GOVERNOR PATERSON CALLS FOR IMMEDIATE FISCAL RELIEF FOR STATES THROUGH SECOND FEDERAL STIMULUS PACKAGE

In Testimony Before Congress, Governor Paterson Calls on Federal Government to Enact a Stimulus Package "Before it Adjourns for the Year.”

“The Most Essential Way That the House and Senate Can Help Our Country is to Reinvest and Reignite the Engine of Our Economy”

Governor David A. Paterson today called on members of Congress to enact a second stimulus package before it adjourns for the year, urging them to focus the package on fiscal relief for states. Specifically, Governor Paterson called for an increase in the Federal Medicaid Assistance Percentage of at least 5 percent through fiscal year 2011 to the hardest-hit states, including New York, and a greater emphasis on infrastructure repair, unemployment compensation and food stamps funding.

The full transcript of Governor Paterson’s oral testimony appears below, click here for his written testimony.

Testimony of Governor David A. Paterson to the House Ways & Means Committee
October 29, 2008.

Thank you Chairman Rangel, Ranking Member McCrery and all the members of the House Ways and Means Committee and Mayor Palmer, Governor Sanford and all the panelists who have been kind enough to travel here today.

The great novelist Ayn Rand advised us in the Fountainhead that our country, the greatest country in the world, was founded on the basis of individuals, where people were encouraged to adventure, not to be complacent; to be daring, not dormant; to prosper, not to plunder. But, unfortunately, an infection of greed and mismanagement combined with a lack of transparency and government regulation have brought us to the point where our nation faces a downturn in its economy only rivaled by the Great Depression. As this committee pauses in its deliberations to hear some of us suggest some of the ways that we might reignite the engine of our economy, I would encourage all of the members of the committee to consider some of the value of the great states that comprise this great country in which we live in.

The Center for Budget Priority and Policy offered its projections for fiscal year 2008-9. There are [27] states in deficit, totaling [$12.3] billion [deficit]; their projections for 2010 are spiked upward incredibly. There will be 39 states in deficit and the amounts owed total over [$100] billion.

In the state that I represent, the State of New York, we balanced our budget on April 9. [In August, we took action to reduce spending by] nearly $1 billion. Even after we addressed that, our state now is $1.5 billion in deficit; a re-opened swelling of our deficit for this year. Our projected deficit for 2009-10, which was originally $5 billion, grew to $6.4 billion by July of this year. In our recent budget forecast – our Mid-Year Forecast – I announced yesterday that New York State’s projected economic deficit for 09-10 is $12.5 billion. The three year deficit plan, by which we try to address our obligations for the next three years, which was [$26.2] billion in July, has now erupted to $47 billion. Much of this is caused by the fact that New York derives 20 percent of its resources from Wall Street and in the fourth quarter of the fiscal year – January, February and March – that figure spirals to 30 percent. So, we’re not out of the problem yet.

But what we will have to do, and what others governors and legislators of others states will have to demonstrate to Washington, is that we have to put our own house in order. This is why I’ve called the legislature back for a second time for an emergency economic conference on November the 18th to close that budget deficit and add more money onto it to bolster us for the rest of the year. I’ll introduce our budget for 2009-2010 six weeks early, on December 16th, to try and address those issues. We have agreed that any taxation right now would only exacerbate the problem – if anything, we need to lower taxes for some of our businesses that would hope to create jobs, so that hundreds of thousands of New Yorkers don’t leave the state as they do every year for other areas where the life quality is better.

We are cutting all we can and we will cut all that we are able to, but inevitably, the deficit is too voluminous for us to address. Therefore we feel that targeted, sensible action by the federal government could provide relief for us now.

This is why today, I call upon Congress to pass a second stimulus legislation package before it adjourns at the end of the year. We think that the most essential way that the House and Senate can help our country is to reinvest and reignite the engine of our economy which we see as our states.

The National Governor's Association wrote a letter just recently advising that the priority way in which we could address this crisis is through an increase in the Federal Medical Assistance Program. [We believe this increase should be] at least five percent through 2011.

Additionally, we think that the House could establish some of the block grants that it did after the attack on our country in 2001 that led to a downturn in our economy, and that this would bring needed essential services back to our states; issues that people face during these times of health care, public assistance, food assistance and obviously unemployment.

We further and moreover suggest that infrastructure repair – something this country has not addressed in the last fifty years – would be an advisable method that we might proceed right now. We in New York have many programs involving roads, bridges, infrastructure development and also water waste treatment that are ready to go. If we had the dollars to actually begin, we would have 40 shovel-ready programs for improving highways and bridges. We would have another 58 programs ready to go in the area of water projects.

We also would hope that the House and the Senate would address the issue of extending unemployment compensation and also the modernization of our unemployment insurance program because of the number of people that have been thrown out of work that was described by Congressman McCrery just a few minutes ago.

We feel that food stamps are the best economy stimulus. The estimates are that $1.73 is rendered for every dollar that is invested in food stamps.

Finally we would suggest that in terms of helping those who are in the greatest of need of health care that there be a moratorium in the outpatient health clinic regulations that would curtail the ability of many to receive health care and may even be not in compliance with federal law.

These are just some of the ideas that we suggest. We recognize that there are opposing points of view. But whichever way the Congress addresses these issues, we advise that the great states of this country right now are facing huge deficits without the resources to affect it.

We have, in many respects, mismanaged and need to put our own houses in order by cutting spending which governments often become overly involved in. However, much of the crisis that has come from the sub-prime mortgage crisis infecting the rest of our county is one that we think needs to be addressed holistically by the federal government investing in the states.

I want to thank all the members of the committee for allowing me this opportunity to present our case to you.