DAN'S PAPERS, December 11, 2009 Page 18 www.danshamptons.com
Albany Tightens the Purse Strings for the East End By T.J. Clemente The clock is ticking on whether or not New York State Governor David Paterson will unilaterally delay payments to localities and schools as part of actions he deems necessary to prevent New York State from running out of money. Paterson has threatened to do so, New York Assemblyman Fred Thiele believes that delaying payments to localities and schools as part of actions deemed necessary by Paterson are reckless and illegal. Thiele told me, “The Governor will only encourage lawsuits if he takes this action. Further, the impact on local governments and schools will in turn increase property taxes as borrowing costs increase. This action is illegal and ill-considered. Rather, trimming the size of the state government is the better alternative.” When I asked him if perhaps the Governor was simply being innovative, Thiele, being the seasoned public servant that he is, offered his assessment. “There is case law—he can cut departmental budgets unilaterally but not local assistance. The state bureaucracy has grown by 8,000 [employees] in two years. He should start there…or did he make a political promise on layoffs, [or was] he just playing to the crowd…nothing innovative about that.” So what is going on as of the first week of December? Thiele replied, “This week the State Legislature took actions to reduce the state budget deficit by $2.8 billion. In addition, the Legislature passed much needed pension reform, which I co-sponsored, that will save tax-
payers $48.5 billion over the next 30 years. While I would have welcomed additional action, there simply was no consensus in the State Senate to do so. However, the Governor has the authority to cut the state bureaucracy unilaterally to address any additional budget shortfall. What the Governor cannot legally do is withhold financial assistance to schools and local governments. These payments are legally obligated.” Morgan Hook, a Paterson spokesman, released this statement: “Yesterday, the Legislature failed to close the budget gap and did nowhere near enough to address New York’s long-term fiscal stability. Simply put, the State cannot spend what it does not have, and Governor Paterson will withhold certification of payments for spending New York can’t afford. Had the Legislature acted in a fiscally responsible way, this would not be necessary. The Governor will not let the State run out of money.” So the game of chicken begins. The result for all school districts and town governments in the state would be dire. The crisis in both East Hampton and Southampton, with their budget situations, would require radical tax measures by their newly elected town supervisors. Perhaps even Community Preservation Fund money would need to be tapped to make payrolls, should the state not make the scheduled and anticipated payments. In Albany, there is a choir of voices shouting that Paterson’s threat is illegal. N.Y. State
Senator Eric Schneiderman held a conference call with reporters Thursday afternoon to say that Paterson stands on legally dubious ground when he says he will unilaterally delay payments to localities and schools. Alan Lubin, the executive vice president of the New York State United Teachers union, said his organization would certainly bring an action if school aid was delayed. “We would go all out,” Lubin reportedly said, and implied that that would mean many TV spots and other media ads. One thing Thiele always seems to know is the right side of the law, but in these times the boundaries are becoming fuzzier. One wise political analyst explained, “Going around the state legislature is a way to make local leaders raise taxes to make up for state shortfalls. The Governor has put pressure on all state representatives, town mayors and supervisors, letting them know unpleasant financial strategies must be taken. It is not business as usual. Paterson may lose in court, but the fact that he might also get a favorable ruling is leverage.” The plain reality seems to be that there are no answers on how to continue to fund programs based on income streams that no longer exist. The truth is, programs must be cut or new income streams (taxes) need to be created. Not the best actions for people who need to get re-elected. Governor Paterson vows not to spend money that the state does not have, even if it means holding back state payments to local school districts and municipalities. He may have no other choice.