The following appears in the July 30-August 5 issue of the Long Island Business News:

Three months after missing New York’s March 31 fiscal deadline, the state has a budget – sort of. The Legislature approved the spending legislation but the fractured Senate Democratic majority bolted Albany without ratifying the revenue bills that fund the appropriations.

The good news: Gov. Paterson proved, beyond a shadow of a doubt, that if the chief executive is willing to use his constitutional powers, he’s in the driver’s seat when it comes to controlling the budget process.

In the 12 weekly emergency-spending bills that permitted the government to operate during the budget impasse, Paterson forced the Legislature to swallow various spending cuts. And the governor’s threat to let the state close down if a budget did not reach his desk by the end of June actually worked. Legislators panicked and met his deadline.

The bad news: Despite the governor’s 6,700 line-item vetoes (which saved approximately $525 million), the $136.5 billion budget is balanced by blue smoke and mirrors with total government spending up $9.6 billion or 7.6 percent – four times the inflation rate. This budget, according to the Manhattan Institute’s E.J. McMahon, “is a house of cards that won’t stand.”

Here are some of the problems with this budget: While overtaxed New Yorkers are still reeling from the devastating impact of the Great Recession and the $8.2 billion of new state taxes and fees imposed on them last year, the Legislature raised taxes by another $1.6 billion. Compare this with spending cuts and no tax increase in Chris Christie’s New Jersey.

The hodgepodge of hikes includes a state income tax on nonresident hedge fund managers who work in New York. The tax, which is projected to bring in $50 million, was described by Mayor Bloomberg – who expects many of these financial bigwigs to flee the city – as “the best thing that ever happened to Connecticut.”

Next, about $4.8 billion in budgeted revenue may never be realized or could come in significantly lower than forecasted. This questionable revenue includes $1 billion in new federal stimulus funding, $500 million in work-force reductions, $300 million in Medicaid fraud recovery, $330 million from the reduction of the sales tax clothing exemption and a one-time $300 million franchise fee from the long-delayed, scandal-ridden Aqueduct Racetrack slot machine project.

Finally, the budget contains $14 billion of one-shot fiscal gimmicks to fund ongoing expenses. The biggest chunks of nonrecurring revenue are $5.7 billion in federal stimulus dollars and $5.5 billion from the temporary personal income tax increase enacted in last year’s fiscal budget.

All this fiscal conjuring is a textbook example of Albany’s lack of will to rein in runaway spending and to deal with the state’s ever-growing structural deficit. The members of Albany’s ruling class are more interested in lavishing money on cronies and special interest groups than reducing spending and taxes to help jump-start New York’s ailing economy.

Thanks to their dereliction of duty, Comptroller Tom DiNapoli forecasted that over the next three fiscal years revenue will increase an anemic 3.4 percent annually but expenditures will jump 8.1 percent. He also estimated that in January the new governor of New York will have to grapple with a budget gap for fiscal year 2011-2012 of at least $7 billion and that it could “be larger if the economic recovery stalls or if resources in [this year’s] budget fail to materialize fully, as has occurred in previous years.”

I do not envy the herculean tasks our next governor will have to face. Nevertheless, if he has the strength of character to boldly and justly use the vast powers of his office, I am confident he will rescue New York from the political leeches that have been sucking dry its fiscal and economic resources.

The following appears in the July 16-22 issue of the Long Island Business News:

In June, I was honored to be appointed an unpaid member of the board of directors of the Nassau County Interim Finance Authority, which monitors Nassau’s broken finances. While I will not touch upon matters before the NIFA board on the op-ed pages of LIBN or any other publication, I do, however, believe it is my duty to comment on an elected official’s recent outburst unjustly questioning the integrity of NIFA Chairman Ronald A. Stack.

Readers will recall that NIFA was created, by an act of the New York Legislature in June 2000, as an oversight agency with borrowing powers to rescue Nassau County from years of fiscal mismanagement.

Since that legislation was signed into law, NIFA has transferred $105 million of state grants to the county and issued $3.8 billion in bonded debt to help restructure the county’s debt and reduce borrowing costs.

(Presently there are approximately $1.7 billion in outstanding NIFA bonds that won’t be fully retired until 2025.)

NIFA is also mandated to collect and distribute the county’s sales tax revenue (about $1 billion annually), monitor the county’s budget and audit county departments. The most significant power granted in its enabling legislation is the ability to impose upon the county a NIFA control period if:

a)  The county defaults in the payment of its debts.

b)  The county incurs a major operating funds deficit of 1 percent or more during any fiscal year.

c)  The county violates the NIFA Act and substantially impairs the marketability of the county’s debt.

d)  The county treasurer certifies that the county financing requirements will not be met.

Fortunately, that power has never been exercised and hopefully it never will.

To avoid a control period, particularly during these difficult fiscal and economic times, it is essential that NIFA board members and county elected officials cooperate for the sake of the common good of Nassau’s overburdened taxpayers. What is not needed is for one of them to issue reckless, irresponsible attacks on another for short-term political gain.

Sadly this has not been the case. On June 29, 2010, the presiding officer of the Nassau County Legislature, Peter Schmitt, filed an ethics complaint with Attorney General Andrew Cuomo and the state public integrity commissioner against Stack, an unpaid citizen volunteer. The complaint alleged that Stack violated the state’s code of ethics because he is employed as a public finance managing director at Wells Fargo, the bank that holds Nassau’s operating accounts.

The charge is baseless; Newsday called it despicable. When Stack joined Wells Fargo in 2009, the state Commission on Public Integrity was notified and it ruled that Stack could continue to serve on the NIFA board even though Wells Fargo had pre-existing agreements with Nassau County.

I have known Ron Stack on a professional basis for years and can attest that his integrity is beyond question. He has devoted many years to serving the people of New York, as a member of NIFA since its inception, and as deputy secretary to Gov. Hugh Carey during the state’s 1970s fiscal crises.

Stack, who is recognized as a public finance expert, also served with distinction as chairman of the Municipal Securities Rulemaking Board, the industry’s oversight body.

Though Stack and I are enrolled in different political parties (I’m a Conservative and he’s a Democrat), I have no doubt that we will work together on the NIFA board to help Nassau County overcome its fiscal malaise.

One can only hope Nassau’s political class will do the same.