Cuomo Tackles A Huge Shortfall

Governor seeks layoffs, a hike in the gas tax, and cuts in Medicaid and city and school aid; calls for spreading sacrifices fairly

IT'S not the kind of economic story a presidential candidate would want included on his r'esum'e. The only comfort New York Gov. Mario Cuomo can take from his state's serious financial straits and the tough choices thus forced on him is that he is not alone. Governors in a number of states face similar budget shortfalls.

To close an expected $6 billion deficit in New York's $29 billion budget for the new fiscal year beginning April 1, Governor Cuomo proposes a 3-to-1 mix of cuts and new revenue.

In a plan unveiled before the Legislature late last week, the governor proposed layoffs of about a 10th of the state's work force, deep cuts in Medicaid and unrestricted aid to cities, and a 10 percent cut in state help to school districts. A scheduled tax cut would be deferred. New revenue would come in part from a 10-cent-a-gallon hike in the gas tax.

The fiscal situation facing Cuomo in the nation's second most populous state has been compared with that faced by former Massachusetts Gov. Michael Dukakis after he lost his 1988 bid for the White House.

Yet there are important differences. Cuomo, now in his third term and ever a shadow boxer when it comes to his presidential intentions, insists it would make no sense for him to consider a national race until the current fiscal crisis is resolved. He stresses that New York's economic problems are part of the national recession. He has built a different case from that of Mr. Dukakis for his own personal strengths. The New York governor emphasizes his leadership qualities rather than his managerial ability. Unlike Dukakis, Cuomo has not singled out his state as a lone success story for which he takes credit. Also, conditions surrounding the 1992 race are likely to be far different from those of four years before.

Cuomo laid the ground carefully for the shocks in his new budget by several advance announcements. Calling this a ``wonderful year for raw truth'' - that the state has no money - he said last month that ``wrenching adjustments'' and great sacrifices would be required but that he would make every effort to spread them fairly. There would be no sacrificial lambs or sacred cows, he said. The governor insisted he was not abandoning his broad social goals.

``Recessions can hurt incumbents but Cuomo has always been very strong at defining issues in the best terms he can,'' notes Lee Miringoff, director of the Marist Institute for Public Opinion in Poughkeepsie, N.Y.

The company in which Cuomo finds himself also offers a certain degree of political protection. The National Governors' Association reports that 30 states are struggling with shortfalls in their current budgets.

Steven Gold, director of the State University of New York's Center for the Study of States, says he does not think the move to raise taxes in New York will adversely affect Cuomo's prospects: ``You have to be very skillful in the way you handle it politically ... but I think there's going to be so much company in raising taxes - it's a bipartisan problem.''

Still, last year New York's credit rating dropped to the third lowest in the nation. That year's budget included a record-high tax increase. To close deficits in each of the last three years, Cuomo has had to resort to borrowing.

``Anyone running against him might question why he allowed deficits to occur when there was still prosperity and why he borrowed money, rolling over the debts rather than liquidating them,'' says Demetrios Caraley, a political scientist at Barnard College. He says New York's fiscal situation cannot do Cuomo any good politically. ``I don't think he can gain from it; it's a question of how much he loses.''

But some political analysts say the state of the national economy and the Gulf war effort, and how these reflect on President Bush, will be far more important than Cuomo's assets or debits in determining who wins the Democratic presidential nomination in 1992.

``It's the incumbent's race to lose,'' insists Mitchell Moss, director of New York University's Urban Research Center. ``The governor of New York would not be judged on his performance on the New York state economy. ... I think the best Cuomo can do is take charge of the state economy and maintain a low profile on the war.''

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