Spitzer's Budget Is Attacked From Two Diverse Angles

Two influential interest groups from opposite ends of the political spectrum are united in their opposition to Governor Spitzer's budget proposal.

The Business Council of New York State, a group that represents business interests, and the Working Families Party, a liberal grassroots operation financed by labor unions, took shots yesterday at the governor's $126.5 billion 2008-09 spending plan, which the administration unveiled on Tuesday.

Until yesterday, both groups had been generally supportive of the governor and his policies. While their displeasure is shared, their specific grievances are not.

The Working Families Party, which cross-endorsed Mr. Spitzer in 2006 and delivered to him 155,000 vote on its ballot line, claims the governor turned his back on middle-class New Yorkers by not raising income tax rates of wealthy residents.

The Business Council is criticizing Mr. Spitzer for lifting state spending by 5% despite the turmoil in the economy.

"With the nation's economy heading towards recession, with state revenues tanking, now is not the time to hammer the private sector with new taxes and fees," the president and chief executive officer of the council, Kenneth Adams, said. "The way to avoid that is to cut government spending."

The governor's proposed spending hike of 5% is about the average annual growth rate of budgets passed during the Pataki administration, fiscal analysts say.

The executive director of the Working Families Party, Daniel Cantor, said in a statement that Mr. Spitzer "put himself in a box where he had to make some difficult choices. Increasingly hard economic times didn't help. But he didn't need to be in that box at all."

He said Mr. Spitzer could have balanced the budget with a "modest tax increase" on incomes exceeding $300,000 a year. Such a hike, he said, would generate $6 billion in additional revenue.

In an interview, Mr. Cantor said Mr. Spitzer "is trying to govern in a progressive way, but on this topic he can do better." He said he didn't know if the governor's decision to exclude an income tax hike on the rich would jeopardize a future endorsement by his group.

Mr. Spitzer proposed closing a more than $4.4 billion budget gap by trimming Medicaid spending growth, by scrapping a prior plan to give middle-class homeowners additional property tax breaks, by raising $1.1 billion in fee increases and new tax regulations, and by relying on nonrecurring revenue, such as the sale of state-owned land.

The governor, meanwhile, yesterday announced members of a commission he set up to recommend a plan for imposing a cap on property taxes levied by school districts.

The members are Nassau County's executive, Thomas Suozzi, the president of Stony Brook University, Shirley Strum Kenny, a longtime Harlem political leader who is the father of Lieutenant Governor David Paterson, Basil Paterson, a former Onondaga County executive, Nicholas Pirro, a municipal finance expert at Merrill Lynch, Michael Solomon, a philanthropist who is a member of the New York State Board of Regents, Merryl Tisch, and a former assemblyman, Paul Tokasz.

The commission's preliminary recommendations are due May 15.