NY gov opposes borrowing to bolster budget

By Valerie Bauman

New York Gov. David Paterson is ruling out borrowing as state leaders try to close a $1.5 billion budget gap in the last five months of the fiscal year.

Paterson says he fears rating agencies would downgrade the state’s credit standing if New York used loans to address the financial crisis.

“Government has to be managed like a household,” he said Monday.

New York state Comptroller Thomas DiNapoli said Paterson is right to rule out taking on such debt. He said the governor’s opposition to borrowing will help maintain the state’s credit rating.

A spokesman for Republican Senate Majority Leader Dean Skelos didn’t respond to a request for comment. Dan Weiller, a spokesman for Assembly Speaker Sheldon Silver, declined to comment on whether the Democrat-led Assembly would support Paterson’s call to hold the line on borrowing _ other than to say they were “working with the governor.”

In past fiscal crises, the Legislature approved borrowing billions of dollars rather than making deep cuts in school aid and other spending. State debt is now $52.5 billion.

Paterson wants $2 billion in spending cut from what remains of the $120 billion 2008-2009 budget during a special legislative session on Nov. 18.

But powerful labor unions oppose school and Medicaid cuts, which are the biggest costs in the state budget.

“We can make a lot of cuts to education on the administrative end without affecting children and teachers,” Paterson said.

Skelos has publicly opposed any cuts to school aid. Silver has historically opposed school cuts. But with the current fiscal crisis, he has said everything _ including school aid _ is on the table, Weiller said.

Paterson has asked Legislative leaders to present their ideas for how to address the budget deficit before the special session. He complained Monday that the last time he presented his own ideas, Silver and Skelos objected to the cuts but declined to publicly suggest where to reduce spending.

“You’re so smart, you tell me how to cut the budget,” Paterson said Monday on a New York City radio show. He gave interviews to WOR 710 and WWRL 1600 Monday morning.

According to the state constitution, Paterson will have to offer his own budget cuts in time for the special session.

Paterson also issued a letter late Monday, ordering all state agencies to use new cost control measures for any spending that doesn’t get at least 75 percent of its funding from the federal government, or spending that impacts public safety.

Paterson also ordered a “rigorous” new review system for all new contracts and capital projects that requires pre-approval from the Division of Budget and Office of state Operations. Other expenses, like those for energy and items like office furniture, state vehicles and cell phones will require the same approval.

Projects will only meet “essential” criteria if not following through would threaten public safety; violate a court order or any law; or result in a substantial loss of federal aid.