NASSAU COUNTY CIVIC ASSOCIATION, INC. "The government is us, we are the government, you and I." Teddy Roosevelt

Step Two

Bringing fiscal sanity to Albany

The budget deal reached last month is a big win for New York residents as it reverses the trend of fiscal mismanagement by state government. Not since George Pataki's first term more then 15 years ago has a Governor been able to convince the legislature to reduce spending. While this is a great achievement, it's just a first step. By stopping the fiscal bleeding, the Governor can now move onto stabilizing the patient and bringing the cure to the fiscal mess in Albany.

One of the fastest growing expenditures is education. The Governor gets it, will Albany? New York spends the most in the nation averaging  $17,173 per student compared to $13,848 in Connecticut and the nation's average of $10,259, yet New York lags in results. In 2010, the New York State Education Department reported that 47% of students in grades 3-8 failed to meet the proficiency standard in English and 39% failed to meet the proficiency standard in math. It's never been about the children, it's all about salaries and benefits. This is exactly why the educational establishment fights for increases in state aid and higher spending.  It's time to hold schools accountable for performance and for what they spend. The answer is two fold, a 2% school tax cap with no exemptions and pension reform. As with any cap, there needs to be an override mechanism that allows voters to alter a proposed budget due to other fiscal contingencies, however any override mechanism should be consistent with the two thirds standard currently utilized by legislatures.

New York spends 50 million a year on Medicaid and under the Obama healthcare law, New York will be required to spend even more. As reported before, New York spends more on Medicare that California and Texas combined. New York again holds the nation's record on Medicaid spending. Each enrollee costs New York $6910 compared to California which spends $3686 per enrollee. New York provides coverage for five million residents yet California covers double the number. New Jersey and Connecticut spend half of what New York spends per capita. Albany often expands Medicaid benefits which impact local governments who split the cost with the state and federal government paying 25% of the cost. New York is one of the few states that provide chemotherapy to illegal aliens and subsidies to graduate medical education. How can any government sustain this burden and balance their budgets without large local property tax increases? The simple answer? Cut spending by reducing benefits, implement stricter eligibility standards and transition the state's Medicaid program to private managed care programs. 

The proliferation of government validates the quote, "government governs best when government is least". With over 1102 public authorities in the State of New York, the actual cost of government has outweighed the benefit by becoming an impediment to financial growth. While the focus has been on the significant layers of local government in the form of special districts, the mechanism created to consolidate their functions is cumbersome. Since the law was enacted in 2009, only nine votes have taken place to consolidate local government entities and two have passed. With the power to eliminate and consolidate executive agencies, the Governor's budget authorized the consolidation of  only eleven state agencies into four. His Spending and Government Efficiency Commission has only met once in April and has passed on their deadline of May 1st to submit their recommendations of which layers of government to eliminate and consolidate. Instead of waiting for another blue ribbon commission, the Governor should read and enact the recommendations contained in the February 2004 report from the Comptroller's office-"Public Authority Reform, reining in New York's secret government" and the 1956 "Hults Report". 

New York's pension bomb has a short fuse with the December report by the Manhattan Institute estimating that the state's pension fund is under funded by $120 billion using corporate accounting standards versus governmental accounting standards. The report goes on to detail that pensions which are a defined benefit plan, a guaranteed benefit backed by taxpayers, will require billions of taxpayer dollars to be considered fully funded; having sufficient assets to pay for pension benefits when they become due. With the enactment of a fifth pension tier in 2009, new public employees would be vested after ten years of employment, unfortunately the cost savings would come in the later years failing to diffuse the current crisis. Even with the Governor's proposal for a 6th tier, changes must be made to the current pension tiers which are having an immediate effect on pension costs. This will require a change to state law and real leadership. In addition, instead of creating another tier, a defined contribution plan which is more popularly known as a 401Kplan should be considered. 

The Census Bureau results for the recent population count has shown that people tend to vote with their feet. This is especially true in New York as the state lost over 100,000 residents who moved to other states with a lower tax burden. How can anyone ignore the large swaths of near empty cities and towns in upstate New York all but forgotten by our elected officials. What ever happened to bringing jobs to upstate New York? The state has even lost government jobs with the closing of dozens of military bases throughout the state. Other states try to lure business by promoting a business friendly environment. What does New York have to offer except higher taxes. According to New York Fiscal Watch, New York was number one in per capita state tax hikes over the last two years accounting for 29% of all tax hikes in America. According to the 2010 Census Bureau, the states with the highest property taxes in the nation are New York and New Jersey. Nassau County resident's pay the highest property taxes in America.  With the worst business climate in America as reported by the tax Foundation in 2010, its unlikely that anything will change in the near future unless there is bold leadership.

Beyond the rhetoric of reform, facts are facts. New York state is still spending beyond its means. State debt in 2010 as reported by Reuters not including the off balance sheet entities or public authorities was $120 billion (including health and pension benefits). Public authority debt as reported by the Comptroller's office in their August 2010 report, "Public Authorities by the numbers" is $214 billion dollars. If correct, New York State's actual debt load would be the highest in the nation exceeding California's state debt of $87 billion. Coupled with the highest taxes in the nation, the Governor has only just begun. With our fiscal crisis the key concern of New York residents, it is somewhat bizarre that his priority and focus is to legalize homosexual marriage, a divisive and controversial issue. Considering the fiscal challenges, his actions are consistent with the old era of politics, deflect and distract when you don't have guts to lead. It's time to take step two, not the two step; it's time to bring fiscal sanity to Albany.