Errol A. Cockfield, Jr.. Newsday. 4/9/2006.

With state leaders at the tail end of crafting a budget that independent analysts say has the potential to increase debt and handcuff the next administration, the candidates for governor yesterday laid out their prescriptions to slow spending.


Speaking at a conference of one of the state's key government watchdog groups, the Citizens Budget Commission, the contenders took on a more serious tone as they attacked the political establishment and offered frank evaluations of the state's fiscal woes.


The two Republicans, former Assembly Minority Leader John Faso and former Massachusetts Gov. William Weld, and the two Democrats, state Attorney General Eliot Spitzer and Nassau County Executive Thomas Suozzi, all gave negative critiques.


“Our state is in trouble, it seems to me," Faso said, citing decreases in population upstate, high local taxes, and spikes in state spending. "One terrorist attack or one Wall Street downturn and we are going to be back in the fiscal soup all over again.”


Another contender, former Secretary of State Randy Daniels, skipped the event and made it public yesterday that he was dropping out of the race. After failing to gain traction in the polls, Daniels, a Democrat turned conservative Republican, was expected to endorse Faso tomorrow.


Suozzi, who is trailing Spitzer by overwhelming margins in the polls, unveiled a five-point "taxpayers saving plan." It would save $5 billion by the third year of implementation, Suozzi said, through a 10 percent reduction in the state workforce, Medicaid fraud controls, pension reform, debt restructuring and a proposal to collect more sales taxes by taking them from wholesalers instead of retailers.


Suozzi said he would use half the money saved to settle the Campaign for Fiscal Equity's school funding lawsuit in New York City, and use the rest for what he said would be a more equitable school aid formula in other parts of the state.


He said it would “enable local governments to reduce school property taxes" and "remove the single greatest obstacle to the economic health of our suburbs and upstate towns and cities.”


The Westchester County event held by the Manhattan-based budget commission gave the candidates, who all favor some form of income or property tax relief, an opportunity to advance more detailed fiscal agendas before a group of the state's most erudite policy wonks.


In a departure from his usually reserved tones, Spitzer leveled his harshest criticisms yet at Gov. George Pataki and the State Legislature, saying state leaders had squandered an opportunity to use surplus money to reduce a growing debt burden. Pataki is expected this week to veto portions of a legislative budget that ranges between $112 billion and $115 billion.


The budget process began on the wrong footing, Spitzer said, when Pataki proposed what Spitzer called tax cuts that favored the wealthy. The legislature then altered those cuts to target working families, Spitzer said, but to pay for them legislators spent the entire $2-billion, one-year surplus.


"This is a faith-based budget, “Spitzer said. "It takes on faith that the state will have dramatic revenue growth in the coming years.”


Weld, who is the perceived Republican front-runner, said he would move to limit local property tax increases to 2.5 percent of the total tax levy, with some exceptions for major purchases. He also reiterated his call for the state to limit spending to the previous year's revenue levels, which would require a constitutional change. “The most important thing we have to do ... is put a tourniquet around the spending habits of the legislature in Albany,” he said.