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Solving New York's Fiscal Crisis Without Hurting the Poor

By FRANK J. RUSSO JR.
Director of the American Family Association of New York

It’s pretty well recognized that New York is the nation’s most dysfunctional state from the perspective of its taxes, finances, and inability to achieve corrective legislation. New York has the highest combined income, property, and sales taxes in the nation and yet is tens of billions in debt. Are there basic legislative actions that could be taken to reduce spending in key areas like Medicaid, education, state pensions and state construction, which would resolve this fiscal crisis without harming the poor? Yes, there are, and the poor would even benefit.

First, nursing home bills are a major part of Medicaid’s budget. Yet, as any eldercare attorney will tell you, many seniors wealthy enough to pay rarely do. Why? Because the senior’s heirs are told the law allows them to transfer the senior’s assets to them and then, after waiting three years, all medical bills, including nursing home bills, will be paid by the taxpayers. Unfortunately, when people are told they can either care for an ill parent at home, or have their parent placed in a nursing home at taxpayers’ expense, too many opt for the latter. But if they had to pay, they might consider caring for their parent at home for a while longer. That’s why the “look back period” to see if assets have been transferred before qualifying for Medicaid should be increased from three years to five years. Those who can pay should pay. It would save taxpayers billions and keep parents in a more loving home environment longer.

The second key area is education. New York spends over $14,000 a pupil, the highest in the nation, and yet our test results are only average. The three downstate Catholic dioceses are closing 30 grade schools this June. Catholic schools in New York City and Long Island often do a better job than their more costly neighboring public schools. New York City's Catholic schools outperform their demographically equivalent public schools both in test results and graduation rates, and do so at less than half the cost. According to a 1991 New York State Senate Advisory Commission study, a parental choice educational system would save taxpayers $4 billion a year. Today, that would be $6 billion. We can do this by using refundable Tuition Tax Credits limited to half the cost of a public school education. This puts parents in control of their child's education, stimulates public schools into better performance, and saves New York taxpayers billions at the same time. This also reduces the multibillion cost imposed by the court on state funding for New York City schools, and does this in a way that lets poor parents decide what's best for their children.

The third area for savings is state pensions. We read recently about police retirees receiving enormous pensions, sometimes even exceeding their base salaries, and the LIRR worker with a pension of $100,000. How does this happen? Simple. Our state legislators have authorized the inclusion of overtime in the calculation of state employee pensions. So, state employees: police, teachers, LIRR workers, and others are smart enough to put in as much overtime as possible in the three years used to determine their pension. That's why we see state pensions at astronomical levels, and our state pension fund broke. The fund, of course, will never go bankrupt, because Albany will just raise our taxes to cover this obligation, so absurdly inflated by smart union negotiators and incompetent legislators. State pension plans, like private plans, should never include overtime in determining pensions.

A fourth key area for savings is how we pay for labor on state construction projects. We're obligated to pay “the prevailing wage”. How’s this calculated? Do we average the $30/hr rate for non-union workers with the union wage of $60/hr? No, that makes too much sense. Instead, we simply define the “prevailing wage” to be “the union wage.” This drives up state construction costs by hundreds of millions every year without any economic or moral justification.

The corrections suggested, which require legislative action, would save New York taxpayers billions every year without harming the poor. In fact, the poor would benefit both from the improved employment climate associated with greater fiscal stability and from the increased educational opportunities associated with parental choice in education.

Article was reprinted with Permission from The New York Sun and Mr. Russo
http://www.nysun.com