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NEW YORK SUN NEWS
Pataki Gives Private Vows To Avoid Major Tax Hikes
But Governor Refuses To Rule Out Increases in Smaller Taxes, Fees
BY WILLIAM F. HAMMOND JR.

ALBANY - Governor Pataki is privately assuring conservatives he will fight against raising broad-based taxes this year — but he is not ruling out increases in smaller taxes, fees, and surcharges.
People who have met with Mr. Pataki in recent days said he displayed a steely, energetic fiscal conservatism reminiscent of his first years in office, when he dramatically cut both spending and taxes in the face of a $5 billion deficit.
“It’s the return of George the First,” said one source, who was among those disappointed by Mr. Pataki’s less tightfisted second term. “I had a flashback to 1995.”
Mr. Pataki warned that his plan for balancing this year’s projected deficit of $10 billion would include “revenue measures…some of which you won’t like,” one source said. But the governor also suggested he would balance those measures with new tax cuts to take effect in future years.
These private conversations with small groups of business leaders and others who advocate lower taxes are part of the governor’s unusual lobbying campaign in advance of his budget presentation on Wednesday.
As in his public speeches, he rules out using what he calls “job-killing taxes” to resolve the state’s fiscal crisis. But he makes it clear the phrase does not encompass all state levies.
The governor’s aides have told health-care lobbyists he might propose increasing the surcharges on hospitals and health insurance imposed under the Health Care Reform Act, which subsidizes medical coverage for the poor and the training of young doctors. These surcharges add more than $1 billion per year to the cost of health insurance in New York.
“We’ve heard that the governor is looking at everything, including Medicaid cuts and assessment increases on health-care providers,” said the president of an upstate hospital lobbying group, Gary Fitzgerald of the Iroquois Health Care Alliance. “It’s a serious concern of ours.”
Already, the governor’s appointees at the Metropolitan Transportation Authority and the State University of New York have moved to increase transit fares and tuition.
A spokesman for the governor, Michael McKeon, declined to discuss Mr. Pataki’s plans for the HCRA surcharges and other state-imposed fees. “We’ll deal with the rest of those issues as we go forward with the rest of the budget,” he said.
An anti-tax activist who met with the governor Monday, Stephen Moore of the Club for Growth, said he liked what he heard.
“I’m encouraged by what he’s saying,” Mr. Moore said. “I’d like to see the fine print before celebrating. But I’m confident it’s going to be a budget that will make conservatives smile and liberal interest groups squeal.… I’m really optimistic this will be a budget that holds the line on spending and, if it has any tax increases at all, it will be minor sin taxes and that sort of thing.”
Underscoring the difficulty of the governor’s task, state Comptroller Alan Hevesi warned yesterday that bonuses paid by Wall Street firms — a significant portion of the state’s personal income — will be down by 37% compared to last year.
Mr. Hevesi estimated that 164,000 workers in the securities industry received a total of $7.9 billion in 2002, down from $12.6 billion in 2001 and $19.4 billion in 2000.
A spokesman for the governor’s budget office, Andrew Rush, said those numbers “are a clear example of why New York faces the biggest fiscal challenge we’ve seen in our lifetimes.”
Seeking to rebut Mr. Pataki’s anti-tax message, liberal interest groups launched a lobbying campaign of their own yesterday to fight what they called “job-killing spending cuts.”
A coalition of more than 200 labor unions, charitable organizations, education activists, religious groups, and others urged state lawmakers to minimize cuts in state programs by raising taxes on the wealthy.
“Cutting a state budget is not a bloodless exercise,” said the director of Statewide Youth Advocacy, Elie Ward. “It impacts on real children, real families, real seniors, and real disabled people all over the state of New York.”
Coalition members disputed the idea, embraced by Mr. Pataki, that tax hikes would hurt the economy more than deep spending cuts.
“If it was just a matter of having low taxes, Wall Street would probably be in Jackson, Mississippi, right now,” said the director of the Fiscal Policy Institute, Frank Mauro. “The quickest way to see jobs and people move away is if public safety starts to deteriorate, if garbage starts piling up in the streets.”
A similar point of view has been voiced by some Assembly Democrats, including Speaker Sheldon Silver of Manhattan. But the Republican majority leader of the Senate, Joseph Bruno, said he supports Mr. Pataki’s “no new taxes” philosophy.
“If you punish business, if you see business as an adversary and you inhibit their ability to compete, you’re going to cut their revenue and the state’s revenue,” Mr. Bruno said at a luncheon meeting of the Albany-area Chamber of Commerce. “That, to me, is common sense, basic arithmetic. But it’s amazing how few people know that.”
Mr. Bruno said he believes that the stock market and the state’s economy will soon rebound, meaning tax revenues that have plunged since the destruction of the World Trade Center will start going back up. “We’re going to budget with some optimism that it will pass and things will get better,” he said.