By Malcolm A. Smith

Gov. David Paterson’s proposals for significant cuts to the state budget are a prudent acknowledgment that our nation’s economic problems and the continuing crisis on Wall Street will force big changes in the way we do business in Albany.

We’re going to have to slash state spending. We’re going to have to find unprecedented new efficiencies in government administration.

And we won’t be able to avoid cuts to some programs that provide valuable services. There’s simply not enough money available to pay for everything state government has funded in recent years.

But most of all, we’ll need bigger and stronger state-federal partnerships than ever.

The economic stimulus package that Congress is about to consider offers a chance for New York’s new state-federal team to work together and make some progress. We’re counting on our experienced and powerful congressional delegation to create opportunities for new jobs all over the state.

I have written to House Speaker Nancy Pelosi, Senate Majority Leader Harry Reid and President-elect Barack Obama to express my support for their mutual efforts to develop and pass a stimulus package to revive our economy.

Congress should pay particular attention to job creation, tax cuts for working families and fiscal assistance to state governments, including an increase in the Federal Medical Assistance Percentages.

I support President-elect Obama’s recommendation for a job creation tax credit of $3,000 for expanding businesses. I’d like to see a matching credit for New York State taxes.

Federal funding for infrastructure initiatives will also drive new job creation, and I have recommended that new infrastructure funding for the stimulus package be targeted at projects already developed by state and local governments.

New York has 40 shovel-ready infrastructure projects, 390 clean water projects and mass transit expansions that could provide an immediate burst of employment with new federal funding. These include 36 separate highway and bridge projects in upstate New York, from the Route 22 bridge over Kinderhook Creek in Rensselaer County to resurfacing of I-690 in Syracuse and replacement of the Route 31 Bridge over the Erie Canal in Monroe County. The multiplier effect of these projects would help boost the prospects of dozens of communities, and would provide crucial help upstate.

The state and federal governments must do more to provide tax reliefs for middle-class families. I share the Obama-Pelosi-Reid commitment to reducing the tax burden on working families. I also agree with Speaker Pelosi’s recommendation of an immediate tax cut rather than rebate checks as a method for boosting take-home pay and helping families quickly. I’m committed to working with my colleagues in Albany to implement similar reforms to state taxes.

There are also steps the federal government can take to help reduce budget pressures at the state level.

New York and nearly all other states are under tremendous fiscal pressure. We face an immediate deficit of approximately $2 billion for our current budget and a gap of $12.7 billion for the 2009-2010 budget.

Fast action by the federal government to help New York and other states through counter-cyclical fiscal measures could help limit service and job cuts while boosting the economy. I support Governor Paterson’s recommendation for a 5 percent increase in FMAP support for Medicaid and related health care programs over the next two years, and urge that it be included in the upcoming stimulus package.
There’s no one magic bullet that will get the New York and national economies working again. But coordinated policies and funding at the state and federal levels are an essential element in the equation.