State Budget Update - Governor Paterson Proposes State Deficit Reduction Plan PDF Print E-mail
In anticipation of the State Legislature's return to Albany on November 18th to address the state's current fiscal crisis, Governor Paterson proposed a deficit reduction plan that would generate state budget savings totaling $2 billion in the current year and another $3.2 billion in 2009-10. While the cuts impact nearly every area of state spending, more than half of the savings would come from reductions in school aid and Medicaid. In addition, all new legislative programs would be reduced by 50 percent. The Governor also proposed actions that would generate additional State revenues including a SUNY/CUNY tuition increase and the extension of the current five cent deposit on soda and beer to water and other non-carbonated beverages.

Included in the Governor's plan are actions that would impact local governments. With respect to AIM funding, while the Governor did not propose any across-the-board reductions to current levels, he did propose eliminating the scheduled increase in AIM funding for 2009-10. This increase was part of the $200 million multi-year commitment to additional AIM funding for cities, villages and towns that was agreed to as part of the 2007-08 state budget. Under this proposal, many local governments would receive the same level of AIM funding in 2009-10 as they do now.

It is important to note, however, that New York City's AIM amount would be reduced by $41 million in the current year. In addition, 33 other cities would have their AIM funding reduced in the current year as well as in 2009-10. These 33 cities include those that received a portion of the $11.6 million that the Legislature added on top of the scheduled increase that all cities received. Consistent with the Governor's plan to reduce all new Legislative initiatives by 50 percent, AIM funding for those 33 cities would be reduced in the current year by half the amount of only the legisaltive add. The other half of the legislative add would be eliminated in 2009-10. Finally, Governor Paterson also proposed reducing Video Lottery Terminal (VLT) Impact Aid by 50 percent in 2009-10. This proposal would affect 17 municipalities that receive this aid to assist them with the additional costs they incur as a result of having video lottery gaming facilities located in their communities.

While there has been no commitment by either the Senate or the Assembly to agree to any of the Governor's proposals, leaders from both houses have acknowledged that the State is facing a serious fiscal crisis and that action needs to be taken. The Governor has also committed to introducing his 2009-10 Executive Budget on December 16, 2008, a month ahead of the January 20, 2009 constitutional deadline, in order to get a "head start" on addressing the state's budget gaps and to help ensure the budget will be adopted before the April 1st deadline.