As Governor Pataki looks for ways to close the state’s $11.5 billion budget gap, he would be wise to consider suggestions that E.J. McMahon’s New York Fiscal Watch has issued in its latest release. The memo, “How To Save Another $1 Billion,” documents $1 billion in savings that the governor could achieve for the next fiscal year.

First among Mr. McMahon’s suggestions is a meaningful paring of the state’s payroll. The state currently employs about 225,000 workers. Though about 5,000 positions have been eliminated through attrition and early retirement incentives since last year, the state, according to the report, could save between $550 million and $700 million a year if it would reduce payroll by a further 15,000 jobs. The report identifies two key areas where payroll reductions would most obviously be appropriate: New York’s legislators have the largest staffs, on average, of legislators from any state in the country. Similarly, the state’s judicial system has received overgenerous funding for personnel expansion, which can be scaled back.

Health care is another sector in which Mr. Pataki could find savings, according to the memo. Currently, the state’s Medicaid funds optional programs, like dentistry and optometry, which are not required under federal law. In times of fiscal crisis these expenditures are excessive. The report estimates savings in this area at $200 million. These savings would also reverberate in the city, since Gotham picks up half of the Medicaid tab.

Scaling back the state’s capital budget plans would be a further opportunity for saving money, according to the memo. As currently configured, $528 million of the $3.3 billion capital expenditure plan is set aside for “economic development” purposes. Such projects will include pork like parking garages and sports stadiums, as well as programs that basically put the state in the venture capital field, such as financing for high-tech “Centers of Excellence.” Nipping these expenses in the bud would save $47 million a year in debt service, according to Mr. McMahon.

Mr. McMahon also targets the Wicks Law, which provides that all public building projects must be handled by multiple contractors, a process that is hardly efficient. Mr. McMahon suggests eliminating it for a savings of $103 million annually.

The Fiscal Watch report details a few other provisions — eliminating costs associated with the Health Care Reform Act of 2002, getting rid of “member item” porkbarrel legislative spending, eliminating rent regulation, and cutting off funding for public arts and broadcasting — that are well worth the governor’s attention. Such cuts might be difficult to get through the legislature, but if Mr. Pataki is going to keep his promise to balance the budget without “job-killing taxes,” these ideas make for important reading.