After his second leaders’ meeting tonight with legislative leaders, Gov. David Paterson said he’s not as optimistic as lawmakers are about getting a budget deal done.

“I don’t know why people are walking around here saying we’re very close to a deal. I don’t know why people think they’re leaving here, and I don’t know why it is so difficult to understand that we have a fiduciary responsibility to the people of New York,” Paterson said.

“We have obligations that have to be met in December and the only way to reduce this deficit is real and recurring cuts, not gimmicks or phony estimates of revenues that don’t exist,” he continued.

He vowed to keep them in town until a deal is reached.

“Now there are a lot of unhappy people leaving the building this evening because they’re coming back tomorrow,” he said. “This is a prelude to what will be continued unhappiness because it reflects the way this entire state will be if we don’t handle its finances, which are in very dire straits right now.”

He added, “So I would expect that people get back in here tomorrow and stop making plans because I’m making the plan. The plan is that we’re going to keep working until we get this done.”

Legislative leaders and Gov. David Paterson were unable to reach a deal today on how to close the state’s $3.2 billion deficit as some lawmakers continued to oppose spending cuts to education and health care.

Paterson has vowed to keep lawmakers in Albany until a deal is reached, but three days of special sessions over the past week has not produced a compromise. Paterson would not indicate Tuesday how long he plans to keep legislators in town.

Paterson insisted the deficit needs to be closed with spending cuts, saying that one-shot revenue sources won’t solve the state’s long-term fiscal problems.  In addition to the mid-year budget gap, the state faces a $6.8 billion deficit next fiscal year, which Paterson predicted could grow to $8 billion to $9 billion.

Paterson held two closed-door sessions with legislative leaders Tuesday in hopes of reaching an agreement.

Legislative leaders suggested they may be agreeable to cutting less than the $3.2 billion proposed by Paterson to at least address the state’s immediate financial problems. Paterson has warned that the state faces running out of money next month.

Paterson suggested that the important piece is that cuts adopted would be recurring, meaning it would help alleviate future deficits. But he also indicated he could accept a deal that’s less than $3.2 billion in deficit reduction measures.

Here’s the governor’s comments after the first leaders’ meeting.

Governor Paterson on DRP from Gannett Albany Bureau on Vimeo.

   Ethical misconduct increasingly is the reason state lawmakers leave office, Citizens Union said in a report released today. Fourteen legislators have left office in the past 10 years because of ethical misconduct, criminal charges or similar issues. Five of them left in the 2007-08 session.

   “We are facing not only a fiscal crisis here in New York state, but a rising crisis in ethical misconduct,” said Dick Dadey, executive director of Citizens Union.   Citizens Union and other good-government groups—Common Cause/NY, the League of Women Voters and the New York Public Interest Research Group—said the report’s findings demonstrate there is a need for ethics reform. Citizens Union found that most investigations that resulted in turnover have been initiated by law enforcement and not existing ethics oversight bodies.

   “It felt like things were getting worse, but now actually there is empirical data to prove it,” said Blair Horner, legislative director for NYPIRG.

   The Assembly passed what the civic groups called a “modest ethics reform” bill earlier this year, and the Senate’s bill goes further than the Assembly. The two houses “appear to be working together to agree on final language,” according to the groups.

   Any final bill should include the following, the organizations said:

  —Safeguards that bar lobbyists, former officials and other interested parties from serving on ethics oversight bodies.

  —An appointment process that fosters independent oversight.

  —Reasonable, reliable and informative, and transparent financial disclosures.

  —Significant investigative and enforcement powers, including in the area of campaign financing, and reasonable audit procedures.

So much for that reflectivity argument.

Gov. David Paterson today said that the controversial new $25 fee on license plates was nothing more than a “revenue grab” and said people do not need new plates early.

The state hoped to bring in $129 million in new revenue by forcing drivers to get new plates when their vehicles’ registrations expire. Paterson said the state moved up by a year the requirement for new plates in order to raise revenue in the face of the state’s budget woes.

“Is that an idea that in a normal circumstance would make any sense? No, it doesn’t make any sense because people don’t need license plates early,” Paterson said on WWRL-AM (1600) in New York City.

“It was a revenue grab. We’re admitting it. And when so many people objected to it, we can’t argue with them and we’ll take it off the table. But when we take it off the table, somebody has got to find $129 million of cutting from the agencies to balance our books.”

