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N.Y. Expects at Least $24.6B From Federal Stimulus

Fri February 27, 2009 - Northeast Edition
Michael Gormley - ASSOCIATED PRESS

A state analysis released shows New York stands to get more than expected from the federal stimulus package, with at least $24.6 billion coming to the state over two years.

Gov. David Paterson said the federal aid will go to education, infrastructure projects and direct benefits to low-income and unemployed New Yorkers who are being hit especially hard by the recession.

Paterson’s stimulus estimate for New York exceeds U.S. Sen. Charles Schumer’s early estimate of about $20 billion over 27 months. Schumer provided that estimate hours after the House and Senate struck the $789 billion economic stimulus deal with the Obama administration.

The difference could be critical to New York as it deals with crushing deficits that could force spending cuts for schools and hospitals, social services, and possibly lead to income-tax increases.

About $1.2 billion is expected to go to New York City transit, where there is a list of improvement projects needed and unpopular fare increases proposed.

Paterson also said that, because and legislative leaders closed the current budget deficit in January, about $1.3 billion targeted for the current fiscal year can be used for closing the deficit projected for 2009-10.

“This funding does not absolve us of our responsibility at the state level to bring spending in line with what our government can afford over the long term,’’ Paterson said. “We still have to address a $13 billion deficit next year and a multiyear deficit of over $48 billion.”

The governor said most of the stimulus money will be spent within two years and stressed the need for state officials to reevaluate their spending and produce a smarter, less costly, more efficient government.

Now budget crafters in the Paterson administration and the Legislature will try to agree on how to spend the stimulus money and address a deficit the Assembly projects has grown to $14.2 billion.

Paterson calls for painful cuts in his proposed 2009-10 budget, including a 3-percent cut in school aid, a 14-percent increase in tuition to public colleges and reduced Medicaid funding. All have Albany’s strongest lobbyists backing efforts to roll back the proposed cuts.

Meanwhile, Schumer announced that one item in the stimulus package will lead to a huge investment in New York commerce.

The state is getting a share of $8 billion that is designated for railroad projects across the nation. Schumer said the money will help get a high-speed rail service going from New York City to Buffalo, giving a boost to passenger travel and business through the state including Schenectady, Utica, Syracuse and Rochester.

“The dream of high speed rail that spans our state from Buffalo to New York City is one step closer to reality,’’ Schumer said. “We have an aging and ailing rail system in upstate New York and this funding will be critical to the future of our transportation systems.’’

Elizabeth Lynam of the independent Citizens Budget Commission warns that state officials should look at the federal stimulus as “a Band-Aid, not a cure.’’

“The federal money should only be used to buy them some time to implement the structural spending reforms New York needs if it is to emerge from this crisis a stronger, more competitive state,’’ she said.

According to Paterson, the stimulus aid to New York will include:

• $11 billion more in federal Medicaid funding. About 70 percent will go the state, the rest to county and big city governments that administer the health coverage program for the poor. The money will be split: $1.9 billion for the current fiscal year, $5 billion in 2009-10 and $4.2 billion in 2010-11.

• $2.5 billion to restore education cuts. The money will be split over the next two fiscal years and could be enough to eliminate Paterson’s proposed cut in education for the fiscal year beginning April 1.

• $556 million in “flexible relief’’ over two years to support government programs approved by the governor and Legislature.

• $940 million for high-needs students in schools and $760 million for special education, both spread over two years.

• $180 million to increase the maximum Pell Grant for college students to $500.

• $1.25 billion for mass transit and $1.1 billion for highways and bridges. State officials said each $1 billion of this aid could produce 10,000 construction and permanent jobs.

• $1.3 billion more for food stamps over two years; $1.3 billion to nearly double the length of time a jobless worker can collect unemployment checks, up to 59 weeks; and $100 million more for child care services for low-income parents trying to hold jobs.

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