In December, then Gov.-elect George Pataki spoke of the upcoming days between his inauguration and the April I start of the new fiscal year. "The critical issue for the people of this state," he said, "is restructuring government. particularly in entitlement pro-rams, so we can deal with this $4 billion-plus [budget] gap and send a clear messace to everybody in this state that this campai-an was not about talk, it was about action." This transition marks a philosophical sea-change for New York, from a government that spent to create jobs and meet the basic survival needs of the poor, children, the elderly and the infirm, to one that places its faith in the private sector. In Pataki's vision, tax cuts will stimulate spending. That will create jobs for the unemployed. reducing welfare costs. Is it simply Reaoanmics revisited the trickle down dream that defied the laws of aravity and trickled up? Or is it an economic strategy that can work at the state level, where budgets must be balanced annually and there's no military spending and foreign aid obligations?

Those hoping for more specifics about the direction of the new administration will be listening carefully to Pataki's first State of the State message. That's when he will present the equivalent of an architect's rendering. But the blueprint won't come for another month, until his Feb.1 budget presentation. He will use his spending, plan as the tool to recast state government.

New York's 53rd governor finds himself following in the footsteps of at least three of his four immediate predecessors: before he can begin to implement his vision and program, he must deal with a budget gap. The only difference is that Pataki, unlike Nelson Rockefeller, Hugh Carey or Mario Cuomo, comes into office promising to lower tax rates and cut spending.

Thirty-six years ago, Rockefeller came to Albany facing a projected state budget shortfall of $220 million. He also had to help New York City Mayor Robert Wagner a Democrat, with $135 million for his budget. Those amounts would hardly raise an eyebrow by today's standards. But in January 1959, top state officials, -the budget director, for example- earned just $20,000.

In 1977, when Hugh Carey led the Democrats back to power in Albany after 18 years, he faced the New York City fiscal crisis. "The days of wine and roses are over," Carey said in his first State of the State address, ringing down the curtain on the Rockefeller era. Carey and the Legislature came within a few hours of letting the city default on notes worth $792 million, but approved a last-minute bailout and created the Municipal Assistance Corporation (MAC) to refinance the debt and oversee future city spending plans.

Mario Cuomo took over from Carey in 1993 facing a $3 billion shortfall. He subsequently enjoyed a few years of fiscal stability, but the Reagan-era federal cutbacks burdened this state, like many others, with millions of dollars of mandated obligations formerly shouldered by Washington. In recession-plagued 1990, Cuomo had to close a $6 billion gap. But Cuomo goes out on something of a roll. His last two budgets ended the year in the black and in a November letter to his successor, Cuomo told Pataki that the current fiscal year will also end with a cash surplus.

It won't be enough to offset much of the gap Pataki projects he must close in his first budget, however. Working feverishly since his election, Pataki's advisors have been crafting the spending plan lie will present to the Legislature in his budget message. A combination of personal and corporate tax cuts that are scheduled to take effect this year, coupled with lower than estimated state tax revenues, will increase the shortfall to about $5 billion. And that doesn't include assistance to close what could be up to another $3 billion gap in New York City's budget. Pataki continues to insist, however that he will plug the shortfall and still implement the first stage of his four-year plan to cut the state's personal income tax rate, from the current 7.875 percent to 5.9 percent. His tax cut plan will cost on average, he says, a bit more than $1 billion a year.

Pataki has said he will wait for the recommendations of his budget and Medicaid task forces, and reports from the numerous working groups set up as part of his transition team, before discussing where his budget knife will cut. "We will be receiving a wide range of options about how to achieve those cost-saving measures," he said, "and I can't tell you at this point what percentage will come from any specific area.

"All those dream jobs I always wanted in government" comments one Albany lawyer whose friends still don't know what the future holds, "I'm glad I never got one. By mid-December, Pataki had made up his mind about some key appointments but said he was not ready to disclose most of them. He did, however, say that Michael Finnegan, his longtime friend, law partner and campaigm chairman, will serve as his counsel. And he announced three other appointments to his personal staff. Manhattan attorney Bradford Race, an old friend of the govemor, will be his chief of staff. James Natoli, chief of staff to Assmebly Minority Leader Clarence Rappleyea (R-Norwich) will serve as director of state operations. And Zenia Mucha, who served as U.S. Sen. Alfonse D'Amato's press secretary until going to work for the Pataki campaign, will be his head of communications.

The Pataki transition has been methodical and remarkably leak-free. "The Republican Party has always been more like a military operation than the Democrats," is how one Albany lobbyist explains the apparent discipline within the GOP ranks.

The advantage is obvious. When only rumors are flying around and there were many during the transition -no real target can attract organized opposition. That applies both to individuals and to policy.

In the weeks immediately following his victory, Pataki appointed several key panels to guide the transition. First came the 53-member Transition Advisory Group. According to Mucha, it was a broadbased collection of former elected officials and others who "are advising us on policy and personnel in a number of different areas." A larger working group, called the Transition Team, with more than 200 members, was designed to be more hands-on. "They are much more specific in their areas of expertise and will be asked to provide information and suggestions," Mucha continued.

