Which will vanish sooner — New York state’s incredible shrinking cash reserves, or its incredible shrinking chief executive? It could be a photo finish.
Even as Gov. Paterson faces growing pressure to resign, the bottom is falling out of the state’s shaky finances.
Late Monday, Paterson’s budget director and the Legislature’s fiscal committees issued a joint revenue forecast adding $850 million to a projected $8.2 billion shortfall for the fiscal year that starts April 1. Of course, the void in the Executive Mansion casts an even darker cloud over this gloomy fiscal outlook.
Lt. Gov. Richard Ravitch, next in line to succeed Paterson, would be greeted as a respectable caretaker, if it comes to that. But respectability would carry him only so far; at the end of the day, a Gov. Ravitch would confront the same problems that have bedeviled Paterson since he took office two years ago. Chief among them is a Legislature that lacks the institutional discipline to even begin tackling the crisis.
But whoever occupies the governor’s office in the coming crucial weeks will still hold major leverage in budget talks. To see why, consider some key facts about state budget-making.
Under Article 7 of New York’s Constitution, the process begins with the Executive Budget — a set of appropriation bills drafted by the governor’s office and introduced automatically upon submission to the Legislature. The Legislature’s ability to change these bills is strictly limited to deleting, reducing or adding to line items of expenditure.
Budget bills become law as soon as they pass; the governor can do nothing to restore spending reductions or deletions. But he can veto any added line items of spending — subject to override by two-thirds majorities in both the Assembly and the Senate.
If the Legislature fails to pass appropriation bills before the April 1 start of the fiscal year, state agencies can’t keep operating unless the governor submits temporary spending bills. Lawmakers can’t originate their own temporary bills, and they can’t add to the governor’s temporary appropriations without exposing those additions to vetoes.
Under the circumstances, the paramount concern of New York’s governor — any governor — must be to control spending. Paterson failed to do that a year ago, when he caved to a budget deal that made the situation worse. This year it’s even more important to get it right.
Paterson’s 2010-11 Executive Budget wasn’t a great start on that front; while it held net spending growth to roughly the inflation rate, it called for billions more in appropriations than the state can afford, overlooked many savings options and included $1 billion in new taxes. But it’s the starting point everyone in the process is stuck with.
Here’s how a governor can use his powers effectively:
1) Announce a hard limit on state spending in the next budget, updated to reflect the newly reduced revenue forecast.
2) Ask Assembly and Senate leaders to draft and pass their own budget bills. Be willing to serve as an honest broker when those bills are hashed out in conference committees– but don’t solve legislators’ problems for them by putting nonexistent money on the table.
3) Promise not to veto line-items of additional spending — as long as they are fully offset by spending cuts.
4) Warn that the line-item veto will be used to hold total spending below the limit, if that’s what it takes.
5) Inform legislators that, if they don’t pass a budget by April 1, any temporary spending bills will be limited to those services essential to the health and safety of New Yorkers. In other words, be willing to initiate a partial government shutdown.
Overriding a budget veto would be no sweat for Speaker Sheldon Silver, who controls 108 of the Assembly’s 150 votes. But Democratic leader John Sampson would need to hold all 32 Democrats (counting the next occupant of Hiram Monserrate’s now-vacant seat) and pick off nine of the 30 Republicans.
That’s a very tall order: Senate Democrats are divided into three factions that have trouble agreeing on the time of day. And the Senate’s Republican leader, Dean Skelos, is aiming to recapture the majority this fall by pledging to block new taxes and to support a cap on spending — so he can’t provide the votes for a spending blowout.
Yes, this is all pretty far-fetched. Paterson, should he survive, is more likely to revert to last year’s form. Ravitch, an inveterate deal-maker, may well try to split the difference between Paterson’s last proposal and the Legislature’s bloated election-year wish list. In any case — how will they pay for it?
E.J. McMahon directs the Manhattan Institute’s Empire Center for New York State Policy, which recently issued its Blueprint for a Better Budget.