In an effort to close a $4.2 billion deficit for the fiscal year 2005-06 beginning April 1, Gov. George E. Pataki on Jan. 18 proposed a $105.5 billion New York State budget that calls for huge spending cuts for health care and Medicaid, and stalls on carrying out a court order to aid New York City schools.

In his 11th budget address, Gov. Pataki said that Medicaid, a health insurance program for low-income residents, “is crushing taxpayers,” and noted that New York State’s program is the most expensive in the nation, while costs are increasing rapidly. Cuts to Medicaid include reductions in reimbursement rates to hospitals and nursing homes, and eliminating some dental, podiatry and other Medicaid options.

Beginning in 2006, the budget also caps local government Medicaid payments at a maximum growth rate of 3.5 percent, lowering that rate to 3 percent by 2008, when this budget calls for a complete state takeover of Medicaid, said Pataki. Currently, Medicaid costs in New York are shared by the state, local and federal government. The governor’s plan could provide billions of dollars in local government relief over the next five years, including $82.6 million next year for New York City in its first year, as reported in The New York Times.

The budget increases school aid by $526 million, with a large part going to New York City schools, but the funding remains a fraction of the $1.4 billion increase per year that a court-appointed panel recommended for each of the next four years. “Any new resources must be accompanied by top-to-bottom fundamental reforms to ensure greater accountability and performance,” said Pataki.

The governor also introduced a “first-in-the-nation” welfare reform: a State Earned Income Tax Credit for fathers who are current in their child-support payments. The credit is aimed at “encouraging fathers to play a more meaningful and productive role in their children’s lives,” said Pataki, a Republican who is midway through his third four-year term as governor and considering a run for a fourth term.

Responding to the governor’s address, as reported in The New York Times, Democratic Assembly Speaker Sheldon Silver said there was not enough for New York City, and that the governor’s tax proposals and higher fees favor the wealthy.