Last week, Governor Paterson met with legislative leaders to discuss measures that would be taken in response to the financial crisis that the nation is currently facing. The crisis on Wall Street has had a strong effect on the economy of NY State.
State revenue is tied strongly to Wall Street, which makes up one-fifth of New York’s yearly income. As a result, when Wall Street revenues dropped, so did state revenues. Next year’s budget deficit is predicted to rise substantially.
In fact, a $1.2 billion hole in the budget has already been caused by the Wall Street decline, according to a New York Times article last Friday.
The budget took an additional hit when Wachovia Corporation was bought out by Wells Fargo, a West Coast bank, instead of the New York based Citigroup, draining even more capital from the state.
Governor Paterson’s proposed plan to deal with this issue is to cut the state budget by $2 billion. He has called for each state agency to cut 10 percent of their spending for next year.
Unfortunately, some of the biggest parts of the budget are Medicaid, education, and financial aid, and they will likely receive an ill-advised cut.
However, should all areas of the budget be cut evenly according to the percent of the budget they make up? Wouldn’t it make more sense to decide spending cuts by which areas are more important and therefore need the funding more?
Universities, particularly state ones, depend on state funding for programs that make college more affordable for students.
Mandatory cuts could force state and community colleges to eliminate the programs that allow those who are unable to pay for tuition to receive a higher education.
A reduction in financial aid could hurt students at St. John’s, depriving them of adequate aid, making college that much more costly.
Many students from middle class families depend on financial aid to help pay for a college education.
With the economic crisis making it harder to take out bank loans, more and more students could be depending on state and federal aid to combat rising college tuitions.
St. John’s students have already been feeling the pinch of the declining economy. Last August, a number of not-for-profit private moneylenders, many of whom St. John’s students had taken loans from, folded or walked away from Federal Stafford Loans.
Fortunately, the University gave these students credit, telling them to just find a new lender. Larger banks were willing to take the students from the defunct lenders, preventing a potential disaster for the students.
Issues like these show that financial aid needs to be prioritized. Financial aid was in danger before Paterson proposed the budget cuts. After a 10 percent cut in funding, students who depend on financial aid might not be as lucky as St. John’s students were at the start of this semester.
There should be some sort of value system to base legislators’ decisions. To demand a 10 percent budget cut from all state agencies across the board is not fair.
Essential institutions, like medical care and education, could suffer significantly without the money, while other areas of the budget, such as the parks department and legislators’ salaries, could perhaps survive a slightly larger decrease.