Lawmakers May Be Inching Toward a Budget Agreement

Albany, NY – Governor David Paterson has once again put off some payments that the
state owes to schools, citing lack of money.

Governor Paterson, who originally included the school aid money in
emergency spending bills approved by the legislature, now says he's
going to withhold $2.1 billion dollars in school aid payments after
all, due to "severe cash flow difficulties".

Paterson says while the scheduled payment date is March 31st, he
legally has until June 1st to had over the money.

This is the second time the governor has had to delay payments due to
schools or local governments. The first was in December, when he and
the legislature failed to agree on a complete plan to close a deficit
in the current year's budget. The money was eventually paid in
January, when more revenues came in.

Now, Paterson is holding back the payments because the legislature
has left the Capitol for a holiday recess without agreeing on a new
state budget in time for the April 1 deadline. The governor warns
that when they return, they may have to cut even more out of the
state spending plan than Paterson had first proposed.

Meanwhile, State lawmakers may be inching toward agreement on a
budget, now that Senate Democrats are more open to a borrowing option
first proposed by Lieutenant Governor Richard Ravitch and favored by
the State Assembly.

Senate Democratic Leader John Sampson says he plans to meet with
Lieutenant Governor Ravitch to discuss the plan to borrow up to $2
billion dollars a year, in exchange for some constraints on spending
in the future. The proposal is favored by Assembly Democrats as a
partial means of closing the over $9 billion dollar deficit.

"I've always had some hesitancy with respect to the borrowing," said
Sampson. "But once again, everything has to be on the table, and we
have to look at that more in depth."

Governor Paterson, who has never appeared to be fully on board with
his Lieutenant Governor's plan, says even if the Senate and Assembly
adopt the borrowing proposal, and float bonds for $2 billion dollars
in state operating expenses, they would still fall far short of
addressing the deficit.

"That leaves you over $4.1 billion dollars worth of deficit that is
not addressed," said Paterson.

While Senate Democrats have accepted many of the governor's cuts to
education and health care, the Assembly plan rejects $600 million
dollars in school aid cuts. Both houses do not want to implement some
of the taxes and fees that Paterson has suggested to bring in
additional revenue. They do not like a proposed tax on sugared soft
drinks, and are against permitting wine to be sold in grocery stores,
which would generate revenue from licensing fees sold to
supermarkets. Paterson says the legislature should consider some cuts
and new revenue options, before they resort to borrowing.

"You know that expression we're putting the cart before the horse,"
said Paterson. "We're putting borrowing before cutting, which is what
our predecessors did, and that's how they got us into the hole we're

There are no legislative sessions scheduled until April 7th, but
Democratic legislative leaders says they have not quit working on the
budget, they are continuing to talk while home in their districts,
and could bring members back at a moment's notice.