Politics on the Hudson

In his 2009-10 budget proposal today, Gov. David Paterson is calling for massive cuts to state education and health-care aid, an elimination of a property-tax rebate program for homeowners and 88 new taxes and fees.

The moves have been expected for months as Paterson tries to close an unprecedented $15.4 billion deficit over the next two years. And few programs are being spared.

The proposed $121 billion budget proposal, to be released in a presentation this morning, calls for keeping spending growth flat from the current fiscal year, which expires March 31.

But to keep up with rises in costs a decline in revenue, particularly from the struggles on Wall Street, Paterson wants to trim school aid, limit the growth in Medicaid spending and reimbursements to hospitals and nursing homes and create a new tier of pension benefits for state and local government employees.

School aid would be cut by 3.3 percent, or nearly $700 million from the current fiscal year, to a total of nearly $21 billion—stoking fears from education officials that local property taxes will need to be increased to make up the difference.

But Paterson warns that the fiscal problems are the result of years of overspending by state government, which no longer can be sustainable.

“For years, record revenues from Wall Street allowed state spending to increase at an unsustainable rate,” Paterson said in a statement. “With the financial services industry in the midst of an unprecedented crisis, we must fundamentally reevaluate what our state can afford to spend.”

Paterson is presenting the budget to the state Legislature a month earlier in hopes of getting an agreement to cut spending sooner than usual. The Legislature is required to pass a spending plan by April 1.

Paterson avoids calling for a broad-based income tax increase, but the budget includes 88 new or increased fees and 10 new public safety fines.

Some of the new charges include an 18 percent sales tax on soft drinks, called an “obesity tax,” eliminating the sales-tax exemption on clothing and footwear under $110 and imposing a sales tax on cable and satellite radio.

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