Cuomo seeks to freeze salaries of state workers

New York Governor Andrew Cuomo is seeking a one-year salary freeze for state workers as the first step after assuming office on Jan 1, 2011.

The move is part of an emergency financial plan that will be announced in the State address on Wednesday, according to senior administration officials, the New York Times reported.

Cuomo, who won the elections in November 2010 by taking a 63 percent of the vote, the fourth-highest margin of victory in a governor's race, has a tough path ahead of him, particularly in strengthening the economy.

The governor said during his campaign that the difficult financial times call for shared sacrifice, the NYTimes reported, quoting a senior administration official.

Job creation has remained weak within the state of New York. New York City had a jobless rate of 9.1 percent in November, which is only a little lesser than the national unemployment rate of 9.8 percent during the month.

A freeze is obviously a difficult thing for many government workers, but it's necessary if the state is going to live within its means, the official added.

The Times expects immediate budget savings of $200 million to $400 million, against an expected deficit of $9 billion, but achieving it would be politically meaningful.

The move does not require legislative approval but would require negotiations with the labor unions. Salaries, pension and health care insurance are some of the biggest expenses for the state.

Cuomo plans to contain the Medicaid budget, which is the state's second largest expense, through an agreement with the hospital industry and the health care union, but plans regarding pension benefits are yet uncertain.

Cuomo also plans a property tax cap of 2 percent, which needs to be passed by the Assembly. According to the plan, property tax levies cannot be more than 2 percent.

The property tax cap has been proposed by two previous governors of the state, but was turned down.

Many schools, local governments, special districts like fire and library that set their own levies will be severely impacted and have been protesting the tax.

If passed, the move will help reduce the budget deficit but create a whole new plethora of problems will need to be dealt with.

Severe tax moves could also affect salaries and jobs in these districts.