In a five minute address, Governor David Paterson promised to do what state leaders have been avoiding for decades: Shrink the size of state government and help New York taxpayers who he says are struggling to do more with less money.
“The time is now to cut up our credit cards,” Paterson said in a speech broadcast on radio and TV across the state in which he said he is ordering the state Legislature back into session in late August. “The era of buy now and pay later and later is over.”
Paterson took the step of addressing state residents, something done occasionally by presidents but rarely by governors, because he said the size of the deficit in next fiscal year’s budget is rising fast, from $5 billion a few months ago to an estimated $6.4 billion now. The size of the deficit is rising in part because of the collapse of the housing market, the severe decline on Wall Street, and rising costs for food and fuel.
The state’s largest “taxpayer” is the financial services sector, which funds 20% of the state budget through such things as taxes on stock trading, banking and bonuses to corporate executives. Paterson noted that the 16 banks that pay the most in state taxes paid $173 million in 2007. This year, he said, the amount is just $5 million — a 97% decrease.
“The damage on Wall Street is infecting all of our communities,” said Paterson, who called the economic downturn “devastating”.
He said that on Wednesday, he will turn in a budget proposal that deals with the shortfall and will call the State Senate and Assembly back into special session on August 29 to consider his proposals.
“Today, I promise you there will be action,” he said.
Paterson said his proposals will, among other things, look at cutting the size of the state workforce, cut spending by state agencies, and seek private business proposals to either run or buy state assets.
“New York families are already making the tough choices,” he said. “Now, your government is going to follow your lead. We are going to end the legislative vacations….and reprioritize.”