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Special Budget Report: Gov. Paterson's Budget Proposal Explained

In case you weren't aware, we're in a financial crisis.

As the stock market continues to fluctuate and unemployment continues to skyrocket, everyone is looking to cut costs, perhaps no one more so than the governor of the state of New York.

In his executive budget proposal, Gov. David Paterson has called for some drastic changes in order to close a $1.7 billion current-year shortfall and a $13.7 billion deficit in 2009-10. The proposal calls for flat spending, a comprehensive deficit reduction plan, increased taxes and funding cuts for numerous sectors.

Read on for a roundup of what's in the budget as it stands now.

What's in

The executive budget proposal calls for the following additions:

The first increases to the welfare allocations since 1990 are a key part of Paterson's proposal. The basic monthly grant has remained at $291 for a family of three ($3,492 per year) for 18 years; Paterson's proposal would raise it to $387, or $4,644 annually.

"Since 1990, the world has changed dramatically, but the basic welfare grant has stayed the same," Paterson said in a press release. "Though our resources are limited, this is a much-needed investment to help assist vulnerable New Yorkers who are suffering as a result of the current economic crisis, far too many of whom are children."

Since 1990, inflation has increased by nearly 65 percent.

Other additions, which Paterson calls part of a "safety net" for those in need, include increased funding to food banks, increased access to insurance coverage, expanded access to health care coverage, increased indigent care funding for teaching hospitals and community clinics, increased access to food stamp benefits and expanded eligibility for the Home Energy Assistance Program.

A new program will provide at least $350 million per year in student loans. The budget proposal calls for the establishment of the New York Higher Education Loan Program, a partnership between the state, private lenders and higher education institutions. The lender would originate the loan, which the State of New York Mortgage Agency would purchase with funds raised by issuing bonds. SONYMA would then issue $350 million in tax-free bonds to finance new fixed-rate loans of up to $10,000 per borrower. Maximum awards would total $20,000 for undergraduates at a two-year school, $50,000 for undergraduates at a four-year school and $70,000 for combined undergraduate and graduate studies at an interest rate of approximately 8 percent.

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