"It's simple," Paterson said in a rare statewide televised address for a governor. "Costs are rising steadily and revenues are dropping dramatically."
"These times call for action and today I promise you there will be action," Paterson said.
Paterson, however, didn't make any specific orders. He also didn't call for some of the drastic measures other states have already taken, including layoffs and cuts to health programs for the poor and to schools. He said he prefers to work with the Legislature to turn back the "crisis." He said details will be released as soon as Wednesday.
"I think it's a good sign that he's talking tough," said Elizabeth Lynam of the independent Citizens Budget Commission. However, she adds that the Legislature and Paterson, now in his fourth month on the job, "are behind the eight ball.
"There was volatility before, uncertainty and bad news," she said. "They are behind the curve."
However, she said that by New York's standards, this action early in the first half of the fiscal year begun April 1 is a quicker start. The drawback is that 2008 is an election year for the Legislature, and lawmakers usually take the time after the regular session, which ended in June, to campaign. They are also unlikely to want to cut funding for the special interests that fund their campaigns.
Labor unions and special interests including those from health care and schools have already sought to blunt any proposals against them, saying they support the need to cut spending but not in their area.
"That's why this is really going to be a test of the governor's leadership," Lynam said.
Senate Majority Leader Dean Skelos said he supports Paterson's plan to further cut spending in his agencies and that all state spending should be reviewed. But the Long Island Republican said he wouldn't touch the most politically sensitive big-ticket item: school aid. State school aid is now more than $20 billion a year after a series of record increases, including a $1.8 billion increase in April.
"I think that would be wrong," Skelos said at a press event on Long Island. "We made a commitment to our school districts, we made a commitment to our property taxpayers. Cutting school aid would be totally inappropriate."
"We were a free wheeling, runaway train for the last five or six years," said Senate Minority Leader Malcolm Smith of Queens, the successor to Paterson as leader of the Senate Democrats. Earlier this year, Smith had called for Albany to make harder fiscal choices but got no support from Paterson or legislative majority leaders. Smith had called for $2 billion in cuts through a hiring freeze, elimination of "nonessential" capital spending, taking cash from public authorities left over from the past fiscal year, and requiring technological efficiencies.
"Every one jumped up and down on us for that, but we thought it was pretty firm," Smith said Monday.
"I would probably call for less spending," Smith said. "But I think the governor is doing the right thing. He's saying the candy store is no longer open. He's telling the Legislature to be tough with special interests who have been running Albany. It's no longer about special interests."
State Comptroller Thomas DiNapoli said Albany's support of politically popular programs that commit overspending for years is to blame, and it's exacerbated by the downturn. He noted that New York City Mayor Michael Bloomberg, by comparison, paid off debt and created substantial reserves in good economic times to prepare for inevitable downturns.
"The state in flush times has spent and borrowed in response to requests," DiNapoli said. "So we're not prepared, frankly, as the city is."
The state made midyear aid cuts in 1990, but that led to outrage by unions representing teachers and other public employees, all of which have become more powerful lobbyists and campaign contributors since then.
Paterson's latest warning and promise to act comes after a token trim in the increase to state agencies' spending in the current state budget adopted in April. Thirteen states have already reduced their enacted 2008 budgets, according to a June survey by the National Association of State Budget Officers and the National Governors Association.
Despite Paterson's repeated calls for urgent action since he took office in March, New York has made only small cuts after annual increases in spending that have historically been nearly double the rate of inflation. The current budget includes further increases sought by unions representing teachers and public workers.
In January, while Albany was still trying to figure out if hard times were ahead, Bloomberg ordered city agency heads to cut expenses by 2.5 percent this fiscal year and 5 percent the following year. California Gov. Arnold Schwarzenegger called for a 10-percent cut in state agency spending.
By contrast, Paterson in April asked agency heads who work for him to trim their increased aid by 3.35 percent.
