Many observers of New York State government say they are hard-pressed to come up with a more dedicated public servant than Patrick J. Bulgaro, the state's budget director.

Mr. Bulgaro, who took over as the state's chief fiscal officer in September 1991, has spent his entire professional career in state government. He began as an intern with the Department of Labor in 1965 and later served as executive deputy commissioner of the state Department of Civil Service. In 1983 he was appointed executive deputy commissioner of the Department of Taxation and Finance.

From interviews with credit analysts, independent observers, and public finance officials from municipalities in the state, a picture of Mr. Bulgaro emerges as a hardworking numbers cruncher, committed to the state's history of progressive government even as economic pressures strain budgets throughout the nation. One credit analyst recalled a time when Mr. Bulgaro worked through a critical budget meeting despite an illness in his family.

But observers also say Mr. Bulgaro faces major challenges as budget director of a state still mired in a deep regional recession. State finance officials, for example, have relied on nonrecurring revenues, also known as one-shots, to balance budgets. These fiscal gimmicks, while declining in the past three fiscal years, have been criticized by state Comptroller Edward V. Regan, rating agencies, and taxpayer activists like Robert L. Schulz. Mr. Schulz has filed lawsuits protesting the state's use of these practices and its sale of debt without voter approval.

In addition, many believe the state needs significant downsizing to survive without fiscal gimmickry. But observers say state lawmakers and Mr. Bulgaro's boss, Gov. Mario M. Cuomo, have shown no significant signs of undertaking that task.

In an interview with staff reporter Charles Gasparino, Mr. Bulgaro discusses the state's economic problems and how he plans to deal with them.

Q. Why did you choose a career in government?

A: My academic training is in history and political science. I've been a government junkie all my life. But I really started in government by enrolling in a public administration internship program.

As a result, I wound up working for the state during an era of tremendous growth and prosperity in the 1960s. This was was the era of Rockefeller and Kennedy. People were being called to arms in an attempt to improve this society.

It was also a period of building. We built the state university system here in New York. We created the Department of Environmental Conservation. New York State was in the forefront of a lot of issues and committed to an agenda.

Q. Are you still committed to that 1960s agenda, to activist government?

A: Absolutely. But the issue is not a question of how much government you have, but how good the government is.

I believe there are certain functions you need government to do, functions that you can't dismiss with words like privatization. Public safety and public health are two functions that are fundamental to the fabric of this society, and the need for government intervention in these areas is essential.

Q: What makes your job different from managing the budgets of West Virginia or Rhode Island?

A: The problems I grapple with every day are not any different than problems that [Nassau County Treasurer] John Scaduto wrestles with, or what [Buffalo Comptroller] Joel Giambra must deal with in Eric County. This is a difficult time to be a fiscal official of any jurisdiction, large or small.

Q. You took over the job during one of the toughest periods in New York's fiscal history. Is there light at the end of the tunnel?

A: We have a unique situation. We had a recession that was followed by three years of the most stagnant growth we've seen this century since the Great Depression.

From coast to coast, fiscal off officials are complaining about the same thing while the federal government keeps pointing to growth. I haven't seen enough growth to feel comfortable that state governments will be helped by this level of economic growth.

But the economy in New York State is very diversified, unlike some states whose fate is tied to a particular industry, certain mineral, or some segment of the economy.

From that standpoint, our economy is about as diversified as the nation's. With this in mind, I think there will be growth at some point in the 1990s, but this growth will be slow, maybe less than one-half the growth experienced in the 1980s. I think state and local governments are in for a difficult period for the foreseeable future.

Still, in New York State we are extremely well positioned for economic growth. We have the [U.S.-Canadian] free trade agreement, which is helping western New York State through this difficult period.

We also have the further development of the European Economic Community, which the state is well positioned to exploit and profit from. The state has the finest system of public and private universities in the country. The best educated work force. For all those reasons, I think New York will do very well in the future.

Q: But many economists say New York and the Northeast will experience much slower growth than other Parts of the country.

A: By the second or third quarter of 1993, the state will begin to recover. There are a lot of reasons why the state's recovery will lag other areas of the country.

We are somewhat dependent on the financial, insurance, and real estate sectors, which represent 10% of our employment base and 15% of our wages. These industries have been heavily impacted.

Banks are in a period of consolidation. Finance firms are reducing work forces and consolidating. Also, about 5% of our economy is tied to construction, which has been slowed by the oversupply of office space in New York City.

Q: Does that mean the state's budget will be strained for the next few years?

A: I think the future portends that scenario for budget directors across the United States. If you look at the 1990s, you will see a period of slow economic growth and low inflation.

That means jobs are not going to be abundant. When inflation is low, that has a noticeable impact on revenue collections of state and local governments.

Q. Your office's first-quarter update projects the state's general fund will have a surplus of about $4 million if revenues and expenses remain on track. Do you still think so?

A: The last quarterly forecast we completed showed that if the year finished out along the lines of the quarter in terms of revenues and expenses, we would have a $4 million surplus in our fiscal 1993 budget.

But it's very hard in this kind of a turbulent economy with a constant stream of mixed signals and continued economic weaknesses for us to feel totally comfortable with that projection.

Q. Is the state going to lose several hundred million dollars in federal Medicaid reimbursements, and, if so, was this figured into your budget forecast of a surplus?

A: These are a variety of federal claims for Medicaid payments amounting to about $200 million. These claims are for retroactive services the federal government has not yet paid the state.

The claims involve services to the homeless and the poor who temporarily resided in state mental hygiene facilities. The federal government rejected our claims on very technical grounds.

We believe this is a bureaucratic glitch and we feel confident that our claims will be upheld, if not by [the federal] Department of Health and Human Services, then by the courts. We are counting the money as part of our budget.

Keep in mind that a $56 billion all funds budget as we have in New York State contains all kinds of risks before the year is over. There are also risks in the other direction, so we hope there is some good news.

Q: New York State places many mandates on local governments. Are state officials cognizant of the financial stress this can cause?

A: We've created a task force of local government officials to identify which mandates should be repealed. The governor during his last two budgets introduced a series of bills to the Legislature calling for mandate relief. Had all the bills been passed by the Legislature, local governments would have saved some $250 million.

Q: What about the charges that state bond sales through entities like the Local Government Assistance Corp. violate New York's constitution because the voters aren't consulted? The state has been upheld in court, but do the lawsuits have a point?

A: These entities were created to achieve certain objectives of the state Legislature, which was chosen by the people of the state. The projects of these entities like the thruway authority created thousands of jobs. This is the right prescription for our economy.

Q: State Comptroller Edward V. Regan says that in its last fiscal year New York used $1.18 billion of nonrecurring budget measures to help close the deficit. Do you agree when he argues that the state leans too heavily on one-shots?

A: There are lots of definitions of what a one-shot is - the comptroller, the Legislature, and others have all published their own lists of one-shots.

I disagree with many of the items others call one-shots. While the amount of one-shots in prior budgets were by any conservative measure still in the billion dollar range, in the 1992-93 budget they total only $450 million.

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