A key group was 20- member Medicaid Task Force chaired by Lt. Gov. Betsy Mc Caughey. "Mediacid is the single largest fiscal and social challenge facing state government," Pataki said as he announced the group's formation. He charged it with devising ways to assure greater continuity of care and to reach those New Yorkers most in need of care. But controlling costs in the state's $9.4 billion mediacid program is central to the governor's plan to cut spending. He has said the largest cuts would come from the program, spreading panic among New York State's heavily Medicaid –dependent hospitals. This has put McCaughey task force under a great deal of pressure. Although it has apparently not bee asked to prepare a detailed reform plan, it must come up with projected and actual cost cuts soon.

Key recommendation of the Budget Task Force, chaired by Assemblyman John Faso, probably won't be known until the governor delivers his budget message.

Pataki has been advised by, among others, neighboring Republican Gov's Christine Todd Whitman and William Weld to push hard for his agenda in the first budget. "If there is milk to be spilled or sacred oxen to be gored." Weld advised during a Republican governor's meeting in November "do it at the start of the new administration." That's when the mandate is clear, the troops are mobilized and the opposition is in disarray.

"Pataki's power peaks in the first six months." agrees CHANGE-NY President Tom Carroll, who is serving on the Medicaid Task Force. "The tax cut was the decisive issue in the campaign. The tax cuts and the spending cuts to allow it ']I be the centerpiece of the 1995 legislative session. If Pataki successfully delivers a tax cut," Carroll says, "he will be on a roll."

The various task force membership lists were studied like old photos of the Kremlin following a May Day parade by those looking for hints of Pataki's plans. They contained a wide range of advisors, including former Gov. Carey and former U.S. Secretary of State Henry Kissinger. They included some surprises, like advisory group member Edward Molloy, president of the Building and Construction Trades Council of Greater New York. Molloy's organization had endorsed Cuomo for re-election. But that support was based on the single issue of Cuomo's support for a specific jobs initiative. "When I listen to Pataki today," Molloy says, "his main theme is jobs, and that's what we were looking to accomplish."

The Rev. Calvin Butts, another advisory group member, remained neutral during the campaign although his much publicized invitation to Pataki to address the congregation at Harlem's Abyssinian Baptist Church attracted a lot of comment. "One must consider that there are a limited number of people of African descent surrounding the campaign," Butts says. Butts has had several conversations with Finnegan. "I'm encouraged by Finnegan's approach to say 'we want to hear your thinking' In light of the proposed tax cuts and the devastating effect that will have on social programs, I think it's important that the administration focus on economic development and job creation. If you want to offset the negative impacts that will come from tring to close a budget deficit and still deliver tax cuts, you definitely will have to provide the African-American community opportunities to work."

Russel Sykes, of the State Communities Aid Association (SCAA), wasn't asked to be part of Pataki's transition team. But his group, which lobbies on behalf of poor New Yorkers, has spoken with members of the budget task force. The association doesn't agree with all aspects of Pataki's tax cut proposal, although it is encouraged by his support of an accelerated phase-in of the earned income tax credit, which will help low wage workers.

'There will be some elements of his tax cut plan that we will support." Sykes says. "John Faso is the right person to be chairing that panel. He has always been respectful of our ideas. And they're certainly going to need ideas."

While New Yorkers wait for news of W high profile cabinet appointments and several thousand other political appointments, there are a range of additional choices Pataki may be able to make during the next four years involving state institutions like the Racing and Wagerina Board, the Environmental Facilities Corporation, the Adirondack Park Agency, the Public Service Cornmission, and the Court of Appeals.

There are three commissioners on the Racing and Wagering Board, for example, all with six-year terms. The governor does, however, appoint the board chairman, currently Democrat Richard Corbisier of Douglaston. Pataki could introduce legislation to eliminate the board, putting its horse-related functions in the Department of Agriculture and Markets and its betting operation with the Lottery, a division of the Department of Taxation and Finance.

The Environmental Facilities Corporation which makes loans for water treatment projects from the State Revolving Fund, has a six-member board. One member's team has just expired, while three of the other seats are held by the Commissioners of health and environment and the secretary of state.

Pataki will be able to have an immediate impact on the makeup of the 11 member Adirondack Park Agency. Three seats are held by the commissioners of the enviroment and economic development and the secretary of state. At least five of the board's eight citizen members, including Chairman John Collins, are holdovers serving terms that have already expired.

The five-member Public Service Commission regulates the state's utilities and is overseeing the move toward competition in the electric power industry. Chairman Peter Bradford's term has expired. Terms of three other commissioners will expire during Pataki's first four years. Only William Cotter, a former state energy commissioner, has a secure seat until after 1998.

But Pataki will have little opportunity to make chances in the jewel in the governor's appointment crown, the state Court of Appeals. During his 12 years in office. Cuomo was able to appoint every member of the state's high court, as well as naming Judith Kaye its chief judge. Terms are 14 years, or until the end of the year in which a judge turns 70. Associate Judge Richard Simons, a Republican considered by some to be one of the court's more conservative judges, faces retirement at the end of 1997. Associate Judge Vito Titone must retire at the end of 1999. The other judges will be sitting into the next decade.