His comments come after his staff had argued the new plates were needed not only to boost the state’s coffers but also because the current ones’ reflectivity is fading.

The reflectivity argument was debunked by county clerks, who petitioned the state to dump the new fee – which lawmakers and Paterson are expected to do.

Paterson and legislative leaders announced earlier this week that they would remove the fee, which they approved in April, if other revenue can be found. The new fee on plates – which would increase from $15 to $25 –- was scheduled to take effect in April.

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Legislative leaders were meeting behind closed doors this afternoon with Gov. David Paterson to continue budget negotiations to close a $3.2 billion mid-year budget gap.

Senate President Sen. Malcolm Smith, D-Queens, said the two sides are millions of dollars apart on a budget agreement, not billions. While Smith said the sides are close, he said an agreement might come out to less than $3.2 billion.

“The main thing is making sure that the cuts are fair, making sure that they don’t disproportionately hurt any particular group,” Smith said told reporters. “And that’s where we are.”

Smith said health care and mid-year school aid cuts are among the issues holding up an agreement.
Senate Democrats remain opposed to school aid cuts, he said.

“What we will do is get to a point where we will sit down with our members (and) we will look through everything. Health-care right now is a sticking point, there’s no question about it.”

Assembly Speaker Sheldon Silver, D-Manhattan, told reporters that he’s ready to reach a deal “anytime they’re ready. Obviously, the hangup is not here,” referring to Senate Democrats.

Silver disagreed with the belief of some Senate Democrats that the state isn’t in jeopardy of running out of money.

“I don’t agree with them,” Silver said. “At some point, when there is $4 billion or $3.5 billion less cash than there is obligations, you’ll run out of money.”

He said schools can absorb some cuts but “obviously we have to be careful that we don’t burden the ones that can’t, but there are a number of them that have reserves.”

The state Legislature is expected to pass legislation that would toughen drunken-driving laws, making it a felony for driving while impaired with a child as a passenger.

The measure would also require people convicted of a DWI in New York, and every person convicted of a DWI-related crime, to have an ignition interlock installed as a condition of their sentence.

The Assembly and Senate said they’ve reached an agreement to pass the bill, called “Leandra’s Law.” It is named after 11-year-old Leandra Rosado, who died last month in an accident in Manhattan as a passenger in a vehicle whose driver police said was drunk.

The Assembly initially didn’t want to make it a felony for all drunk drivers who had a child in the car, only for those who had blood alcohol levels more than twice the legal limit of .08.

But after pressure, the Assembly said it would go ahead with the tougher law, which they said would be the toughest drunken driving law in the nation.

“If enacted, this bill will make our roads safer and ensure the security of our families,” said Assembly Speaker Sheldon Silver, D-Manhattan.

The legislation would make it a felony to drive drunk with a passenger under age 15 with a blood alcohol level above .08. The law would carry a possible prison sentence of up to 1-1/3-to-4 years for a first offense.

Additionally, the law would require interlock devices that prevent intoxicated drivers from starting a vehicle. And if a convicted driver tries to bypass or tamper with the system, the law would consider that a crime.

Rochester Mayor Robert Duffy responded this afternoon to being mentioned in a New York Times article that he’s being considered by Attorney General Andrew Cuomo as a potential running mate if Cuomo runs for governor next year.

Duffy said he hasn’t been approached by anyone about the position and dismissed it as speculation.

Here’s his statement:

“Last week I was interviewed by New York Times reporter Danny Hakim regarding speculation that I have been mentioned as a potential Lt. Governor candidate next year. As I said in the interview, I want to be very clear on a couple of things. I have never been approached by anyone, directly or indirectly about Lt. Governor position. While it is flattering to be mentioned for such a role, it is clearly just speculation on someone’s part and I must decline to respond to speculation and rumor.”

“I consider both the governor and the attorney general to be colleagues and friends. I have fully supported each of them in their vitally important jobs as they have supported me in my job.”

Gov. David Paterson called legislators back to the Capitol on Monday, but like last week the sides remained at odds over how to close the state’s $3.2 billion mid-year budget gap.

Paterson has indicated he plans to keep the state Legislature in Albany until a deal is complete, which lawmakers expect may still be days away. He has called another special session for Tuesday after ordering them to Albany last week for what ended up being a failed session.

Paterson has proposed $1.3 billion in cuts, mainly to education and health care, to close the gap. But Senate Democrats in particular have been opposed to the cuts and are seeking alternatives.

