NY governor says layoffs needed, but up to successor

NEW YORK (Reuters) - New York state might have to lay off thousands of state workers to help close a $9.2 billion budget deficit, but the next governor should make that decision, Governor David Paterson said on Tuesday.

Paterson, who is not running for election in November, had promised unionized public workers that there would be no layoffs this year after they agreed to lower pension benefits for new hires to save $38 billion over 35 years.

"This is a last resort," Paterson told reporters at a news conference. "It takes a long period of time to schedule layoffs so I want this ready to go on January 1, so that the next governor has this option should the next governor choose to use it," the governor said.

On Friday, a U.S. court blocked the Democratic governor from furloughing 100,000 public employees for one day, a move designed to save $30 million.

Public workers have balked at the $250 million of savings included in Paterson's $135 billion budget plan. The legislature has failed to enact his budget more than two months past the deadline.

Both Attorney General Andrew Cuomo, the Democratic gubernatorial candidate, and Rick Lazio, a former congressman seeking the Republican nomination for governor, have said the state work force must be trimmed.

Steve Levy, the Republican county executive of Suffolk County also seeking the GOP gubernatorial nomination, has reduced the work force of Suffolk County, on Long Island, since he was first elected in 2003.

Paterson said layoffs could increase the state's unemployment rate but noted that New York for the second time this year will run out of cash in June, forcing him to delay payments to schools, cities and towns, and nonprofits.

If New York's fiscal problems deepen, Paterson said he might accelerate the layoffs. Referring to his agreement with the unions, he said: "I don't think the memorandum of understanding is one that could not be changed."

Kenneth Brynien, is president of the Public Employees Federation, in a statement said the union was still willing to find other ways of saving money, including hiring fewer costly consultants.

New York saves money when it uses temporary employees, according to Paterson.

Danny Donohue, president of the Civil Service Employees Association, in a statement noted the state still wants to hire temporary employees despite a hiring freeze.

(Editing by Leslie Adler)