Gov. David Paterson warned today that New York faces a $20 billion budget gap over the next three years, raising concern that future belt tightening is desperately needed.

Paterson said a state economic report to be released Thursday will show that New York faces a roughly $5 billion budget gap in the 2009-10 fiscal year and a 50 percent increase in the deficit in the two following years, bringing each year’s gap to about $7.5 billion.

The state Legislature and Paterson approved a 2008-09 budget on April 9 that closed a $4.6 billion budget gap.

“Right now we have to bring some fiscal reality to the state and sometime I wonder what’s going around here because we are deep in debt,” Paterson told reporters.

Despite approving a $121.7 billion budget that increases spending by nearly 5 percent, Paterson has been increasingly critical of state spending.

He has warned that state lawmakers may need to make further cuts to the budget this year, and has called on legislators to start working soon on next year’s budget to prepare for the future budget woes.

The state’s fiscal year runs from April 1 to March 31.

Attorney General Andrew Cuomo said Medicaid fraud collections through court actions grew to $112.5 million—nearly double the $59.4 million recovered in 2006.

He released a report today that can be viewed here .

Medicaid is the single largest piece of the state budget, totaling more than $40 billion, and is the largest part of county budgets too.

Cuomo said that $41.5 million in recoveries stemmed from cases involving home health care as part of Operation Home Alone that has led to 32 convictions and more than 80 defendants who have been charged in the investigation.

And more than $35 million came from settlements with more than 30 managed care organizations that submitted duplicate claims.

The report states that the Cuomo’s office:—Increased the staff of the Medicaid fraud unit.—Established Medicaid fraud partnerships with district attorneys
across the state.—Worked with New York City in filing a lawsuit against Merck & Co., Inc., for false marketing of the drug Vioxx.—Created a hotline (1-866-NYS-FIGHT) for New Yorkers to report Medicaid abuse.

Assembly Republicans, right,  and Senate Republicans, left, in the state Legislature said this morning that cutting the state’s gas-tax cap for the summer, which would save 32.75 a gallon, would help tourism in New York and boost the economy.

Assembly Republicans said the gas-tax cut, which would cost the state between $500 million and $800 million in revenue, would serve as a state stimulus package for the summer months. The plans calls for a suspension of the gas tax from Memorial Day to Labor Day.

“You’re talking about a lot of savings during the summer months when a lot of the driving is done,” said Assembly Minority Leader James Tedisco.

Senate Republicans said that the gas-tax suspension—coupled with a federal and county gas-tax cut—would save drivers 65 cents a gallon. The feds are talking about a gas-tax cut, yet many counties have gone away from gas-tax cuts because they said it hasn’t resulted in savings at the pump.

And Republicans offered no concrete way to pay for the tax cut.

“We have to provide relief so people can afford to live and support their family,” said Senate Majority Leader Joseph Bruno.

The Democratic-controlled Assembly has not supported the measure, while Gov. David Paterson said today that he would support the concept but there is no clear indication that gas companies would pass on the savings to drivers.

Gov. David Paterson will not adhere to lower campaign contribution limits imposed by his predecessor, according to reports here and here.

Paterson will accept up to the $55,900 contribution limit allowed by state law, one of the most generous limits in the country.
“In order to compete on a level playing field he will adhere to the limits that are set under current rules,” spokesman Jonathan Rosen told the Albany Times-Union.

Spitzer imposed on his campaign a $10,000 ceiling on contributions from individuals, PACS and  special-interest groups.

Yet Paterson, who isn’t a millionaire like Spitzer, has just 114,000 in his campaign account, according to the New York Sun, and will need to raise millions to compete for re-election in 2010.

Paterson, a Democrat, has said he plans to run in 2010.

The report from the State Commission on Local Government Efficiency and Competitiveness came out this morning from Gov. David Paterson, left, with committee members, and it recommends 76 ways for local governments to lower costs.You can view the report here:

The recommendations include giving local governments and school districts incentives to merge and renegotiating contracts with public workers to reduce benefits.

Here are some of the other recommendations in the report:
—Have public employees pay 25 percent of the cost of their health insurance, phased in over five years.—Allow local governments to renegotiate contracts with their employee unions if they agree to merge.—Merge smaller school districts and eliminate some villages and other local governments.—Make positions in town and county governments like highway superintendent, assessor, town clerk, tax receiver and coroner appointed rather than elected jobs.—Build regional jails to replace county facilities.—Give newly hired workers lower pension benefits than current workers get.

