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      Cuomo finds 'secret' budget flaw

      A series of so-called "permanent laws" and little-known regulations buried in New York's often secretive budget process have for decades dramatically padded funding for special interests and helped push the state into multibillion dollar deficits, Gov. Andrew Cuomo said Monday.

      Cuomo, who discovered practices that he says mirror deceptions on Wall Street, said he will stop the "sham" that can keep a governor from truly curbing or cutting spending. He said the practice this year would automatically increase Medicaid and education spending by 13 percent, so that even a 7-percent cut announced publicly would still be a 6-percent increase in funding.

      "I was shocked to learn that the state's budget process is a sham that mirrors the deceptive practices I fought to change in the private sector," Cuomo states in the opinion piece to newspapers first obtained by The Associated Press. He titles the piece: "The Real Albany Sham: The Budget."

      Cuomo, the former attorney general, said the flawed budget system under way for decades pressured by special interests is resulting in the state's projected $10 billion deficit. He says if the inflation rate was used, the deficit would be $1 billion.

      The $10 billion deficit projection has led to the threat of layoffs among state workers and deep cuts in education and Medicaid that could force additional layoffs in communities as the state tries to recover from recession.

      "It's not secret. It's not necessarily even sleazy," said Lawrence Levy, a political commentator and dean of Hofstra University's National Center on Suburban Studies. "He seems surprised and scandalized that a deficit is defined by what could happen if you do nothing, versus what you need to do to match revenues."

      "This is a big, complicated place and Cuomo could make a difference if he is prepared to focus like a laser," Levy said. "The danger is when governors stop paying attention. Then they can get eaten up the Legislature and special interests."

      There was no immediate comment from the Senate's Republican majority or the Assembly's Democratic majority. Cuomo's 2011-12 budget proposal to the Legislature is scheduled for Tuesday.

      Cuomo's revelation is startling for Albany's long criticized and often secretive budget process. Advocacy groups have long decried the notion that a reduction in the traditional increase of 5 percent in funding can be deemed "a cut." But Cuomo says the automatic increases in "hundreds of rates and formulas marbleized" in law are much larger.

      Cuomo said the discovery of what is "almost a state secret" reminded him of the misconduct he investigated as attorney general in the student loan industry and on Wall Street.

      He said the large, automatic increases in funding are contained in arcane regulations and something he was told is called "permanent law."

      "The question is: Who is responsible for setting the growth in the state's budget? The answer is shockingly, no one," Cuomo stated.

      "These formulas (predominantly in education and Medicaid funding) are often inserted into law by pressure from well-connected special interests and lobbyists," Cuomo stated. "When a governor takes office, in many ways the die has already been cast."

      "This all must end," Cuomo said.