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by Jay Gallagher

Wednesday, March 10, 2010

Budget Sweetener for Legislature from Lt. Gov.

Lt. Gov. Richard Ravitch today proposed a $6 billion sweetener to lawmakers desperate not to cut spending or raise taxes next year, even in the face of a $9 billion budget gap.

As part of his plan to get the state’s spending and revenues in line, Ravitch - a key architect of the bailout plan for New York City in the 1970s - said the state could borrow as much as $2 billion a year over the next three years to pay for operating expenses.

He didn’t put it this way, but it’s the equivalent of taking out a home-equity loan to buy groceries.

“Borrowing is never a good way of solving operating deficits,’’ he said. But he added at another point, “A very limited amount of borrowing may be needed to reach our goal,’’ in part because he doesn’t think it’s politically possible for lawmakers to do the needed cutting and revenue-raising to balance this year’s budget.

He said within five years the state’s spending and revenues should be matched up. Current projections from the state Budget Division shows a $50 billion shortfall for that period.

Ravitch’s plan, which he planned to brief lawmakers on later today, would also:

-- Set up an independent financial-review board to make sure state spending doesn’t get out of control. If the board finds spending exceeding revenues, the Legislature would be required to make cuts. If lawmakers refused, the governor could make them.

-- Change the start of the fiscal year from April 1 to July 1, and potentially have lawmakers adopt a three-month spending plan soon while they ponder what changes to make for the new, later fiscal year.

-- Require the governor to submit a five-year financial plan when he proposes his budget. Now he proceeds one year at a time.

-- Make the state change its method of accounting from cash to accrual, meaning that revenues and expenditures would have to be counted when the obligation was incurred, not when the cash was received or spent. This would make it harder to manipulate the budget, he explained, by slowing down paying bills to send the obligation into another fiscal year.

Ravitch, 76, who was appointed to his job by Paterson last July, said “there has to be dramatic cuts’’ in spending, but didn’t suggest any. He said that’s up to Paterson and the Legislature.

Paterson, who before has ruled out borrowing to help balance the budget, praised the plan today.

“At its core, his plan reflects our shared view that New York's finances are on an unsustainable path and that true structural fiscal reform is urgently needed to control spending,’’ Paterson said. “Given the Lieutenant Governor's considerable experience and expertise, his proposals deserve to be heard and discussed as we move forward toward the final Enacted Budget.’’

E.J. McMahon of the Empire Center for New York Policy, a conservative think tank, called the plan “an unhelpful distraction.’’

“This adds a huge dimension of confusion and complexity when what you need is a sharper spotlight’’ on the Legislature and its failure to agree so far to spending cuts, he said.

After being briefed on the plan earlier this week, Assembly Speaker Sheldon Silver, D-Manhattan, said it was “not dead on arrival’’ in his house, while Republican Senate Leader Dean Skelos, R-Nassau County, said he opposed borrowing and tax increases. Neither has yet publicly suggested yet spending cuts to balance the budget.

The Legislature is supposed to adopt a spending plan by the end of the month, but there has been little visible progress in negotiations with the deadline three weeks away.

1 comment:

Anonymous said...


I look forward to your blogs every week. They are very informative and enlightening.

Thank you for this blog site and thank you LWVNY!

Debra Drake