New York Lawmakers Pass Stopgap Bills, Avoid State Shutdown

http://www.businessweek.com/news/2010-06-15/new-york-lawmakers-pass-stopgap-bills-avoid-state-shutdown.html

New York Lawmakers Pass Stopgap Bills, Avoid State Shutdown
June 15 (Bloomberg) -- The New York Legislature passed emergency spending bills for the 11th consecutive week, avoiding a state government shutdown as lawmakers debate how to close an $8.5 billion budget deficit for the year that began April 1.

Agency heads and their 150,000 workers had been making contingency plans if the measures failed and left the state without authority to pay all its bills. Employees were warned that buildings might close and some of them wouldn’t be working today if the appropriation bills didn’t pass, according to agency memos.

State Senator Pedro Espada, the Bronx Democrat whose threats to oppose the bills ignited warnings of “chaos in the streets” from Governor David Paterson, said June 10 that he would support the measure and the government of the third most- populous U.S. state would stay open.

On June 11, Paterson recommended an annual spending plan for human services, such as welfare; and mental health services, such as residences for the disabled, that reduced outlays by $327 million, said Robert Megna, the state budget director. The bills passed yesterday cut spending by the same amount, said Morgan Hook, a spokesman for Paterson.

Paterson won $775 million in savings and annualized reductions, mostly from the Medicaid program, in last week’s emergency spending bill. That narrowed a projected $9.2 billion deficit in Paterson’s $135.2 billion fiscal 2011 budget proposal, presented in February, to about $8.5 billion.

Welfare Payments

The measures approved yesterday would extend a 10 percent increase in welfare payments to the poor that took effect June 1. In January, Paterson proposed delaying half the boost.

Revenue from bonds and other sources, such as allowing wine sales in grocery stores or higher cigarette taxes, are needed to avoid “pain and the destruction of human services in this state that would be unprecedented,” Espada said.

The shutdown threat eased when Republican Senator Tom Libous, the chamber’s second-ranking Republican, said yesterday that lawmakers would pass the bill. Democrats hold a 32 to 30 majority in the Senate, the minimum number needed to pass bills if all Republicans vote no, as they had in the past.

The bills passed 34 to 27 in the upper chamber, with 31 Democrats and three Republicans voting in favor. Democratic Senator Ruben Diaz, Sr., of the Bronx, voted against, the Daily News reported. The state Assembly also passed the measures, the newspaper said.

--Editors: Mark Tannenbaum, Ted Bunker