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August 20, 2004

Governor Pataki vetoes $1.8 billion from Legislature's budget, warns of major gap in 2005

Governor Pataki announced he has vetoed $1.8 billion from the budget approved by the Legislature, and said the state will still face a projected budget gap of $6.1 billion in the fiscal year starting next April 1.

"The budget sent to me simply spends too much and reforms too little," the Governor said when announcing the vetoes. "We spend too much. We tax too much."

The Governor's 195 line-item vetoes removed $235 million in new across-the-board operating expenses and $1.6 billion in new borrowing from the budget. The Governor also removed more than $700 million in new operating expenses over the next three years.

The budget sent to the Governor totaled $101.6 billion. That budget would have been out of balance by nearly $700 million this year, and create an out-year gap of $6.3 billion, according to the Governor.

The vetoes reduce the budget total to $101.3 billion and reduce this year's gap to $434 million, reducing the projected out-year gap to $6.1 billion, the Governor said.

Business Council President Daniel B. Walsh had urged the Governor to veto the Legislature's excess spending and push for Medicaid reform to help restrain spending.

"With no reform, Medicaid costs continue to rise at unsustainable levels," Walsh told the Governor in an August 18 letter. As a result, businesses and homeowners in many counties will see higher property taxes in just a few months, and lawmakers will face "enormous pressure" for state-level tax increases in 2005, he said.

Governor Pataki also noted the need for Medicaid reform. "The budget that was presented to me completely fails to address the critical issue of Medicaid reform and many other areas where we know new reforms are sorely needed," the Governor said.

In most cases, the Senate was willing to enact important these measures, but the Assembly leadership blocked any of these reforms from being included in the adopted budget, the Governor said.

Unfortunately, the failure to act is not something that can be vetoed, the Governor added.