Republicans in the state Assembly and Senate are calling for a repeal of the state’s gas taxes this summer in the wake of soaring gas prices.

Senate Majority Leader Joseph Bruno, R-Brunswick, Rensselaer County, has a news conference scheduled for tomorrow morning and Assembly Minority Leader James Tedisco, R-Schenectady, has an announcement scheduled for the afternoon.

Republicans want to suspend a 32.75 cents tax imposed in New York. Yet some leaders have questioned the effectiveness of gas-tax caps or suspensions, saying there is no guarantee that oil companies will pass on the savings to consumers.

That’s been Gov. David Paterson’s opinion in recent days, and Democrats say a gas-tax suspension in the summer months—when about 40 percent of the state’s sales-tax revenue from gas is collected because of the busy travel season—would cost the state up to $800 million in lost revenue.

That would be a tough hit when lawmakers are warning of tough fiscal time ahead. But supporters say the measure is needed to give New Yorkers relief at the pump.

Attorney General Andrew Cuomo also spoke at Reform Day today, saying that among his watchdog efforts is a movement to weed out unscrupulous member items obtained by state lawmakers.

Last year, Cuomo instituted a certification process for every state grant that lawmakers secure for their districts, such as money for Little Leagues, churches and other non-profit groups.

The $200 million a year in member items have been under scrutiny in recent years and criticized for widespread fraud.

Yet Cuomo said his certification process is apparently having positive results. He said that of the 6,500 members items passed last year, 2,700 have not yet been presented to his office, suggesting that some fear his review process.

“I think we brought review and scrutiny to the program that hasn’t existed before,” Cuomo later told reporters. “And I think people are looking at those certifications and thinking twice before they sign them—as they should.”

Senate Minority Leader Malcolm Smith called on Senate Republican Leader Joseph Bruno to join the reform movement in the state, telling an audience of good-government groups in Albany today for Reform Day that “Joe Bruno. Your time has come. Reform is on its way.”

I later asked him to elaborate, and he said that Bruno needs to seek reform to state government.

“Reform is the call of the day and so you can either be on this train or you can be on the station,” Smith said. “And if you’re on the station and the train pulls out and leaves you, then you have to wave to everyone who is gone.”

Smith is seeking to win a Democratic majority in the Senate for the first time since 1965. Republicans hold a two-seat majority, and Bruno was vowed to retain his GOP majority.

Smith, though, said a main problem with state government is that the minority party has little influence, saying “We are no longer the Empire State. You cannot live in a state where for the most part you have legislators who don’t have the ability to do their job” because they aren’t in the majority.

He said the minority members receive few resources, such as only recently getting a phone in their conference room.

He said if Democrats take the majority, minority members would be allowed to bring issues to the floor if there is support within legislative committees.

As for giving more resources to the minority if he takes over, such as the phones, “We’ll just transfer it back to them.”

There was no immediate reaction from Bruno’s office.

The state Consumer Protection Board is advising recipients of federal rebate checks to buy “necessary, long-term use items, especially those that will help reduce future costs.”

Here are some of there recommendations:
•        Pay down credit-card debt.
•        Make a payment towards a hybrid or more-fuel efficient car.
•        Purchase energy-efficient appliances and light bulbs.
•        Buy household items that have long shelf lives, like laundry detergent and toiletries, in bulk to reduce weekly shopping bills.
•        Prepay membership and/or association fees if consumers belong to these groups, or make a payment to defray other monthly expenses.
•        Make a payment toward the principle on a mortgage.
•        Prepay school tuition.
•        Prepay for heating for next year.
•        Purchase government bonds and CD’s to save money.

The state’s -plan to freeze almost $110 million the State University collects from students and public-hospital patients “will dismantle the university,’’ Phillip Smith, head of the system’s largest union, warned today.

“Without these funds, SUNY will not be able to deliver the educational and health-care services that students, parents and hospital patients have already paid for,’’ said Smith, president of United University Professions.

The state Budget Division has ordered a 3.35 percent cut in most state spending because of an anticipated financial problems later this year. The cut hits SUNY unusually hard because it applies not only to state taxpayers funds the university system gets, but also to tuition, dorm fees, hospital charges and other money it takes in.

There was no immediate response from the Budget Division.

Updated:

Here’s a response from Jeffrey Gordon, state budget spokesman:
“Given the serious fiscal difficulties facing New York State, every state agency needs to economize.  The savings are a very small portion of SUNY’s $4.5 billion budget and we are working with them to implement these savings in a way that won’t compromise the important services SUNY provides. ”