Aid loss hurts Albany

Layoffs possible as city officials map next move after Paterson acts to veto bill providing $325M in long-term help

CHRIS CHURCHILL Business writer
Section: Main,  Page: A1

Date: Thursday, August 7, 2008

ALBANY - City officials must scramble for additional ways to eliminate a looming budget deficit after Gov. David Paterson rejected their plea for a long-term boost in state aid.

Paterson, citing the state's own financial woes, vetoed a bill Wednesday that would have given Albany $5.5 million this year and $11 million annually for 29 subsequent years. The city is trying to head off an estimated $14.7 million deficit for 2009. "Obviously, we're going to have to take a long hard look at what we're spending, what we're spending it on, and what we can cut back on," Albany Common Council President Shawn Morris said Wednesday night. "It wasn't money we were necessarily counting on at this point, but in terms of the big picture we have to look at the amount of funding from the state that Albany receives. It's not just need-based, it's what's right in terms of aid to the capital city."

City Comptroller Thomas Nitido was more blunt: "The city was confronting some very significant financial problems before the loss of this money - what was a pretty sad situation is becoming a desperate one," he said. "The city has to contemplate some very serious cuts, including layoffs."'

Nitido said the city budgeted a deficit this year and is operating in part from reserve funds. He said that with contractually obligated raises and rising costs, doing so next year would cause serious cash flow problems.

But Paterson, who has told New Yorkers the state faces a recession and a fiscal emergency, could not support additional money for Albany during dire economic times, said Laura Anglin, the state budget director.

"I do believe that if the state's finances were in a different state, the outcome would have been different," Anglin said Wednesday. "The governor is taking a very hard look at legislation that has financial implications."

Albany, like many state capitals, has a substantial amount of state-owned land it can't tax. The bill would have provided an annual payment in lieu of taxes as a way to overcome the situation.

Under the bill, the state would have paid the city for the Harriman State Office Campus, the 330-acre complex near the Uni versity at Albany.

But Anglin stressed the state already makes payments to the city for Harriman and other state properties. The payments first began in 2000, she said, at $4.5 million annually. Lawmakers have since boosted the amount to $22.85 million a year.

The amount does not include the $14 million given this year to Albany as part of the Aid and Incentives to Municipalities disbursements to all cities and towns in the state.

"If you look at what the state has done for the city, it has been very generous," Anglin said.

The vetoed bill would have cost the state $325 million over 30 years, Anglin said. And she said state officials were "surprised" the city increased the state's water bill for the Harriman campus by $300,000 this year.

The arrival of legislation on Paterson's desk was a surprise. Its prospects for passage looked poor at the end of the last legislative session. Then, at Jennings' urging, outgoing Senate Majority Leader Joseph L. Bruno guided the bill through the Republican-led Senate.

Mayor Jerry Jennings, who'd lobbied hard for the aid, could not be reached for comment Wednesday. Robert Van Amburgh, his spokesman, said news of the veto had not reached City Hall, and added that the mayor had been both "confident" and "hopeful" it would get Paterson's signature.

"I'm sure he's disappointed if this is true," Van Amburgh said.

City representatives, though, might have known a veto was possible. Assemblyman Jack McEneny, D-Albany, on Wednesday said city officials, aware of the state's budget problems, had been negotiating with Paterson's office and lawmakers. They had even indicated willingness to forgo the initial $5.5 million payment to save the bill.

"It's just too tight a year," McEneny said. "But the governor has given assurances that he understands the plight of the city and is willing to find other ways to help the city."

Anglin said Paterson will continue to work with Albany officials as they attempt to overcome the city's budgetary problems.

"We're very concerned about the city and all the local governments that are struggling right now," she said.

Jimmy Vielkind contributed to this report.

Chris Churchill can be reached at 454-5442 or by e-mail at