The Cuomo court will have an important role to play on at least one of Pataki's main campaign issues: the death penalty. This bench is expected to look very closely at any case involving capital punishment. It is unlikely that the state will put any murderers to death during Pataki's first four years.

Mark Lawton, a consultant to the National Commission for State and Local Government at the Rockefeller Institute of Government, says he's developed a sense about transitions. "Some are smooth and easy; some are lock the desk, close the door and walk out."

Lawton was involved in two transitions, from Malcolm Wilson to Carey, and from Carey to Cuomo. In the Wilson-to-Carey transition he prepared briefing papers to help orient the new people coming in. At the time, he says, the New York City fiscal crisis alone, with the impending Urban Development Corporation default "tended to focus everyone's attention."

Now, Lawton is studying how governments look for managerial talent. "Everyone knows about career professional managers," he says, "but the idea of improving the quality of exempt managers is less well known. "Virtually every government has a cadre, a whole level of people that are exchanged when the politics changes," he continues. "And the critical thinking about these people is they should have professional talents and skills. They are probably the most critical nexus between the political forces and the permanent government."

Ironically, both classes of managers- civil service and exempt –are exactly the people who are vilified as bureaucrats during every election. Pataki, for example, took aim at managers at the state Education Department. Whether or not he succeeds in cutting jobs there, these are some of the same people he will need to carry out another campaign promise, improving education in New York. "I have always felt," Lawton says, "if you don't have the right people in the those places, you don't Yet things done." Lawton calls them "a very critical, if not thin, line of managers."

In the private sector, Lawton adds. more care is paid to the development of managerial talent. "If you had turnover this constant in business," he says, "you wouldn't wonder why that business wasn't working better."

The transition underway in New York State government is not just from one political party to another, changing managers but keeping the same system. Democrats replaced Republicans in 1975, just as Republicans replaced Democrats in 1958. It's been a lot longer since New York had a governor who was a fiscal conservative.

Tax cuts will be an important test for Pataki. But he also will be judged by his ability to change the image of New York as an unfriendly place to do business.

A year ago, when he was looking ahead to his re-election effort, Cuomo offered what he said was a business friendly agenda in his State of the State message, including $1 billion worth of corporate tax cuts. "Happy days are near again," quipped the State Business Council. But not, a majority of New York voters said, near enough.

As the 'Pataki candidacy grew in credibility, contributions from business interests poured in, helping the Republican candidate raise a record $14 million. Now hope is high that Pataki will change the state's business climate.

Optimism crackled through the Hotel Syracuse like high-priced electricity one December morning as Pataki spoke to representatives of 23 Central New York chambers of commerce. The upstate business community certainly hopes for a better economic climate under Pataki. The upstate realon voted overwhelmingly for the Republican candidate and, according to David Cordeau, president of the Greater Syracuse Chamber of Commerce, Pataki's supporters want to help him with his program. "We voted for this guy, and we're ready not to quit at the voting booth." Cordeau says. "We came to tell the governor that we are behind him."

To make their case, most of the chambers agreed on a 10-point Central New York Business Manifest, which they presented to Pataki at the breakfast. The most important issue, Cordeau explains, before getting into any policy specifics, is the "the business culture, the management culture of state government.'

"We've got to appoint people that at least are business-minded, people that are willing to listen to the business community," Cordeau says. "We asked him to really take that to heart. We want government to be a partner to the business community. Not an adversary, not a benefactor, but a partner.'

Pataki's victory means changes for the Legislature as well.

Republican senators ensured strategic homogeneity by ousting Ralph Marino (R-Muttontown), and replacing him with Joseph Bruno (R-C, Brunswick). Bruno was an early Pataki supporter, while Marino offered only tepid loyalty to the Republican ticket. Bruno brings a business-friendly approach to government. He's agreed with Pataki that the budget must be negotiated more openly than in the past. He has promised the members of his conference that "he will be more up-front and accessible. "There will be no more all-night sessions-"It's not a good government," he says. And in a particularly sharp rebuke of the Marino management style, Bruno assured his fellow senators that they, rather than the majority leader's top staff, will have "much more say" on policy issues. With Pataki in charge, however, the new majority leader will have to moderate his own views to reflect the Republican governor's program something Marino never had to do.

Despite the Democrats' commanding edge in the Assembly, it's there that Republican activists hope change will be most apparent. "I think the Assembly is doing to be a lot of fun," says one.

The Democratic majority hands by a slender thread, so Republican thinking goes, since so many suburban and upstate Democrats won in districts that were also carried by Pataki. Assembly Republicans will be able to use a new weapon this year, motions to discharge from committee. That will force Democrats to vote on issues they might have avoided in the past. Add to that the governor's line item veto something Cuomo rarely used. That will put pressure on some Democrats to support the new governor's tax cut proposals, or face more angry voters in 1996.

It would be naive, however, to think that lawmakers from both parties won't be held accountable. "The voters have had it," says Sen.Mike Hoblock (D-Albany), "and unless there is some change, those who are here now are going to be out in two years. That's going to put everyone's feet to the fire."