NY Budget Insanity
Legislature Loses Control on Fiscal Sanity
The New York State Legislature recently approved their 2023-2024 state budget in the amount of $229 billion dollars. The budget is actually $9 billion higher than last year's budget. Now it's important to put the state budget in prospective. New York's budget is double the combined budgets of Florida and Pennsylvania which total $160.3 billion even though both states have 14.34 million more residents than New York. Even with debt, New York is a leader but not in a positive way. New York carries the second highest debt load in the nation with total debt in the amount of $391.6 billion. Much of the debt is from back door spending by the state's twelve hundred public authorities. Even though California is the top state with debt, it has a population that is double New York population of 20.20 million (as of 4/1/20). Even after New York received billions in Covid relief funds, the state budget has increased by $17 billion over the last three year period. Now some may say New York had no choice but to raise spending, however common sense and rationality say otherwise. Numbers don't lie.
How can other states spend within their means and still provide essential services? It's all about using fiscal sanity. You can't spend more than you take in, continue the process and either hope for a federal bail out, improving tax revenues or by increasing taxes. Even so, New York did get a bail out like many other states in the form of Covid relief funds. The state received over 30 billion in Covid relief funds in 2021 alone, $12.75 billion in general aid (“recovery aid”) and $19.3 billion in categorical aid for schools, universities, childcare, housing, and other purposes. The state also received $345 million from the Coronavirus Capital Projects Fund. Yet the state has continued on with their drunken spending spree. Not to be out done, one of the state's largest public authority, the Metropolitan Transportation Authority (MTA) received $14 billion dollars from various Covid relief funds and from The American Rescue Plan. Where did all the money go?
The MTA continues to bleed money, ridership and continued cost over runs for various capital improvement projects. How does the legislature address the issue? More money through higher taxes. This is why New York passed "Congestion Pricing" which is a surcharge on all vehicles entering lower Manhattan below 60th Street. The fees are projected to range from $9-$23 per vehicle. The state also increased the Metropolitan Commuter Transportation Mobility Tax (MCTMT) on New York City residents but initially tried to charge all state residents. The state also provided an additional $300 million dollars and has committed additional funding from New York's casinos. This does not include billions in additional funding for capital improvement from other sources. Recently another public authority, the Port Authority of New York and New Jersey received $6.9 billion in federal funds for the construction of a second river tunnel under the Hudson River between Manhattan and New Jersey. The money from federal taxpayers is not infinite.
Another area of zero accountability is education spending. New York has increased school aid to local districts this year by 9.7% to the tune of $34.4 billion. In 2022, New York was spending on average $32,272 per pupil. This year New York City is projected to spend $38,000 per pupil. Even with a inflationary cap in place to limit the growth of local school taxes, the state plays the shell game by taking other taxpayer funds to increase education spending with no oversight or accountability. With this level of proliferate spending, one would believe that New York has a top tier education system if money alone buys success. Well the numbers again don't lie. The percentage of 4th and 8th graders performing at or above proficient in New York is twenty eight percent. So if money alone is not the answer, what is the state doing to improve education in New York? What happened to accountability?
The state legislature's primary mission is to pass legislation that will improve the life's of its residents and help maintain a safe functioning society with minimal cost to the taxpayer. Unfortunately this rational was lost in the ideological take over of the state by the Progressive movement. One of the most insane and self destructive portion of the budget is the implementation of the so called "Climate Change policies" derived from the Climate Leadership and Community Protection Act (CLCPA) of 2019 passed by the legislature. The Act requires public utilities in the state to generate 70 percent of electricity from renewable sources by 2030 and to fully transition to non carbon emissions by 2040. This abrupt approach is reckless for many reasons not including the fact that it is quite irrational. The budget bans fossil fuels for new construction beginning in December 31, 2025 and all construction by December 31, 2028. It would require the use of electric systems to cook and heat homes. School districts and private transportation carriers will be required to purchase or lease only zero-emission school buses when purchasing or leasing new school buses, with full fleet conversion and operation of zero-emission school buses required by July 1, 2035. The state is also banning the sale of new gas powered vehicles beginning in 2035. .
The cost to retrofit your home and purchase an electric vehicle is cost prohibitive for many New York residents. The market has shown that consumers are not interested in purchasing electric vehicles due to the cost, limited driving range, minimal charging stations and reliability. Besides, where does the government have the right to dictate what you buy? The rapid pace to transition to electric devices powered by renewable sources will lead to rolling blackouts. One has to look no further than California (which has similar "Climate change Policies") recently told its residents to stop charging their electric vehicles and turn down the air conditioning due to the demand on the power grid. There were several reasons for the blackouts; increased demand for energy due to more electric vehicles, increased use of electrical heating/cooling, a reduction of power plants that go on line when excess power is needed and the unreliability of non renewable energy. Texas found out about the unreliability with wind power during a cold snap which caused the wind turbines to shut down. This caused thousands to lose power for an extended period of time and sustain loses due to frozen water pipes in their homes. The reality is gas powered vehicles do not put a strain on the energy grid as they operate autonomously and can continue to operate even after natural disasters. Long Islanders went through hurricane Sandy which left the island without power for weeks. How can a person operate an electric vehicle, cook or heat their home when there is no power?
One of the most significant drivers of cost to all aspects of our society is the cost of health care. New York increased their Medicaid budget by $1.4 billion and cited the increase due to higher enrollment. What most taxpayers are unaware of is the actual number of New York residents who receive Medicaid. The total number is 40% of all New Yorker's. Compounding that statistic was the state's decision to expand coverage for certain classes of illegal aliens (those 65 years old or over). Surprisingly, that number was not enough for the legislature which wanted to cover all illegal aliens in the state, however the Governor wisely rejected the plan as it would bankrupt New York. The total number of residents receiving Medicaid has swelled to 8 million at a cost of $94.4 billion with New York state paying $34.7 billion with the rest shared by the counties and the federal government at a total cost of $109 billion. As per the state budget, Medicaid spending over last year will rise by 7%. New York spends the same as California even though California has 15.3 million residents who receive Medicaid. The budget also shifts more of the Medicaid costs to the counties which will result in higher local taxes.
The New York legislature and Governor Hochul have lost any sense of fiscal reality. Spending beyond our means and then some is not a receipt for success, it is total insanity. The window for a course correction is closing. It is time for the state to enact across the board spending cuts, allocate more money for reserves, rein in education spending by requiring accountability, reduce the scope of the state's Medicaid program and cut ineffective programs. The state also needs to eliminate excessive taxes and fees. If any government is ineffective at maintaining the roads, fails to protect its citizens from crime, spending tax payer funds with almost no accountability and has some of the highest taxes in the nation, that is the very reason people vote with their feet by moving. We know that the legislature is not listening, are you Governor Hochul?