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LATE BUDGET JUST A SYMPTOM OF DEEPER PROBLEMS IN ALBANY

There's a dirty little secret in Albany: the state budget doesn't work.

Wait, you may be thinking, that's no secret. Our legislators have missed the deadline for budget adoption 20 years in a row.

But things are even worse than that. After all, a broken budget "process" isn't nearly as bad as a state government that's just plain "broke." That's what we have. And that's Albany's dirty little secret.

Gov. George Pataki's budget experts say the state faces a gap of $6 billion between expected revenues and spending in the fiscal year starting April 1, 2005. Even in high-spending New York, that's real money. It's equivalent, for instance, to roughly 40 percent of state funding for public schools.

The huge shortfall is no surprise. When the governor proposed this year's fiscal plan in January, he projected a multi-billion-dollar gap for 2005, even if the Legislature held spending to the level he proposed. The Legislature did no such thing. Instead, Senate and Assembly members voted to add nearly $2 billion in spending. The governor vetoed some of the additions, but the net result was an overall increase of 6 percent -- almost three times the rate of inflation.

We just elected 212 representatives to the Legislature. Did you hear a single incumbent even talk about the $6 billion gap facing New York State? If so, did you hear any proposals for reducing spending, raising taxes or taking other actions to close the gap?

In 1975, Gov. Hugh Carey took office facing what was then called a "fiscal crisis." As a proportion of that year's spending, the "crisis" was roughly the same size as today's. Carey dealt firmly and honestly with the problem, telling New Yorkers, "The days of wine and roses are over." He said government must live within its means and persuaded the Legislature to do exactly that.

In December 1990, the spending plan adopted months earlier was unsustainable because New York was losing jobs, and tax revenues were declining. Gov. Mario Cuomo worked with lawmakers to cut hundreds of millions in spending -- including the politically unpopular step of reducing state education aid in the middle of a school year.

Today what we hear from our elected leaders are mainly arguments about how to spend more. But we can't afford more spending. The big budget gap projected for next year is a continuation of a problem that faced Albany in 2001, 2002 and 2003.

And it will afflict both the state and local governments, including Erie County and the city of Buffalo, for years to come. Unless, that is, our state budget policies become more responsible and accountable.

State leaders have failed to confront the problem, or even talk openly about it, for one main reason: politically powerful unions and other interest groups want spending to jump each year. They don't want the sort of honest dialogue that might limit spending increases to, say, only twice the inflation rate.

The New York City-based hospital workers union, Local 1199, vowed recently to "spend what it takes" to defeat any cost-saving Medicaid reforms in 2005. That's no idle threat. Local 1199 spends more on lobbying Albany than any other organization -- nearly five times as much as No. 2, New York State United Teachers.

In 1997, when Pataki proposed steps to hold down rising Medicaid costs, Local 1199 spent millions on TV and radio commercials to warn New Yorkers that the governor's plan would take away their health care. Hence today's lack of honest talk about out-of-control spending and its effect on New York's highest-in-the-nation taxes.

There is a glimmer of hope for more responsible budgeting. It lies in all the current discussion about reforming a state government that is "broken" -- or, as we often hear, "dysfunctional."

More than at any time in recent memory, New Yorkers are aware Albany needs fixing. But we need to think of state government as "broke," rather than "broken." In other words, we need to change state policies -- starting with the budget -- much more than we need to change the processes of government.

The Legislature seems unwilling to enact real reform on its own. That means it's time for the people to get involved, through a constitutional convention. Delegates to a convention could, with approval from voters, force changes such as a requirement that each annual budget be balanced.

Each year's budget should spell out its impact on spending and taxes in the succeeding year, so legislators could not simply ignore a $6 billion gap. The state should be required to send every taxpayer a notice of the percentage increase in spending, compared to inflation, just as Albany itself requires of every school district.

Changing the State Constitution won't guarantee a more responsible government. But it may be our best hope.

Robert B. Ward is director of research at the Public Policy Institute/The Business Council of New York State in Albany.