New York governor cuts spending

Attacks forced Pataki to order the cuts

By David Schepp BBC News Online North America business reporter

Governor George Pataki has ordered the state of New York to slash $3bn from its budget for the next 18 months following the attacks on the World Trade Center.

We will eliminate, as of today, all nonessential discretionary spending by state agencies

George Pataki, New York Governor

Mr Pataki, reacting to fears the state may face a shortfall of some $9bn (£6.2bn) over the next year and a half, provided few details of the planned reductions in government spending.

Among the governor's suggestions, however, were incentives for state workers to retire early, as well as debt restructuring, agency cuts and a hiring freeze of state workers.

"We will eliminate, as of today, all nonessential discretionary spending by state agencies," Mr Pataki said. "And we are working on programmes to restructure state debt.

"Coupled with the section plans we expect to have back from the agencies, we expect that these steps will save more than $3bn over the course of the next 18 months."

Speaking in the state capital of Albany, Mr Pataki said he believes the 11 September attacks, which have left nearly 6,000 dead or missing, would result in declining tax revenues for the state.

Already burdened

Mr Pataki acted after it appeared unlikely that lawmakers would pass a supplemental budget bill that could have added several billion dollars in additional revenue to the state's nearly $80bn budget approved in August.

Mr Pataki said the loss of businesses and jobs caused by the attacks on the World Trade Center would mean a reduction of $9bn over the next 18 months.

The New York governor has petitioned the federal government to provide the state for an additional $54bn in aid to help the city recover from the attacks.

Mr Pataki, a Republican, has been at odds with the Democrat controlled state legislature since it passed a bare-bones budget in August.

Legislative leaders and Mr Pataki were in budget negotiations when the Twin Towers were destroyed on 11 September.