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States in fiscal mess: N.Y. governor cuts his pay

By Aaron Smith, CNNMoney staff writer

NEW YORK (CNNMoney) -- New York's new governor, one of several greeted by billions of dollars in budget gaps, acted to cut his salary Monday amid reports he will freeze the pay of most other state workers.

Andrew Cuomo, who took office on New Year's Day, said he would cut his $179,000 salary by 5%. He also cut the pay of other senior state officials, including Lt. Gov. Robert Duffy, as well as the governor's secretary, counsel, director of state operations, counselor and chief of staff.

"Change starts at the top and we will lead by example," said Cuomo, a Democrat elected by a wide margin in November.

Cuomo faces a $9 billion budget gap in fiscal 2012, which begins April 1. He is far from alone -- the Conference of State Legislatures says the 50 states face a combined $82 billion in deficits in their 2012 fiscal years, as high unemployment continues to undermine a weakening tax base across the country.

The New York Times reported that Cuomo is expected to announce a one-year pay freeze for state workers during his first State of the State address on Wednesday.

The salary freeze has been part of his plan since the campaign. Prior to the election, Cuomo said contracts for 96% of the state workforce are up for renegotiation on April 1, the first day of fiscal year 2012, and he intended to keep them at their current levels.

"We must freeze salary increases for state workers for one year as part of our emergency financial plan," said Cuomo in his 252-page plan for New York, written when he was still on the campaign trail. "We will freeze salaries while the state takes other measures to get spending in line and recover from the current financial emergency."

The state faces a budget gap of $315 million for the current fiscal year, which ends March 31, according to Erik Kriss, spokesman for the state budget division. This is in spite of the state reducing its workforce by nearly 900 employees by Dec. 31, he added.

If the state doesn't close the gap by the end of this fiscal year, then it will roll over to fiscal year 2012, which already faces a budget gap forecast of $9 billion, said Kriss.

The situation gets worse. There are budget gap forecasts of $14.6 billion in fiscal 2013 and $17.2 billion in fiscal 2014, according to Kriss and the National Conference of State Legislatures.

Kriss said the state budget is getting dragged down by "continued sluggishness of the economy, depression of tax revenue and growth of Medicaid." He said that Cuomo does not plan to raise taxes to try and fill the gap "because right now we are the tax capital of America, if you combine state and federal taxes."

New York is not alone in its fiscal struggles. The neighboring state of New Jersey has similar problems, with a projected budget gap of $10.5 billion for fiscal year 2012, according to the Conference of State Legislatures.

California, where Jerry Brown returned Monday to the governor's office he held in the late 1970s, is in much worse shape. The conference projects a budget gap of $19.2 billion for fiscal year 2012, followed by a gap of $22.4 billion in 2013 and $20.4 billion in 2014. To top of page

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