Cash-poor NY pushes state workers to take severance

NEW YORK (Reuters) - Cash-poor New York has extended a severance program that offers its workers $20,000 payments after only 1,089 people were approved in the first round.

Democratic Governor David Paterson's first attempt to trim the state workforce by encouraging employees to retire early ended on November 11 and the program was extended through January 20, according to a November 18 letter by the governor and his budget chief that was released on Thursday.

"It has come to our attention that thousands of employees expressed an interest in participating in the program, but certain agencies chose not to accept these employees into the program," the letter said.

State agencies have been told to slice $500 million of spending and they should "aggressively offer severances" to accomplish these reductions, the letter said.

Like many states, the recession has spawned a budget gap in New York and a spokesman for the state's Division of Budget said the governor had met with legislative leaders on Thursday evening to break a logjam over Paterson's plan to slice $5 billion over two years.

New York state employs about 200,000 people, and around 137,000 union and non-union employees are eligible for the severance program, a budget spokesman said by email.

(Reporting by Joan Gralla; Editing by Phil Berlowitz)