By NICK REISMAN
Gannett Albany Bureau
ALBANY -- Three weeks after his Jan. 1 swearing-in ceremony, New York's new governor will have to lay out his plan for the 2011-12 state budget, which is expected to have a $8.2 billion hole.
The fiscal outlook gets worse from there.
Even if the deficit next year is closed, the Division of Budget estimates there will be a $13.5 billion gap in 2012-13 and a $15.6 billion deficit in 2013-14.
But the two candidates for governor, Democrat Andrew Cuomo and Republican Carl Paladino, have offered varying measures of detail on how they plan to approach the potentially bruising budget battle, fiscal watchdogs say.
"Both of them want to persuade us that they can make the tough decisions," said E.J. McMahon, executive director of the conservative Empire Center for New York State Policy. "The main difference between them is Paladino seems to want to make it clear that he's willing to cut anything and doesn't care and Cuomo is a holding the line guy on spending and on taxes."
McMahon said Cuomo's budget proposals boil down to vague pledges of reducing costs and rooting out inefficiencies. Paladino has been more specific, but does not have a mastery of the facts, McMahon said.
"You're not going to get a complete budget balancing program out of either candidate at this point in the campaign," he said.
Cuomo, the current attorney general, has churned out a series of policy books that discuss the state's myriad problems and his plans to cut down on state spending and "rightsizing" state government. His campaign referred questions about plans for the budget to the policy books.
As governor, Cuomo would seek to eliminate or consolidate unnecessary layers of government and state agencies. Other bureaucratic appendages like non-functioning public corporations that likely do not have significant budget costs would be eliminated.
Cuomo would also push for a state-spending cap that could only be broken by a supermajority of the state Legislature with consent from the governor. He wants to freeze state salaries.
But Cuomo has not said specifically if he plans to cut the state workforce or slash education aid to districts. On Medicaid, which makes up the lion's share of the state budget, Cuomo has called for a "fundamental restructure" of the health-care program for low-income people.
"We must get New York's fiscal house in order," Cuomo writes in one of the policy books. "It will not be easy and will require sustained effort, seriousness of purpose and the ability to build a coalition for making the hard decisions the state's crisis demands."
Paladino, a Buffalo businessman and favorite of the Tea Party movement, has said he would reduce state spending by 20 percent over two years and taxes by 10 percent in his first year.
Those goals will be achieved by cutting state bureaucracy and optional entitlement programs within Medicaid. State worker layoffs will occur under Paladino, said his campaign manager Michael Caputo.
"At the end of the day, our government is bloated and we have too many public employees," Caputo said. "This needs to be done and, unfortunately, that will cost some public employees their jobs."
But he has no plans to cut education aid, Caputo said. Instead, savings achieved by eliminating the state Department of Education will stave off cuts to per-student education costs, Caputo said.
"He wants to make sure the students in the state are not deprived of the level of education they deserve," Caputo said.
Both candidates say they would resist tax increases and borrowing as a way to close the deficit. Cuomo said he would close the gap without raising taxes.
Gov. David Paterson, who is not running for a full term, vetoed $1.4 billion in education aid approved by the state Legislature in June as a way to close a $9.2 billion deficit in the 2010-11 fiscal year, which began April 1.
Paterson also pushed through a plan to increase taxes on cigarettes and tobacco products, collect taxes sold to non-tribal people on Indian lands and eliminated a sales tax exemption on clothing under $110. Even with the spending cuts and new taxes, the state's 2010-11 budget may still fall out of balance by the end of the calendar year if projected revenues do not meet expectations.
The state is in line to receive $607 million from a federal education-aid package, but that money is not likely to be available again in 2011.
"The next governor is going to have to cut school aid just like Paterson did," predicted McMahon, of the Empire Center.
Paterson is also seeking to eliminate 2,000 jobs through attrition and layoffs by the end of the year. Cuomo told the Albany Times Union editorial board Tuesday that he believed the plan was legal.
Cuomo, who holds double-digit leads over Paladino in statewide polls, said in an interview with The New York Times that he would aggressively seek concessions from public-employee unions as governor. Still, New York State United Teachers President Richard Iannuzzi, was hopeful he could work with the next governor, no matter who wins on Election Day.
"I'm going to take Andrew on his word that he wants collaboration and cooperation," Iannuzzi said. "The idea of cooperation will breakdown if there isn't a real sense of sharing of the pain."
The union has declined to make an endorsement in the governor's race. Cuomo supports limiting annual property tax increases at two percent or the rate of inflation, putting him at odds with the union, which supports tying property taxes to household income.
Paladino has called Cuomo's tax-cap plan "gutless" and would work to reduce the state's property tax burden, which is the highest in the country, according to most studies. But Paladino has conceded that a tax cap would be a first step toward cuts in spending.
Iannuzzi points to the cuts school districts have had to deal with in the last year, but said there should be other areas of the budget that are sacrificed.
"We've gone into a new pension system, we've made sacrifices in local school districts, we've taken a significant cut this year and now we need to sit at the table and see who else is sacrificing and move this state forward," he said.
The Public Employees Federation union plans to press the next governor on its legislative goals, which include cutting down on the number of consultants hired by the state. The union endorsed Cuomo in August.
"We've made our selection and we're behind Andrew Cuomo," said spokeswoman Darcy Wells. "We're confident that we can work with him and hopefully be more receptive to our suggestions in how the state can save money."
The next governor will have to contend with a projected $8.2 billion budget deficit. Here is what Democratic candidate Andrew Cuomo would do to control the budget and what Republican Carl Paladino has proposed.
--Cut $20 billion from Medicaid by eliminating optional benefits and strengthening anti-fraud practices.
--Shift the start of the fiscal year from April 1 to July 1 in order for the state to have a better idea of revenue projections.
--Require a two-thirds or "supermajority" approval in the state Legislature for any tax hike.
--Continue a hiring freeze of state workers and implement a "pay for performance" plan that ties an employee's pay to a set of goals, not periodic salary increases.
-- Create a commission to review state agencies and evaluate whether they are necessary. Paladino is already considering the elimination of the Adirondack Park Agency and the Lower Manhattan Development Corp.
--Consolidate or eliminate public authorities, local governments and districts that are redundant or no longer serve a purpose.
--Cap annual state spending that can be overridden by a two-thirds supermajority in the Legislature and the governor.
--Have the state take over Medicaid responsibilities from the county governments, carefully manage resources for high-needs patients and use the aggregate buying power of the state and local governments to reduce prescription drug costs.
--Reduce pension costs by creating a Tier VI program that would cut down on "padding" through overtime.
--Freeze salary increases of state employees.
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