Senate Finance Committee Chairman Carl Kruger, D-Brooklyn, hand delivered a letter to Paterson’s office Monday asking him to start taxing cigarettes sold on Native-American reservations.

Kruger claims the tax could generate up to $1.6 billion in revenue for the state, but state officials said it would be much less. The state has tried unsuccessfully for years to collect the tax from tribes.

Sen. Stephen Saland, R-Poughkeepsie, said collecting the tax is not a short-term solution to the state’s fiscal problems. He warned, as Paterson has, that the state faces running out of money.

“At some point we will run out of money. Maybe it won’t be by December 31, maybe it will be by January 31,” he said. “It’s not a question of if; it’s only a question of when if we don’t close the deficit.”
Kruger and other Senate Democrats said cuts to schools mid year would hurt classroom education.

“It’s my hope that there will not be education cuts, but I cannot say that will not happen,” said Sen. Suzi Oppenheimer, D-Mamaroneck, Westchester County.

Some Democrats have floated raising $1 billion through a temporary surcharge on HMOs, but Kruger said that would be coupled with a cap on premiums charged to health insurers. The proposal was sharply criticized by business groups, saying it would hurt companies and be another tax on New Yorkers.

“They will be committing the same fiscal sins of the past if they raise the taxes on health insurance,” said Brian Sampson, executive director of Unshackle Upstate.

Sampson and other business groups said spending cuts are needed. Paterson continued to urge Monday that cuts need to be part of an agreement.

“This is why the state is in so much trouble because we have a spending addiction that has overcome Albany for the last couple of decades,” Paterson said on WVTL-1570 AM based in Amsterdam, Montgomery County.

Sen. Carl Kruger, D-Brooklyn, chair of the Senate Finance Committee, wrote a letter to Gov. David Paterson asking him to start taxing cigarettes sold on Native American reservations. Kruger claims the tax could generate up to $1.6 billion in revenue for the state, reports Gannett’s Jon Campbell, who attended Kruger’s news conference outside the governor’s office.

Kruger hand-delivered a letter to Paterson saying he should collect the taxes.

“We have an obligation as elected officials and as law-abiding New Yorkers to say that everybody has to pay their fair share. The denial of these taxes is no different than saying to somebody in Westchester County, ‘Don’t pay your property tax, and if you’re upset by that, then go out and picket on the Sprain Brook (Parkway).’”

Matt Anderson, spokesman for Paterson’s budget division, said his office estimated taxing the cigarettes would bring in a more modest $200 million to $300 million annually.

The “$1.6 billion is certainly on the high side,” said Matt Anderson, spokesman for Paterson’s budget division. “We don’t think it’s ultimately achievable.”

Republican gubernatorial candidate Rick Lazio wrote a letter this morning to Attorney General Andrew Cuomo defending Gov. David Paterson and saying Cuomo should speak publicly if he thinks he could do a better job.

The letter comes after a New York Times article today said that Cuomo is already talking about a statewide ticket to run along with him as a gubernatorial candidate.

The article mentioned Rochester Mayor Robert Duffy as a potential lieutenant-governor candidate, and a source familiar with the Cuomo’s staff discussions said this morning said that Duffy and Cuomo have developed a strong rapport.

As for Lazio, part of his letter states:

“I am writing to ask that you and any associates that may be acting on your behalf stop trying to undermine the governor. If you think you can do a better job than Governor Paterson, why don’t you say so publically?,” Lazio wrote. “You’ve been in Albany for the past two and a half years, and you have been a part of Albany culture for decades, but have never taken on the failing legislative leadership when you could have.”

Barney Keller, Lazio’s spokesman, questioned the timing of the leak to the Times, saying it undermines Paterson’s ability to negotiate with lawmakers this week to close the state’s $3.2 billion deficit.

“You or your friends want to speculate about who is going to be your lieutenant governor? Fine. Can we do it after the governor’s done negotiating a $3.2 billion deficit reduction package?,” Keller said.

For his part, Paterson did a blitz of six radio stations this morning and was asked repeatedly about whether he will run for governor next year. He insisted he is.

On Buffalo station WBEN, Paterson was asked whether he would still run if he faces a primary against Cuomo.

“I can’t speculate on what anyone else is going to do,” Paterson said. “I’m running for governor. I obviously considered all those possibilities when I said I’m running for governor, and I’m running for governor.”

Here’s Lazio’s letter:

Rick Lazio Letter to Andrew Cuomo, 11-16-09