June 29 (Bloomberg) -- The New York Legislature approved budget bills that its leaders said closed a $9.2 billion deficit and eliminated the threat of a government shutdown looming over Albany this month.
Hours after yesterday’s vote, Governor David Paterson vetoed $419 million of education spending included in the package. He will also veto other spending increases as well as 6,800 so-called member items that lawmakers use to funnel state funds to groups in their districts, he said last night in Albany.
The bills passed by Democratic lawmakers controlling the Senate and Assembly “presented us with the same gimmicks, chicanery and avoidance conduct that has characterized fiscal management of this state for far too long,” said Paterson, a Democrat who isn’t seeking election in November.
Paterson, 56, said the lawmakers’ budget isn’t balanced. He added that it would result in a deficit of $400 million to $1.5 billion, depending on how much the U.S. Congress reduces $1.06 billion of extra federal money for Medicaid that he said the state isn’t going to collect in full.
“We responsibly have to have a Medicaid contingency plan” or else the state will face a deficit later this year, he said. When a budget deficit emerged last year, lawmakers failed to approve spending cuts to close it, “and I’m not going to let that happen again,” Paterson said.
He described how other states are preparing for the loss of some Medicaid funding, and said it was wrong for legislators to argue that such planning would make it easier for federal lawmakers to cut the program.
New York, the nation’s third-most populous state, has operated under emergency spending measures since April 1, after lawmakers and the governor failed to agree on how to close the deficit in a $135 billion spending plan Paterson proposed in January.
In the absence of a comprehensive budget, the governor has shuffled funds between accounts and delayed payments to schools and contractors.
Paterson’s veto yesterday came after lawmakers refused to accept a bill from him that contained less education funding than they wanted. They also wouldn’t reduce other spending to create a reserve for the potential cuts in Medicaid, which provides health care for the poor.
The veto can be overturned by a two-thirds vote in each chamber. Democrats hold 107 seats in the 150-member Assembly. In the 62-member Senate, where the 32 Democrats are the minimum number needed to pass legislation, a two-thirds vote would require support from Republicans.
Senate Republicans voted unanimously against all the budget bills. The Democrats’ plan “taxes too much and spends too much,” Republican Senate leader Dean Skelos of Rockville Centre on Long Island said in a statement.
Assembly Speaker Sheldon Silver, a Manhattan Democrat, said the Legislature’s budget plan “provides adequate revenue.” Paterson’s veto “will mean larger classes, higher property taxes and more expensive tuition” for students in the state or New York City university systems, Silver said.
Lawmakers said the additional education funding would have reduced property taxes because many districts would have been required to apply the funds to lower the local levy on homeowners.
After passing the budget in pieces, with each bill consisting of hundreds of pages of itemized appropriations, there is no compilation of the spending measures to show how much the state plans to spend in the fiscal year that began April 1.
“We do not have a number,” said Senate Finance Committee Chairman Carl Kruger, when asked the size of the budget during debate on the Senate floor. Even without knowing a spending total, there is enough revenue to balance the budget, said Kruger, a Democrat from Brooklyn.
Lawmakers plan to vote on tax changes that are part of their revenue plan later this week, said Senate Democratic leader John Sampson of Brooklyn.
Total spending, including federal aid, is about $136 billion for the year that began April 1, Austin Shafran, a spokesman for Sampson, said after the Senate approved the bills.
Lawmakers in the Senate and Assembly assumed the full federal Medicaid payment would be coming, as did Paterson in his February budget update. Earlier this month, the U.S. Senate failed to approve the spending, leading Paterson to propose a 10 percent cut in agency budgets to fund a special reserve.
By appropriating money for parts of state government not covered by earlier budget measures, the Legislature has ended the threat of a government shutdown if it didn’t pass Paterson’s weekly emergency spending bills, according to Sampson and Paterson.
Paterson criticized lawmakers for failing to approve his proposals for a cap on local school and government property taxes and giving state universities more flexibility to increase tuition.
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