Cuomo's Fiscal Ax Troubles New York's Local Officials

IT'S Thursday night in New York, and ``Ask The Governor'' is on the radio. Gov. Mario Cuomo (D) interrupts a caller who wants to talk about the hotly disputed state budget. Taking the offensive in anticipation of an argument, the alternately honey-tongued and caustic governor insists the citizen answer this: Should government, (A) raise income taxes, (B) raise property taxes, or (C) cut spending?

``Cut spending,'' says the caller, who is speaking from his car phone. Mr. Cuomo congratulates him on a wise choice.

But in real life, things are never so simple, as Cuomo knows. One of America's top liberals, he's made an out-of-character choice: not to refrain from raising taxes, but to continue with one of the largest tax cuts in state history at a time when local services are going begging.

Cuomo intends to pay for the tax cut by limiting medicaid services, holding increases in state spending to below the inflation level, cutting aid to local government, and imposing ``sin'' taxes on tobacco and alcohol products.

Even the governor has agreed that his $46.6 billion budget, which would go into effect April 1, cuts into programs for the poor, the homeless, and people with AIDS. ``It's going to be a little tough this year,'' he said, speaking at a labor breakfast in February, but ``it's not going to kill you.''

For cities, which are scrambling to meet one crisis after another in education, drug abuse, and health care, there is no slack to take up. Brooklyn's Interfaith Medical Center, for example, is in such bad shape that doctors are donating their own money to purchase medicine and equipment.

A coalition of hospital workers, doctors, deaf and blind students and others bearing the brunt of cuts are putting the heat on Cuomo and the legislature. Last week, thousands poured into Albany, the state capital, in the largest demonstration there in years. Their request is not that Cuomo cancel - but only delay - cutting the top income-tax rate from 8 to 7.5 percent until revenues begin to climb again. No go, says the governor. To quash the third of four annual tax cuts would stifle job growth and harm New York's effort to project economic vitality and build credibility with business.

Grumbling over the budget is heard far outside New York City. In Plattsburgh, population 23,000, located 300 miles to the north near the Canadian border, Mayor Carlton Rennell is trying to figure out how he'll cope.

``The present level is as low as it's economically sound to go,'' he says. ``Now it's time for us to bite the bullet and pay for the services we're using.''

Mayor Rennell said he thinks insistence on cuts at all costs is consistent with Reagan-era trickle-down theories, but finds it surprising coming from Cuomo, who was touted last year as the ``Great Liberal Hope'' for the White House.

Rennell worries that people have forgotten the purpose of funding government, and cites Justice Oliver Wendell Holmes, who said taxes are the price paid for a civilized society. He says he's frustrated because Cuomo's proposed cut in support to local government merely shifts more of the burden. It could mean he'll have to raise city taxes to provide sewage treatment, street-sweeping, and services his constituents take for granted.

The issue is not unique to this state, according to Terry Golway, editor of Empire State Report, which follows New York government. He says other states - including New Jersey - which are also trying to look good to business at a time of disappearing state surpluses, face the same choice between incentives and basics. He feels that the funding football, which Reagan passed to the states, is now being passed on to localities.

Mr. Golway accuses state officials of showing contempt and lack of understanding for the role of cities and counties. ``They think of [municipal leaders] as hicks and farmers,'' he says.

To Mayor Rennell, what the budget fight boils down to is that municipalities throughout the state ``are perceived more as a special interest than as a member of a partnership.''