New York State Gov. Andrew M. Cuomo gives his State...

New York State Gov. Andrew M. Cuomo gives his State of the Budget speech in the Empire State Plaza Convention Center in Albany. (Jan. 17, 2012) Credit: Newsday / J. Conrad Williams Jr.

ALBANY -- Gov. Andrew M. Cuomo drew a line in the sand with unions and school districts in his 2012-13 state budget proposal Tuesday: Implement a new teacher-evaluation system within a year or forgo their share of $805 million in state aid.

In taking the stand, the governor made a fight over teacher evaluations one of the centerpieces of his legislative agenda. It's also likely to be one of three major flash points -- along with pension cutbacks and casino gambling -- as lawmakers and the governor try to adopt a budget by the April 1 deadline.

In his budget address, Cuomo said he will withhold the $805 million -- a 4 percent increase that had been approved last year -- from school districts that don't comply.

"The equation is simple," Cuomo said. "At the end of the day, no evaluation? No money."

In his second year in office, Cuomo proposed an overall spending level of $132.5 billion, a 0.2 percent decline. He wants to cut state-agency spending about $1 billion and merge some offices, such as the Racing and Wagering Board with the Division of Lottery. He also wants to reduce some special-education and social service spending, keep higher-education spending flat, and have the state take over some Medicaid costs from local governments.

He included several proposals that are likely to undergo intense scrutiny from lawmakers and special-interest groups, including an expansion of gambling and a new, cheaper pension package for future government employees -- for the first time offering them a new 401(k)-style retirement plan.

"Pensions, education and gambling -- I think those will be the flash points," said Assemb. Michael Fitzpatrick (R-St. James).

The governor wants lawmakers to pass a constitutional amendment to allow Las Vegas-style casinos. Voters would have to approve the amendment in a referendum. He also wants to build the "world's largest convention center" at Aqueduct Racetrack in Queens and expand the video slot machine operation there.

The governor's pension proposal would give new government hires the option of either a state pension that is less lucrative than current employees enjoy, or a 401(k)-style plan. The pension plan would save local governments outside of New York City an estimated $80 billion over 30 years.

"This is dramatic change for the system," Cuomo declared.

But Danny Donohoe, president of the state Civil Service Employees Association, blasted Cuomo's proposal as "an assault on the middle class and a cheap shot at public employees."

In wading into the teacher-evaluation process, the governor is inserting himself into a lawsuit that's been going on for nearly a year. The state Education Department and unions are in settlement talks about proposed regulations.

The delay has endangered about $700 million in federal education funds to New York. Though the federal government hasn't issued a deadline for settling it, the governor gave the education department and unions a deadline of one month to end the lawsuit.

"If they don't do it, we'll do it for them," by adding language to the state budget to create an evaluation system, he said.

Once the lawsuit is settled, individual school districts must agree with teachers on how to implement the new process by Jan. 17, 2013. State Education Commissioner John King called the governor's ultimatum a "positive" step and blasted the unions for pursuing the lawsuit. But the New York State United Teachers said King's statement "undermines everything the governor was hoping to achieve."

The state's two top legislators said they support Cuomo on the issue. "I hope the education groups out there understand that this has to get done," said Senate Majority Leader Dean Skelos (R-Rockville Centre).

Assembly Speaker Sheldon Silver (D-Manhattan) said the teacher-evaluation proposal was "not a problem." However, he sounded cool to the idea of creating a new pension "tier" for new workers. He noted lawmakers created a new one just two years ago.

With Ted Phillips, Dan Janison and Jo Napolitano


The governor's plan


Cuomo's proposed budget for the 2012-13 fiscal year, which begins April 1, would:

Set overall spending at $132.5 billion, a decline of $225 million or 0.2 percent, marking the first time in 16 years that New York State cut spending in consecutive years.

Boost school aid by $805 million, but withhold that money from school districts that don't adopt a new, tougher teacher-evaluation process by Jan. 17, 2013.

Create a 401k-style pension package as an option for new state employees.

Help counties' Medicaid costs by taking over a limited amount of expenses, representing $1.2 billion over five years.

Incorporate a tax hike on families earning more than $2 million annually.

Reduce state agency spending 1.4 percent or $0.2 billion.

Cut preschool special education spending by about $20 million.

Limit reimbursements for salaries at state-subsidized nonprofit service providers to $199,000 and eliminate cost-of-living increases to social service providers.

Raise state-college tuition by $300 annually to $5,270, a step that lawmakers approved last year -- while keeping overall higher education spending flat.

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