NY Governor Cuomo seeks budget advice as debt talks wither

Reuters 41 mins ago...

NEW YORK (Reuters) - New York Governor Andrew Cuomo on Monday turned to some 20 business, labor and political leaders to help solve the state's fiscal problems as the U.S. Congress's "super committee" was set to declare defeat in efforts to reach a deficit-cutting agreement.

Failure to reach an agreement to reduce the U.S. deficit by at least $1.2 trillion over 10 years would trigger automatic cuts of the same amount over the next decade, beginning in 2013.

If the automatic cuts are triggered, Cuomo estimated that New York would lose about $5 billion in federal funding over 10 years, beginning in the state's upcoming fiscal year.

Cuomo in a statement said he asked the leaders, whom the governor spoke to via a conference call, to work with his administration to devise "an expedited job creation and fiscal stabilization plan."

The make-up of Cuomo's Council of Economic and Fiscal Advisors suggested the governor, a Democrat, is trying to build a diverse, bipartisan coalition to support budget cuts that could prove necessary.

New York gets about $40 billion a year from the federal government.

Cuomo said his estimate of lost federal funding does not count a loss in taxes from what could be a wave of more job cuts and a decline on Wall Street.

Last week, Cuomo warned that New York's current $133 billion budget had sprung a $350 million hole, while next year's accord has a $3.25 billion gap.

The governor has said some steps the super committee could enact -- such as cuts to Medicaid and abolishing federal income-tax deductions for state and local taxes -- could have a "catastrophic" impact on New York. The loss of the deduction for state and local taxes would impact disposable income and would likely affect consumer spending.

The New York financial experts invited to take part in Monday's call included American Express Chairman Kenneth Chenault; Ken Langone, co-founder of Home Depot; Felix Rohatyn, chief executive officer of Lazard, who helped lead New York City out of its 1970s debt crisis; Glenn Dubin, co-founder of Highbridge Capital Management; James Chanos, founder of Kynikos Associates; and Frank Zarb, former chairman of the NASDAQ stock exchange.

Also part of the group were Pat Barrett, ex-Republican state party chairman and former chief executive officer of Avis; Denis Hughes, president of the AFL-CIO; Alexis Herman, a former U.S. secretary of labor; Rossana Rosado, chief executive officer of the newspaper El Diario, and Marc Morial, president of the National Urban League.

New York politicians asked to participate were Buffalo Mayor Byron Brown, a Democrat who is close to Cuomo; and Peter Solomon, a former vice chairman of Lehman Brothers and a deputy mayor of economic policy and development under former Mayor Edward Koch.

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