The new $132.6 billion state budget, at first glance, appears to be a more rational approach to the Empire State’s fiscal challenges than its predecessors. It is, in fact, somewhat of an improvement, with a $135 million reduction from its immediate predecessor. A substantial part of that improvement results from the Governor’s signature accomplishment, the elimination of automatic spending hikes. And, for the second time in a row, it was completed in time.
But a closer examination reveals that although some progress was made, the basic problems remain unaddressed.
On the surface, (and widely reported in the media) the budget cuts spending. In reality, however, the portion of spending paid for totally from instate revenue (that’s state revenue minus federal aid) actually increased by 2%.
All parties to the agreement (and again, widely reported in the media) proudly proclaim that no new taxes are in the budget. Unfortunately, that’s inaccurate. Last December, taxes on upper income earners were increased by a whopping $1.5 billion. There is, of course, a tendency to say that these wealthier individuals can afford to pay the extra charge. The problem is, they don’t have to. Many will “vote with their feet” and simply move to a lower tax state. Remember that even before the December tax hike, New York was the worst state in the whole nation in terms of individual tax rates, and was also one of the five worst states for tax increases in the 2003—2010 period.
Political pandering is present in the bill. Funds are dedicated to a so-called “Close to home” initiative that allows NYC to take control of at-risk youth; currently, these young people are housed at less expensive upstate sites. There is no convincing explanation of what benefits this provides.
Education spending is increased, despite the fact that New York spends far more per-pupil than any other American state. According to the latest available statistics, Albany and local budgets provide $18,126 per student, dwarfing the national average of $10,499. Unfortunately, for all that extra funding (even accounting for the state’s higher cost of living) there is no indication that our student’s dismal performance has benefited. Many of these funds are merely attempts to win support of powerful interest groups.
One unacceptable gimmick the budget relies on is the deferring of pension costs, in the indigestible amount of over $780 billion, for a decade. This is a throwback to the some of the worst practices Albany has used.
Most disheartening of all, this budget is, once again, the work of “Three Men in a Room,” the governor, the Assembly speaker, and the Senate majority leader. It is difficult to see how real budget reform can come while Albany continues to refuse to allow truly open and honest debate among all legislators to occur.
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