Gov. Pataki is preparing a budget that will include a back-loaded tax cut aimed at the middle class to take effect three years from now. It will be paid for by the projected revenues of a still-booming economy. Unfortunately, there are a few clouds in this vision of the future.
For one thing, predicting the economy is an inexact science and there's no guarantee the economy will still be booming. For another, this state has a disturbingly low reserve with which to meet any economic downturn, and a disturbingly high long-term debt it should be trying to pay off.
We'd like to see a personal income tax cut. That would put money in the pockets of New Yorkers, boost the economy by giving them more money to spend and make the state more attractive to new residents and new businesses.
But it should be paid for with real dollars instead of hoped-for ones. It should take effect sooner, rather than later. And it shouldn't put the state in a precarious financial position if a recession hits, forcing postponement of promised relief. That's happened before. It shouldn't happen again.
The governor wants to put the $1.7 billion expected as this year's surplus into a reserve fund, to offset the growing annual impact of such already-enacted tax cuts as the STAR program. That's a prudent step, but it's no guarantee the state will be able to meet the $600 million annual impact of the newly proposed tax cuts when they take full effect in 2003.
New York also faces a budget gap next year, with estimates ranging from $2.5 billion by the non-government Citizens Budget Commission to $5 billion by the governor's own budget office. The governor has dismissed those estimates and proclaimed that the state is in "good economic condition," but he also has pledged a budget that will only try to hold spending increases at less than the rate of inflation.
Clearly, if there's going to be any new tax cut -- or any new bolstering of the rainy-day reserves or trimming of long-term debts -- it's going to have to come from more serious belt-tightening than that. The state must find new ways to cut costs without compromising the economic-development initiatives that are designed to grow the state economy or at least keep it strong.