N.Y., California sing blue-state budget blues

California’s Jerry Brown and New York’s Andrew M. Cuomo won their gubernatorial election bids last year with strong support from public-employee unions, which puts them each in a particularly dicey position when it comes to their states’ mammoth budget deficits.

The two new Democratic chief executives, presiding over the nation’s two pre-eminent blue states, confronted the realities of weak economies, falling revenues and rising debts in outlining their — very different — governing visions this week.

Democrats typically protect public-sector unions, a key party constituency, from the worst of the cuts. In his budget proposal unveiled Tuesday, however, Mr. Cuomo spelled out a plan to eliminate as many as 11,500 state jobs through layoffs and attrition.

Labor leaders have pleaded with the governor to extend a temporary tax increase on New York’s wealthiest residents, but Mr. Cuomo has refused, sticking fast to a campaign promise he made last year to tackle the state’s $10 billion budget gap without tax increases.

Mr. Cuomo’s proposal would cut $918.4 million in state aid to New York City, more than half of it school aid, and provide no state funds to the city for the second straight year.

“We simply cannot afford to keep spending at our current rate,” Mr. Cuomo said in a statement. “This budget achieves real, year-to-year savings while restructuring the way we manage our state government.”

The new governor was even more blunt in his budget address to state legislators in Albany on Tuesday.

“New York state is functionally bankrupt,” Mr. Cuomo said, urging lawmakers to resist pressure from lobbyists and special interests. “In a down economy, this is a death spiral.”

In California, Mr. Brown is turning to a tax increase as his first option. In his State of the State address Monday, he called for a special election in June that would offer voters the choice to extend state tax increases on income, sales and vehicles.

Focusing on a revenue-raising ballot measure allows Mr. Brown to avoid a collision with state public-employees unions in the short term. Given the state’s $25 billion funding shortfall and calls to slice state workers’ retirement benefits, however, few think Mr. Brown can avoid tackling the pension system for long.

“He has a very fine line to walk,” said Dan Schnur, director of the Jesse Unruh Institute at the University of Southern California. “He has indicated the necessity of re-examining the public-pension issue. But he also recognizes some strong supporters are not going to be particularly happy about that.”

A tax increase referendum is hardly a sure thing. California voters rejected a series of measures to boost taxes two years ago. What’s more, the June ballot is likely to be loaded with other attention-grabbing measures, including one that eases term limits for state legislators, that will distract from the tax proposal.

Also, ballot measures in special elections have a poor track record. Since 1973, 28 measures have appeared on special-election ballots. Only eight have passed, said David McCuan, political science professor at Sonoma State University.

“Special elections don’t fare well. They didn’t fare well under the ’Governator,’ and they didn’t fare well under ’Moonbeam,’” he said, referring to former Gov. Arnold Schwarzenegger and Mr. Brown’s nickname during his first stint as governor in the 1970s, respectively.

Indeed, Mr. Brown’s request for a tax increase first may be part of a long-term strategy to win cooperation from labor unions by demonstrating a good-faith effort to pursue revenue increases before taking a knife to pension payments.

Mr. Brown will need a few Republican votes in the state Legislature to place his referendum on the ballot. While most Republican lawmakers say they will refuse to support a ballot measure, they have yet to propose their own plan and may listen if the new governor offers pension reform in return.

“What I would envision is that Brown would make a deal, in which case pension reform becomes the ’player to be named later,’” said Mr. McCuan. “I could see him looking at pension reform as soon as this fall.”

For Mr. Cuomo, a tax increase was off the table, given his campaign vow. Even so, union officials criticized him Tuesday for what they described as balancing the budget on the backs of workers instead of wealthy New Yorkers.

Mr. Cuomo’s proposed $132.9 billion budget would reduce state spending by $3.7 billion, the first actual reduction in spending in more than a decade. The brunt of the cuts would come at the expense of planned Medicaid and school spending, which would each take a $1.85 billion hit.

“The governor continues to insist pain will be shared in his budget,” said Public Employees Federation President Kenneth Brynien. “Unfortunately, when he says this, it appears the pain will be shared by the workers who provide vital services and the state’s citizens who rely on them, rather than those responsible for the collapse of the state and national economy.”

Mr. Brynien appeared to be alluding to executives in the banking industry. The cuts were proposed after nearly two years of battling with Gov. David A. Paterson, a Democrat who oversaw the elimination of 11,000 state jobs.