One on One with NY Governor David Paterson
Tuesday, October 20, 2009
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SUSIE GHARIB: Even though Wall Street is still cheering about Dow 10,000, the financial district's home state, New York, is in bad financial shape. Unemployment is up. Taxes are high and it has a big budget deficit. The Empire State is particularly hard hit because of huge job losses in the financial sector and a steep drop in tax revenues because of the economic problems facing banks and Wall Street firms. That's one reason why New York Governor David Paterson called last week for $5 billion in budget cuts. When I talked with him today he said those cuts still won't be enough to stabilize New York's economy.
GOV. DAVID PATERSON (D) NEW YORK: We have huge bills due in December and if we don't pay those bills or shift money around or borrow from special pools, we'll be sending a signal to the rating agencies that will be similar to what happened in other states that are now severely encumbered because most of their payments are now going to interest on their debt, rather than to relieve their budget deficits.
GHARIB: So Governor Paterson, then what is your plan to revive the New York economy, especially with Federal stimulus money running out next year?
PATERSON: Our plan is to impose a spending cap on the legislature. A spending cap over the next four years would reduce our out year deficit from $38 billion to $7 billion. And if the recession ends and the revenues start to come back, the revenues should cover the other $7 billion.
GHARIB: We hear from economists that unemployment will keep rising even as the U.S. economy recovers and in New York City, the unemployment rate is already above the national average. It's 10.3 percent, as you know. So what are your plans to deal with rising unemployment and the drop in tax revenues as a result of that?
PATERSON: I think that in order to facilitate a revenue enhancement from the production that they could give us, we're going to need a second stimulus package. Listen, the states are going to run up $300 billion of deficit, maybe $400 billion next year. So I think that expansion of stimulus on the Federal level and what we're doing in New York State is trying to accommodate any businesses that want to come into the state and create jobs. As a government, we're trying to help them if they're putting people back to work.
GHARIB: The White House has said that it has no plans for another stimulus package, even a targeted stimulus. So what else can you do?
PATERSON: If that doesn't happen, we are simply going to have to limit our spending. It's as simple as that. If there aren't going to be more resources, then we're going to have to start cutting spending in some of the places that New York has avoided but other states have actually gone.
GHARIB: We know that the rating agencies have been looking very carefully at the state's financial -- finances and New York rights now is in good shape in terms of its rating. Have you been talking to the rating agencies?
PATERSON: The rating agencies are watching and have warned this state, this legislature and executive branches had better keep the house in order, as we have, over the first 18 months of my administration and we have never missed a payment to any of our obligators. We have not missed payments to schools or local governments or to not for profits. Unfortunately like the state of Pennsylvania, even with its governor warning the legislature, it happened to them. And, but if we don't address this problem right now, involving payments we have to make in December, then we get on the watch list.
GHARIB: If Wall Street and the financial industry don't bounce back in terms of jobs and salaries, how vulnerable is New York State?
PATERSON: Well, the state has been vulnerable all along. Wall Street's proceeds comprise 20 percent of New York's revenues for the year. So we are going to have to shift as an economy from a financial services based economy downstate and a manufacturing economy upstate to an innovation economy all over the state involving clean, renewable energy production, medical and scientific research and obviously information technology.
GHARIB: What are you doing to make those new businesses come to the state?
PATERSON: We are openly soliciting and have been successful bringing Yahoo! to western New York, expanding Geico in western New York, bringing Canon to Long Island. We are selling low cost energy to companies to come to our state so that they won't have the energy needs that they would have other places to induce them to come here, because we have a great work force that has been hindered by the diminished manufacturing economy upstate and the financial services crash downstate.
GHARIB: Governor Paterson, thank you so much for your time. It's been a pleasure talking to you.
PATERSON: Thank you.
