New York Governor Vetoes $1.8 billion from Budget

Published November 1, 2004

New York Gov. George Pataki vetoed $1.8 billion from the budget approved by the state legislature August 11–more than four months past deadline–and said the state will still face a projected budget gap of $6.1 billion in the fiscal year starting next April 1.

“The budget sent to me simply spends too much and reforms too little,” the governor said when announcing the vetoes on August 20. “We spend too much. We tax too much.”

Pataki’s 195 line-item vetoes removed from the budget $235 million in new across-the-board operating expenses and $1.6 billion in new borrowing. The governor also removed more than $700 million in new operating expenses over the next three years.

On September 20, the Democrat-controlled state Assembly tried and failed to override some of the vetoes. A later override vote remains possible.

The budget sent to the governor totaled $101.6 billion. That budget would have been out of balance by nearly $700 million in the current 2004-05 fiscal year, and would have created an out-year gap of $6.3 billion, according to the governor.

The vetoes reduced the budget total to $101.3 billion and reduced the current 2004-05 fiscal year’s gap to $434 million, reducing the projected out-year gap to $6.1 billion, according to Pataki.

Daniel B. Walsh, president and CEO of the Business Council of New York State, had urged the governor to veto what he characterized as the legislature’s excess spending and push for Medicaid reform to help restrain spending.

“With no reform, Medicaid costs continue to rise at unsustainable levels,” Walsh told the governor in an August 18 letter. As a result, businesses and homeowners in many counties will see higher property taxes in just a few months, and lawmakers will face “enormous pressure” for state-level tax increases in 2005, he said.

Pataki likewise noted the need for Medicaid reform. “The budget that was presented to me completely fails to address the critical issue of Medicaid reform and many other areas where we know new reforms are sorely needed,” the governor said.

In most cases, the governor said, the state Senate was willing to enact such measures, but the Assembly leadership blocked the reforms from being included in the budget that was ultimately adopted.

Unfortunately, the governor added, the failure to act is not something that can be vetoed.

Pataki and the legislature are awaiting action by New York’s highest court, the Court of Appeals, on two cases relating to the balance of budget powers between the executive and legislative branches. Those cases, expected to be heard this fall, could have a major impact on the state’s fiscal practices in coming years.

The legislature usually seeks to spend more than the governor wishes, regardless of whether the chief executive’s office is held by a Republican or Democrat.

Robert Ward ([email protected]) is director of research at the Public Policy Institute of New York State.