“In the past 30 days, as I have prepared the state’s budget, I was shocked to learn that the state’s budget process is a sham that mirrors the deceptive practices I fought to change in the private sector,” Gov. Cuomo wrote in an op-ed piece distributed to newspapers and displayed on the governor’s official website Monday—the eve of his much-anticipated and feared budget presentation on Tuesday.
As he prepares to make deep cuts in state spending, the governor revealed the state’s process behind setting the budget as a pushing and pulling of special interests and senseless formulas.
“Special interests dominate the process with little transparency; programs continue with no accountability and the taxpayers get the exorbitant bills,” wrote Cuomo.
The $10 billion deficit that has loomed so ominously over budget talks is not, however, a concrete reality said Cuomo. It is based on a projected increase in state spending by 13 percent. So, if he cuts 7 percent off the budget, state spending will still increase by 6 percent over last year’s budget.
“Who is responsible for setting the growth in the state’s budget?” asked Cuomo in his op-ed. “The answer is shockingly, no one. It is dictated by hundreds of rates and formulas that are marbleized throughout New York state laws that govern different programs—formulas that have been built into the law over decades, without regard to fiscal realities, performance, or accountability.”
The deficit is an abstract number generated by archaic formulas he intends to change. He suggests that new formulas take into account inflation, the Consumer Price Index (CPI), or personal income growth.
Cuts and Changes
In his State of the State address on Jan. 5, Cuomo proposed capping state spending at the rate of inflation. In 2010, the all items index increased 1.5 percent before seasonal adjustment, according to the Bureau of Labor Statistics. A 1.5 percent increase in spending is certainly a downgrade from a 13 percent increase. Some would say, it’s going too low.
To increase spending by 1.5 percent [Cuomo] would have to cut a lot of services,” said Frank Mauro of the Fiscal Policy Institute, an independent, nonpartisan, nonprofit research and education organization that works to improve public policy.
Mauro suggests maintaining the temporary additional tax imposed on individual annual incomes of $200,000 or more, or on an annual household income of $300,000.
Mayor Michael Bloomberg and Cuomo have both proclaimed this tax would do more damage than good, driving the rich out of the state and into lower-tax regions. Cuomo made it clear in his State of the State address that he would freeze taxes, eventually reducing them.
“New York has no future as the tax capital of the nation,” stated Cuomo. “Our young people will not stay, [and businesses will not come.”
Mauro said taxing the rich is not ideal, but it is a preferable measure when compared with the alternative. These high-income earners are the least likely to spend and pump back money into the economy said Mauro.
“You need all of your first $30,000 to live, you don’t need your third $30,000 to live,” he pointed out. The projected state employee layoffs, on the other hand, could have a greater impact on the economy asserted Mauro.
A couple of weeks ago, rumors began to circulate about a plan to lay off about 15,000 civil service workers. The Civil Service Employees Association (CSEA) union reports that they have no knowledge of this plan that was leaked to the media, and that the administration has not provided them with any further information.
Stephen Madarasz, spokesperson for the CSEA, said Cuomo is bringing a possible hiring freeze, salary freeze, and more to “the bargaining table, and that’s the proper place to bring these issues.”
“Politicians can’t talk about on the one hand revitalizing the economy, and then on the other hand talk about layoffs,” he added. Madarasz said the money the state saves on salaries must be looked at against the social services unemployed state workers may need and the money they will not be putting back into the economy.
Cuomo’s father, former Gov. Mario Cuomo; former Gov. George Pataki, and former Gov. David Paterson all threatened massive state employee layoffs, only to follow through with a fraction of them. The layoffs were a leveraging tool to push for concessions and pay cuts, points out a CBS New York report, and Cuomo may be employing the same tactic.
Mayor Michael Bloomberg has also not made it clear how many city employees he intends to lay off, though imminent layoffs are a certainty. He ominously noted, “Eighty percent of the city’s budget goes to salaries and benefits.”
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