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State still must cut Tough year ahead, future deficits mandate trimming jobs and spending

It would be helpful if the State Legislature would actually listen to Gov. David A. Paterson, who for months has been warning about the need to deal responsibly with ballooning deficits. It would be even more helpful if Assembly and Senate leaders would actually act in response to his budgetary warnings.

Here's Paterson on the deficits and the possibility that federal stimulus money can patch some of the budgetary gap this time around: "It is our responsibility in New York to clean up our own debt."

And here's Paterson in response to a multimillion-dollar, fear-laced ad campaign by unions representing public employees (think about the source of that funding) that decries Paterson's call for spending cuts: "The ads say this is the worst cut ever. Yes! Exactly!"

The governor, obviously, has no illusions. The Legislature, on the other hand, does. Instead of seriously reducing costs -- most of which would require reducing state job payrolls -- lawmakers pin their hopes on a federal bailout and ignore the fact that it can be only a short-term, stopgap measure.

Democrats now figure that the state's deficit for the upcoming fiscal year is $14 billion, up from $13 billion that the governor had projected earlier. That number's in dispute -- no surprise there -- and Paterson is projecting up to $50 billion in deficits through the next five years. There has been some change. But what we've seen so far from Albany is a patchwork of one-shot bandages on systemic bleeding, most of them costing the taxpayers.

New York must cut spending, and it should do so with payroll reductions and the kind of structural changes -- elimination of duplicative agencies and services, enhanced budget accountability through reduced reliance of scores of off-budget public authorities, pension reforms and other initiatives -- that offer savings with a minimum of service cuts. Private companies are being forced to cut jobs. Why not the state? Thousands of state workers in California recently faced proposed layoffs, and New Jersey -- also in search of the quickest and surest way to cuts costs -- is joining California in imposing unpaid furlough days. In New York, nearly 8,000 state jobs have been added in the past two years, a 3.4 percent increase to nearly 240,000 state workers.

New York's development incentives, needed because state taxes already are so high, also must be more carefully targeted and focused on job creation. And there can't be wholesale fee and tax increases of the sort that propel people and businesses out of New York.

Disappointing is the heavy reliance on projected federal stimulus aid by the Democratic legislative majority, led by Assembly Speaker Sheldon Silver, who also wants increased taxes on the wealthy (defined as family incomes starting at $250,000) while also open to possibly raising the state sales tax rate -- a regressive tax increase that will hurt the poor.

Paterson, meanwhile, already has proposed $512 million in various new taxes and fees to help plug what has become a moving target deficit, as part of a package that would include $9 billion in spending cuts and $4 billion in "revenue enhancements." That, to be sure, is before any adjustments from a two-year, $25 billion federal bailout targeted mainly to forestall state Medicaid and education cuts, at least for the short term.

Ultimately, there will not be enough fee revenues from music downloads, soft drinks and whatever else lawmakers can conjure up to stop the leaking. Paterson, Silver and Senate Majority Leader Malcolm Smith New York's latest "three men in a room" -- cannot just propose often-punishing solutions that will adversely affect hard-working taxpayers. Lawmakers should do what's right for the people and not just for their own jobs. Ultimately, they may even have to do what once would have been considered impossible -- real change and real belt-tightening.

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