By SHERRY HALBROOK
“Quite frankly, we are running out of money,” Gov. David Paterson told state legislators at a special joint session of the Senate and Assembly he called in early November.
Although few lawmakers disputed just how serious the problem is, they balked at accepting the full course of cures he prescribed. Neither, however, could they quickly agree on a different approach.
So, as the governor and legislators continue to wrangle over how best to close New York’s $3.1 billion mid-year budget deficit, PEF keeps nudging them toward substantially reducing the dependence on highly priced consultants and other measures aimed at closing the budget gap.
Start with the real fat
“Our goal is to help the state resolve the budget problem without resorting to severe cuts to core state programs and services,” said PEF President Ken Brynien.
PEF members stepped forward to testify at legislative hearings on state correctional services and information technology, an area where state agencies rely heavily on private consultants. (See related articles, pages 5, 6.)
In late October, Brynien wrote to state legislators, proposing reduced consultant use and six additional measures they should carefully consider taking before agreeing to slash deeper into state programs.
These other measures include:
• Using the state’s $1B Tax Stabilization Reserve Fund;
• Lobbying Congress and the president to provide additional federal stimulus aid to states;
• Expanding the use of severance and voluntary reductions in work schedules to reduce state work force costs;
• Reducing the state’s share of Medicaid costs by negotiating volume discounts for prescription drugs;
• Reforming the state’s economic development programs to eliminate inequities and waste; and
• Reducing the state’s overtime and workers compensation costs by improving staffing in key areas.
Misguided and mistaken
The New York Times came out with an editorial November 16, berating both the Democratic and Republican leaders for failing to move quickly and effectively.
The newspaper also said, “It is time to consider layoffs and furloughs of state employees, as other states have done.”
Brynien said the call for layoffs and furloughs of state employees is as misguided as some of the other cost-cutting proposals that have surfaced.
“Forcing our members to take unpaid furloughs would violate our contract. Laying them off would amount to throwing the baby out with the bath water,” Brynien said. “New Yorkers need their state work force. People who talk about ‘trimming the fat’ don’t recognize just how lean the state work force has become after years of hiring freezes coupled with retirements.”
Get real
“Even if the governor laid off every single state employee, it would not provide enough savings to close this gap, but it would paralyze the state and severely deepen unemployment, especially in rural and remote communities that are already struggling,” Brynien said.
The combined cost for all state agency operations accounts for just 15 percent of the total state budget. The cost of state employees’ salaries and their benefits is about 12.5 percent of total state spending.
The state already is saving approximately $160 million in 2009-10 (expected to grow to more than $300 million in 2010-11) by reducing the state work force through the severance program and attrition, and leaving the vacant positions unfilled.
The $5 billion deficit reduction plan Paterson has proposed to the Legislature is supplemented by $500 million in additional cuts to state agency non-personal-services budgets. That’s an 11 percent cut in agency non-employee-related spending for such things as equipment, travel, supplies and materials, and contracts including those for consultant services.
Since the 2008-09 state budget was enacted, state agencies have had their funding cut by more than $2 billion.
“No other segment of the state budget has absorbed funding cuts of this magnitude, relative to their share of the state budget,” Brynien told legislators in his letter.
The governor has already told state agency heads their operational budgets cannot increase next year.
Freeze state contracting
“We continue to work with the governor’s staff to improve the current executive order and budget bulletin relating to reducing consultant spending and performing cost-benefit analysis,” Brynien said.
“We’ve been informed agencies will receive budget waivers to hire state employees to replace consultants if the agencies can show it will save money in the current budget year.”
Brynien urged the governor to cut reliance on consultants further.
“The state should institute a freeze on all new consultant contracts, require a budget waiver to enter into those contracts, and examine all current consultant contracts to determine which can be terminated and which can be done by state employees at a lower cost,” he said.
“State agencies must be given specific, mandatory, three-year savings targets for reducing their use of consultants,” Brynien said.
“We estimate the state could save $730 million over this time period by having state employees do about half the work currently done by consultants. That would produce more than $400 million in recurring annual savings after March 2012.