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Budget growth must no longer operate on automatic

As attorney general, I uncovered schemes by lenders to exploit students, plots by insurance companies to defraud patients and attempts by Wall Street to deceive home buyers.

In the past 30 days, as I have prepared the state's budget, I was shocked to learn that the state's budget process is a sham that mirrors the deceptive practices I fought to change in the private sector.

This year it is widely accepted and often reported that the state has a $10 billion "deficit" (I myself have often repeated this number). What does that mean? It is the difference between state revenues and the state's growth in spending in next year's budget.

The next question is: Who is responsible for setting the growth in the state's budget? The answer is, shockingly, no one. It is dictated by hundreds of rates and formulas that are marbleized throughout New York State laws. The formulas operate year after year, generating liabilities that, when totaled, define the state's budget growth.

Unbelievably, this year these rates and formulas in total call for a 13 percent increase in Medicaid and a 13 percent increase in education funding next year. A 13 percent increase, in this economic climate, is wholly unrealistic. Wouldn't you like your salary or savings account to be based on a formula that gave you a 13 percent increase even though inflation was less than 2 percent? The world doesn't work that way -- except in Albany.

Besides dictating numbers, this process frames the dialogue around the budget and biases the political discourse. In Albany speak, "deficit" means the amount needed to fund the 13 percent increase. For example, if one assumed these programs would increase at the rate of inflation (instead of 13 percent) the $10 billion deficit is really a $1 billion deficit. A "cut" is then defined as anything less than a 13 percent increase.

This is the system that has brought New York to the brink, and it is why we are the highest "spending-and-taxing" state in the nation with programs that fail to perform for the people.

This all must end. We need fundamental reform in the budget system that allows us to recalibrate spending this year to a sustainable level. The state budget should increase based on objective, fair criteria, such as the rate of inflation, enrollment, the Consumer Price Index or personal income growth. Programs should be reviewed for effectiveness and terminated if they are not working well. Reimbursement rates should be negotiated to get the best bargain. Performance should be measured.

Albany must give up its insistence on pleasing the special interests rather than serving the people. This is the real budget battle that I will wage this year. We must balance this year's budget but we must also reform the process so that the cycle finally stops. This year's budget is not merely about the numbers. It's about our values and our future.

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Andrew M. Cuomo is governor of New York.

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