Budget Crisis

Letter via e-mail from Gov. Paterson's office

Earlier this week, the Legislature concluded an Extraordinary Session that I convened to address New York State’s worsening fiscal crisis. While the deficit reduction legislation passed by the Legislature provides needed savings, it falls well short of what is necessary to put New York on the road to fiscal and economic recovery.

Although the Legislature failed to join me to adequately address this crisis, we were able to achieve historic reforms that make government more accountable to taxpayers.

This week, we enacted the most important reform to our State’s pension system in more than 25 years, creating a new “Tier 5” that will substantially reduce the cost of government for the long-term. Public pensions have been allowed to grow at an unsustainable rate for a generation – with rising costs for local governments passed on to New Yorkers in ever-increasing property taxes. Thanks to this legislation, New York finally has a rational pension system that provides a secure retirement for hardworking public employees, while controlling costs for property taxpayers.

With Tier 5, we have achieved true structural reform that changes the way the system works. This is not a short-term stopgap. It is long-term reform that will help us operate government more efficiently, control costs, and address the property tax burden that is weighing down New York’s families and businesses.

Pension reform is just one piece of my agenda to change the way Albany works and reduce the property tax burden.

Also this week, we enacted landmark reform of our State’s public authorities. Public authorities are critical to promoting economic development, but for too long they have operated without sufficient transparency. The new law provides the tools needed to root out any waste, fraud or abuse in the system and to reduce costs.

The objective of these measures is simple: cuts costs and provide tax relief.

For too long, we have tolerated a culture in Albany that pays out special interests at the expense of New York’s taxpayers. Decades of overspending by Albany has left our State more vulnerable to the effects of a national recession. High unemployment has depleted the taxes the State depends on and the collapse of Wall Street has taken away New York’s greatest economic engine. This culture of overspending must end, which is why I convened the special session of the Legislature.

Unfortunately, the deficit reduction plan passed by the Legislature does not fully address our current-year budget deficit. It does not solve our severe cash-flow crunch. It does not address our long-term structural imbalance.

As Governor, I have a fundamental responsibility to keep our State solvent. Everyday New Yorkers know that they simply cannot spend money that they do not have, and our State government should understand that as well. For decades, Albany has refused to take the necessary steps to control spending, and has too often put off until tomorrow what should have been done yesterday. I will not allow this to continue on my watch.

Because certain legislators are unwilling to stand up and control spending for fear of the political consequences, I will move forward and implement the tough choices they were unwilling to make. In the coming days, I will direct the Division of the Budget to reduce State aid payments administratively in order to balance the budget and prevent New York from running out of cash.

I do not take this action lightly, but there is no other responsible path. If the Legislature will not do what is necessary, I will take the difficult actions that are needed to restore our State’s fiscal integrity.