Cuomo exposing budget process sham – By George J. Marlin

The following appears in the March 11-17, 2011 issue of the Long Island Business News:

Because there weren’t any consequences for irresponsible fiscal behavior by Albany’s power brokers during the Pataki, Spitzer and Paterson administrations, state spending over the past decade has increased on average 5.7 percent annually while revenue during the same period rose only 3.8 percent. As a result, the Paterson budget adopted for the present fiscal year that ends on March 31, which included ridiculously unrealistic tax revenue projections and over $16 billion in one-shot revenue (an astounding 30 percent of General Fund spending), is out of balance to the tune of $750 million and has caused the state’s structural deficit to surge to levels that threaten the very solvency of the state.

With a projected deficit for the fiscal year beginning April 1 of $10 billion, Gov. Andrew Cuomo decided it was time to put an end to the fiscal follies that are responsible for New Yorkers paying the highest combined state and local taxes in the nation. Declaring the state “functionally bankrupt” and the budget a “special interest protection program,” the governor exposed a sham budget process that includes codified formulas – designed by lobbyists – that automatically increase Medicaid and education spending every year with no regard to revenue availability, an astounding 13 percent – five times the inflation rate. He pledged to terminate these “deceptive practices” with the same vigor he used as attorney general to end such practices in the private sector.

To address the fiscal quandary he inherited, Cuomo proposed a budget that not only radically changes the way Albany does business, but tackles this year’s deficit and the state’s structural deficit as well.

According to state Comptroller Thomas DiNapoli, the proposed Cuomo financial plan brings “recurring spending into better alignment with recurring revenue” and reduces out-year deficits by $13 billion, $15.4 billion and $17 billion in state fiscal years 2012-13, 2013-14 and 2014-15, respectively.

The comptroller’s report also made these observations:

  • The Executive Budget avoids significant new tax increases and largely avoids borrowing for operating expenses to close the projected $10 billion deficit. The budget primarily uses recurring spending reductions (totaling 89 percent of the gap-closing plan) for budget balance.
  • The proposed budget is less reliant on temporary and nonrecurring actions than in previous years. The financial plan relies on $7.7 billion in temporary and nonrecurring actions in (State Fiscal Year) 2011-12, a 54 percent reduction from the $16.7 billion used in 2010-11.
  • The governor proposes to create or restructure several grant programs to be competitively and/or performance-based in many substantive areas including education, local governments, economic development and energy.
  • The current year (SFY 2010-11) General Fund deficit, largely caused by lower than anticipated General Fund tax collections, is expected to be closed with revenue received earlier than anticipated, including an accelerated payment (or spin-up) of existing temporary utility tax revenue, and reduced spending, some of which may include changing the timing of payments.

To eliminate the $10 billion deficit, Cuomo calls for shared sacrifice and spares no facet of state spending. Savings and spending reductions in state operations are projected to be $1.37 billion. This could include 9,800 layoffs and the elimination of 3,500 prison beds. As for assistance to local municipalities and school districts, proposed spending reductions and savings total $7.48 billion.

If the governor continues to stand firm, rallies the overtaxed public to his side and fully utilizes his broad executive budgetary powers, he can change the political culture in Albany, checkmate legislators and their union masters, and put the Empire State on the road to fiscal and economic recovery.

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