Bad-times budget plan for NY cuts education

ALBANY, N.Y. -- Gov. George Pataki proposed major cuts in education and health-care spending Wednesday but avoided what he called "job-killing taxes" in his state budget proposal.

Pataki said he would seek to reduce the state work force by 5,000 employees, mainly through attrition, but he did not rule out layoffs.

The Republican governor offered the $90.8 billion spending plan a day after New Jersey's Gov. James E. McGreevey proposed 10 percent budget cuts for its nine state universities. The news will likely be repeated to other state agencies in the coming days.

"He is being honest about the bad situation and telling people what they don't necessarily want to hear," said McGreevey spokesman Micah Rasmussen.

$11.5 billion shortfall

Pataki's plan for the fiscal year beginning in April was designed to deal with a projected $11.5 billion revenue shortfall over the next 14 months.

"Today, I urge you to stand with me and send the right message to the New Yorkers who are worried about their jobs, to those who need jobs, and to the entrepreneurs who create jobs: Let's take the option of raising job-killing taxes off the table on Day One," Pataki told the Legislature.

While he rejected calls to increase the state's income tax or major corporate taxes, he did propose raising an extra $1.4 billion through hikes in more narrow taxes and fees, including 35 percent higher tuition for in-state students at the State University of New York. The tuition rate, which had been steady since 1995, would rise by $1,200 to $4,600 a year.

The Pataki proposal would reduce state aid to elementary and secondary schools by $1.2 billion, about 8 percent less than this year's total of more than $14 billion.

The plan would also cut $1 billion from Medicaid and other health care spending. The Medicaid program, providing health care for the poor, currently costs the state more than $12 billion.

The proposed spending cuts could hit heavily in New York City, which gets almost 40 percent of all state school aid and accounts for almost two-thirds of state Medicaid spending.

Pataki blames the budget problems on the Sept. 11 attacks and the weak national economy. Others say the fiscal woes were exacerbated by the decision by Pataki and the Legislature to increase spending substantially and cutting taxes during the boom years that preceded 2001.

The sluggish economy has hurt New Jersey, as well, pushing down revenue collections and leaving it with a $1.3 billion deficit for the fiscal year that ends June 30.

The McGreevey administration has projected a $5 billion gap between spending and revenue estimates for the budget that begins July 1, and the colleges will lose at least $100 million, aides said.

McGreevey had already slashed their state aid by 5 percent a year ago, cutting $65 million.

"These cuts border on catastrophic. We can't cut our way out of this," said George Pruitt, president of Thomas Edison State College.

McGreevey last year ordered a $1 billion increase in corporate taxes but refused to raise the sales or income taxes.

This year, he again ruled out raising taxes, and said the corporate business tax would remain unchanged.