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Gov. Cuomo Livid About 'Sham' Budget Process

ALBANY (CBS 2/AP) -- There was a dramatic revelation from Gov. Andrew Cuomo on Monday – there have been secret budget rules that for decades have padded funding for special interests and helped push state finances into the red.

"My grey hairs are multiplying just thinking about what we have to do," Cuomo said.

Those were the prophetic words from Gov. Cuomo at his New Year's Day inauguration. Because what he said he's discovered in his first month in office is enough to turn his entire head white -- a "sham" budget process that automatically increases Medicaid and education spending by 13-percent, reports CBS 2's Marcia Kramer. He said it can and does hamstring any governor trying to cut costs.

In the fuzzy math world of Albany this secret law means that an announced 7-percent cut in funding would actually be a 6 percent increase.

"I was shocked to learn that the state's budget process is a sham that mirrors the deceptive practices I fought to change in the private sector," Cuomo said in an op-ed piece titled "The Real Albany Sham: The Budget," scheduled to run in state newspapers on Tuesday.

Steven Cohen, who has the top job in the Cuomo administration as secretary to the governor, explained it this way:

"If you speak to people that don't operate inside this world, whether it's people who run their own family budget or people who run small businesses or people who run big businesses they will say that may be the way it works in government but that is bizarre," Cohen told Kramer.

That fuzzy math is what enabled Mayor Michael Bloomberg to say Monday: "In our budget we have assumed an increase in state aid of $650 million for education."

Think about it. The mayor is actually expecting a $1 billion cut in school money, but his budget assumes that huge increase, "because the previous governor over a long period of time, many times, assured us that that would be there when the next budget is passed," Bloomberg said.

On Tuesday Gov. Cuomo will unveil his plan to close a $10 billion budget gap without raising taxes, but Monday he picked up some surprising support. Michael Caputo, Republican opponent Carl Paladino's campaign manager, gave Cuomo a shout out for "talking the talk" of fiscal responsibility.

There was no immediate comment from the Senate's Republican majority or the Assembly's Democratic majority. Cuomo's 2011-12 budget proposal to the Legislature is scheduled for Tuesday.

Cuomo's revelation is startling for Albany's long criticized and often secretive budget process. Advocacy groups have long decried the notion that a reduction in the traditional increase of 5 percent in funding can be deemed "a cut." But Cuomo says the automatic increases in "hundreds of rates and formulas marbleized" in law are much larger.

Cuomo said the discovery of what is "almost a state secret" reminded him of the misconduct he investigated as attorney general in the student loan industry and on Wall Street.

He said the large, automatic increases in funding are contained in arcane regulations and something he was told is called "permanent law."

"The question is: Who is responsible for setting the growth in the state's budget? The answer is shockingly, no one," Cuomo stated.

"These formulas (predominantly in education and Medicaid funding) are often inserted into law by pressure from well-connected special interests and lobbyists," Cuomo stated. "When a governor takes office, in many ways the die has already been cast."

"This all must end," Cuomo said.

(The Associated Press contributed to this report.)

Do you have faith Gov. Cuomo can fix this problem? Let us know about it in the comments section below.

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