $1.4 billion from public schools -- which some of them worry would not only hurt schools, but their own political futures in an election year.

"I don't think it's helpful," Assembly Majority Leader Ronald J. Canestrari, an Albany-area Democrat, said of Paterson's no-borrow pledge. He added, "We must be flexible, and I think that includes the concept of borrowing as part of that flexibility."

"I'm not disappointed," Assembly Speaker Sheldon Silver, D-Manhattan, said of Paterson's vow. "I think it's very good for the governor to put his opinion out at this time."

Negotiators have spent the last several days trying to close down the portion of the budget dealing with how much the state will spend on transportation, economic development and public safety. A tentative deal came together Wednesday for an initiative to replace the Empire Zone economic-development program.

Silver said there will be no backing down on a tentative deal among state leaders to begin collecting taxes on cigarette sales by Indian retailers. Wednesday, Seneca Nation officials were at the Capitol trying to push back against the plan.

Sources earlier this week told The Buffalo News that $100 million or more is being put into the upcoming fiscal plan as revenue from those tax collections.

"Nobody disputes the right of the Seneca Nation to buy cigarettes without taxation. The issue is: Are they entitled to unfairly compete with merchants other than Native American merchants and allow people to avoid the tax by buying from them?" Silver said.

Seneca officials, who maintain that centuries-old treaty rights protect the tax-free sales, insisted that the state should not count on the revenues because the collections will never occur.

Legislative leaders say they will be able to adopt the final portions of the budget next week. Paterson has said they have until June 28 to do so or he will put the remaining elements of his budget -- including school aid cuts and tax increases -- into that week's emergency appropriations bill.

A number of fiscal and nonfiscal issues are still hanging, including whether to give more fiscal autonomy to the state university system, whether a "no-fault" divorce law should be enacted and how to control future property tax increases.

Meanwhile, the state's Power for Jobs program, used by hundreds of businesses to reduce electricity bills, has recently expired. The sides are stuck over how to allocate future power incentives and whether to reduce a component of the expired law that gave a small break on utility bills for hundreds of thousands of upstate residential ratepayers.

e-mail: tprecious@buffnews.com

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