ALBANY — An economic think tank called on Gov. Paterson yesterday to freeze the salaries of all public employees — from police officers to DMV clerks to teachers — as part of a $30 billion plan to skirt fiscal calamity.
The unprecedented action proposed by the Manhattan Institute’s Empire Center would require the governor and the Legislature to declare a state fiscal emergency like the one used in the 1970s to save the city.
Taxpayers could save $1.6 billion this year alone if the government simply did not hand out raises, said E.J. McMahon of the Empire Center.
“The vast majority of people think that’s not controversial at all,” McMahon said. “They think it’s common sense.”
The dramatic wage freeze was among 30 cost-saving moves proposed by the business-backed think tank in advance of Paterson’s State of the State Address to the Legislature tomorrow.
Financial issues will likely dominate the governor’s agenda.
State government faces a budget gap of $7 billion or more next year, when taxpayers are on the hook for an estimated $328 million to fund a 4 percent across-the-board pay hike for state workers.
The budget gap is projected to balloon to $15 billion the following year as the state adjusts to a reduced role for Wall Street and as its share of federal stimulus money begins to run out.
“The long-term picture is very gloomy,” McMahon said. “Sooner or later, state officials need to confront the fact that they have no choice but to reduce spending.”
The Empire Center says its plan would close this year’s budget gap without tax hikes or layoffs.
Frank Mauro of the labor-backed Fiscal Policy Institute rejected the plan and said the state’s current financial woes pale in comparison to the city’s financial crisis three decades ago.
“Wages are one of the terms and conditions of employment that are — and should be — collectively bargained,” Mauro said.
The Empire Center’s plan called on the Legislature to cut its $220 million budget in half and dump $129 million in member-item cash it has squirreled away.
It also recommends a $1.8 billion cut from Medicaid and $1.7 billion in school aid.
Paterson won’t detail his own gap-closing plans until Jan. 19, when he’s required to present a balanced 2010-11 budget to the Legislature.
Additional reporting by David Seifman