Lawmakers and lobbyists expect Paterson to include a cigarette tax increase of $1 per pack.
Gov. David Paterson talks to reporters outside his office at the Capitol in Albany, N.Y., on Wednesday, May 12, 2010.
Negotiations failed. Appeals fell on deaf ears.
Now, Gov. David Paterson is playing hardball to get a state budget done.
Paterson has started to include increasingly drastic measures in his weekly budget extender bills to strong-arm lawmakers into agreeing on a final state budget. And it looks like it is working.
“I don’t think that a governor should have to threaten the Legislature with shutting down government to get them to do the job that they were sent here to do,” Paterson said. “But it becomes necessary when a long time period has elapsed and there has been no action.”
Monday, Paterson proposed $775 million in health care cuts and savings, which legislators agreed to. The alternative was shutting down state government. Next week, lawmakers and lobbyists expect Paterson to include a $1 per pack increase in the state’s cigarette tax in his 11th budget extender bill. Cuts to education could follow.
“I don’t see any movement toward a soda tax or toward wine in grocery stores at the moment — but that could change,” said Assemblywoman Joan Christensen, D-Syracuse.
Lawmakers don’t want to be forced to vote for unpopular taxes or spending cuts, especially in this election year. So they are scrambling to work out a state budget to pre-empt further action by the governor.
Democratic leaders met amongst themselves and with the governor over the weekend and early this week. Sources say a budget deal is near. Albany insiders said Tuesday the leaders were as close as $500 million from closing the state’s $9.2 billion budget gap, but Paterson said three-way agreements are still $2.2 billion apart.
“There is a lot of activity,” said Assemblyman Al Stirpe, D-North Syracuse. “It looks like we may get to vote on something by the end of the week.”
Still, in the world of Albany, close is not the finish line and agreements could fall apart at any time.
In the meantime, a few rank-and-file lawmakers are planning their own hardball attack.
At least two Senate Democrats, who up until now have kept government running by voting in favor of weekly budget extenders, are threatening to vote “no” on the next extender bill, which will come before the Senate and Assembly on Monday. Without the votes of Sens. Pedro Espada Jr. and the Rev. Ruben Diaz, state government will shut down. Republicans have consistently voted against the budget extender bills and Democrats hold only a one-seat majority in the house.
Espada, who set off the debilitating Senate coup last year, said bold leadership is needed again and he plans to force the Senate leadership — which he says has been out-negotiated in the budget process — to work through the weekend to seal a deal with the Assembly and governor.
New York’s budget is now 70 days late.
Tuesday, a Paterson administration source hinted that the governor’s next budget extender, if a budget deal is not reached, could include cuts to mental health and human services programs, as well as the cigarette tax. That tax would net the state an estimated $218 million in annual revenue. Smokers already pay $2.75 per pack in state excise taxes.
Cigarette taxes
New York has the fourth-highest state taxes on cigarettes, but could become No. 1 soon. Gov. David Paterson is proposing to increase the state excise tax by $1 per pack. Here’s how cigarettes are taxed per pack by states with the five highest and five lowest rates as of Feb. 1.
Rhode Island $3.46
Connecticut $3.00
*Hawaii $2.80
New York $2.75
New Jersey $2.70
Georgia $0.37
Louisiana $0.36
Virginia $0.30
Missouri $0.17
S. Carolina $0.07
* effective July 1, 2010
Source: The Tax Foundation
“As far as we can tell, it’s not a done deal, but the governor and Assembly leadership appear to be committed to (raising the cigarette tax),” said James Calvin, president of the state Association of Convenience Stores. “The Senate leadership up until now has said no new taxes. We hope they hold to it.”
Calvin said a tax increase would hurt small business, counties and even the state, because more smokers would buy tax-free cigarettes from Indian nations, online or on the black market.
The school lobby also is nervous because education cuts could come next.
“Education is the last big item that is unresolved,” said Billy Easton, executive director for the Alliance for Quality Education. “The need to get the budget done is starting to overtake some of the issues, and we do not want to see the need to restore funding for our schoolchildren get lost in the mix.”
The health care appropriations decided Monday comprise about 40 percent of the state’s budget. The cuts the Legislature voted for extend through the entire fiscal year, which ends March 31.
Despite decades of late budgets, Monday’s action marked the first time a governor has enacted a portion of the final state budget through a temporary budget extender bill. Christensen called the strategy “ingenious” because it forced legislative leaders to step up negotiations.
“That is not how government is supposed to work,” Paterson said. “But I’m going to get (the budget) done by any means necessary. If it means putting further cuts in emergency appropriations, then I’m ready to do it.”
Paterson said he is reviewing “a menu of opportunities” to include in his next budget extender bill, but he would not be more specific. His bill will be made public Friday.
Special interest groups hope the Legislature acts before the governor can wield his power again. Lawmakers, anxious to keep votes and financial support coming their way before November elections, are working to make that happen.
“Hopefully there won’t be a need for additional extenders and we’ll be able to close down the budget prior to that,” said Austin Shafran, spokesman for the Senate Democrats.
Contact Delen Goldberg at dgoldberg@syracuse.com or 470-2274.