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December 6, 2004

Comptroller Hevesi: Spending cuts are essential

Given a projected $6 billion budget gap in 2005, state leaders must cut spending across the board to provide more funding for New York City schools, state Comptroller Alan Hevesi said.

The comptroller reviewed New York State's fiscal picture during remarks at a conference on how state leaders should respond to an expected court order requiring billions in new spending on New York City schools.

The state Budget Division projects a $6 billion gap between spending and revenues in the 2004-05 fiscal year. In addition, the Metropolitan Transportation Authority will require billions in additional revenues to pay for operating and capital expenses, Comptroller Hevesi said.

The state's current fiscal problems stem from years of spending more than Albany could afford, he said: "We are burying ourselves in these deficits."

The comptroller said Governor Pataki and the Legislature should take an approach such as "We're cutting everybody by 1 percent. Let the revenues catch up to the spending."

The Citizens Budget Commission, which hosted the conference, has proposed increases in statewide personal-income, business and sales taxes to pay for more New York City school funding.

Robert Ward, director of research for The Business Council's Public Policy Institute, told the conference that high taxes across the state already hurt young New Yorkers by driving jobs elsewhere. The proposed tax increases will further reduce opportunities in the city and statewide, he said.

Ward said both the state Legislature and New York City officials have chosen to allocate billions of dollars to Medicaid, rather than education, and could change spending priorities without raising taxes still further. With no reform to Medicaid, taxpayer-funded health care will eventually drain any new tax revenues intended for education, he said.

New York's state and local tax burden is already the highest in the country by a variety of measures, Donald Boyd of the Nelson A. Rockefeller Institute of Government told the conference.

By the "most sophisticated" measure, known as the representative tax system, taxes on businesses and workers in New York State are 44 percent higher than the national average, Boyd said.