GOV SENDS $EIZIN’S GREETINGS

by Sally Goldenberg

Gov. Paterson yesterday ordered his budget staff to withhold $750 million in payments to municipalities for school aid, property-tax exemptions and other services to keep the state afloat for the rest of December.

The governor blamed the cash-flow problem — which affects the city to the tune of about $84 million — on the Legislature’s failure to close the budget gap.

A teachers union has threatened legal action to stop him.

“We’re disappointed in the tack that the governor has taken, especially after the Legislature expressly chose not to reduce school aid, and we are reviewing our legal options,” said Carl Korn, spokesman for the New York State United Teachers.

A grim Paterson said he was confident his action would hold up in court.

“This is tragic that we’re put in this situation, but we did not get the resources from the special [legislative] session that I have been saying for the last three months that we actually need,” the governor said at a press conference.

“If the Legislature won’t act, then I will. I will not let this state run out of money on my watch.”

He said New York is $1 billion short of cash this month and will make up the remaining $250 million with anticipated revenues and a rainy-day fund.

During the special session, the Legislature agreed to only $2.7 billion worth of cuts to plug a $3.2 billion budget hole for the fiscal year, which ends in March.

The delayed payments announced yesterday will hit the city especially hard, with a loss of nearly $24 million in municipal aid payments and about $60 million in school aid from checks that were to arrive tomorrow.

Mayor Bloomberg declined comment, saying he was awaiting more information, but state lawmakers panned the move.

“From the governor’s own statements, he already knows that any attempt to singlehandedly impound money that has been allocated by the Legislature is unconstitutional,” said Senate Finance Chairman Carl Kruger (D-Brooklyn).

Austin Shafran, spokesman for the Senate Democrats, said, “Constantly attacking the Legislature is easy, but it doesn’t solve people’s problems. New Yorkers don’t want political rancor or self-indulgent theatrics. They want their leaders to get things done.”

Paterson is directing the state to withhold 10 percent of payments for a slew of services, and said he would re-evaluate the fiscal situation next month to determine when municipalities will actually get the cash they are counting on.

A state budget official said it was unclear whether the state must make these payments by the end of its fiscal year.