ALBANY - Warning New York faces a calamitous $60 billion in red ink over the next five years, Lt. Gov. Richard Ravitch Wednesday called for less spending, up to $6 billion in borrowing and mandatory balanced budgets.
Ravitch, who helped New York City avert bankruptcy in the mid-1970s, said the state is headed for a fiscal abyss if spending isn't brought into line with tax collections shrunken by recession and turmoil on Wall Street. Until budget-making is overhauled, there is little hope of generating surpluses that could be used for education and business development, he said.
The 18-page plan doesn't say where spending should be cut but cautions against tax hikes.
Lawmakers greeted Ravitch's proposal with measured skepticism. Some publicly derided borrowing money to pay operating expenses. Others privately worried the plan would undermine the legislature's power.
Lawmakers have already largely dismissed the 2010-11 budget proposed by Gov. David A. Paterson in mid-January. He suggested eliminating the deficit with a $1.1 billion reduction in school aid; $1 billion less for hospitals and $1 billion less to state agencies.
Ravitch estimated next year's deficit is $13 billion, not the previously stated $9 billion, once one-time revenues and federal stimulus money are excluded. Such red ink cannot be stanched with spending cuts alone, he said.
To stave off the draconian measures, Ravitch suggested borrowing up to $2 billion. He said a similar amount of debt could be taken on in each of the following two years - but only as New York moves to leaner budgets.
"Borrowing is never a good way of solving operating budget deficits - but we may have to do it," Ravitch said.
Some lawmakers expressed reservations about adding to New York's heavy debt burden. The state has borrowed $9.8 billion in past years to close deficits and spends $1.1 billion yearly to pay off that debt, said state Comptroller Thomas DiNapoli.
State Sen. John Sampson of Brooklyn, the Democratic chief, said he was "hesitant" about more debt. Sen. Dean Skelos (R-Rockville Centre), the minority leader, agreed, adding he was disappointed Ravitch hadn't endorsed a spending cap and requiring a super majority of the legislature to increase taxes.
Assembly Speaker Sheldon Silver (D-Manhattan), a longtime friend of Ravitch, reacted positively: "I think a lot of it makes sense . . . it's mitigating cuts."
Another sticking point for lawmakers is Ravitch's call for a Financial Review Board that would monitor compliance with his five-year plan and keep the budget balanced. The board would issue warnings, and if leaders failed to close deficits the governor could unilaterally withhold state payments.
E.J. McMahon, director of the conservative Empire Center for New York State Policy, praised components of the plan, but said Ravitch had not gone far enough. "What we need to do is cut spending," he said.
Lt. Gov. Ravitch unveiled a plan Wednesday to eliminate a projected $60-billion budget deficit over five years. The key elements are:
REVIEW BOARD. Creation of a five-member Financial Review Board to monitor compliance with a five-year fiscal plan and ensure the state budget stays in balance throughout the year.
NO PAYMENTS. Empower the governor to withhold payments if budget falls out of balance.
BORROWING. Allow more borrowing - up to $2 billion in each of the next three years - to forestall draconian cuts to services.
NEW FISCAL YEAR. Change the start of the fiscal year from April 1 to July 1, thereby giving lawmakers more information about tax collections before adopting a new budget.
PAY OFF DEBT. Require budget surpluses to be used to pay off debt.
PAY-AS-GO. Use new accounting rules that spur pay-as-you-go spending.
NO POLICY CHANGES. Bar the governor from inserting into budget bills changes in policy.
Compiled by James T. Madore