Are New York’s schools 65 percent better than the na tional average? Are our hospitals 73 percent better or our prisons 63 percent better? For that matter, is our Legislature 161 percent better than the average state’s?
These question arise because we spend that much more than the US average in these areas:
* $15,987 per pupil on K-12 education, more than any other state.
* $7,927 per Medicaid enrollee, second highest in the nation, 73 percent above the national average.
* $36,835 per prison inmate, fifth among the states.
* And $989,892 per member of the Legislature on the budgets for the state Assembly and Senate.
New York faces a $9 billion budget deficit in the coming fiscal year, and local governments also face large shortfalls. Yet countless analysts and politicians, including Lt. Gov. Richard Ravitch, suggest that it is impossible to close these budget gaps without raising taxes and incurring debt.
In fact, “impossible” may be how they see the politics of cutting spending — but it certainly doesn’t apply to the math of trimming the budget.
Census numbers (for 2007, the most recent complete data set) reveal that New York spends far more per capita on state and local government ($12,920) than any other state but two. And those exceptions are Alaska and Wyoming — two atypical states with low populations and vast energy industry-derived revenues.
Indeed, if the Empire State simply cut its per-capita spending to the level of the next highest state, California (No. 4 on the list at $10,940 per capita), we’d save some $38 billion a year. A cut in federal matching funds would partly offset the savings, but the remainder would be more than enough to close this year’s budget gap and slash our leaden tax burden.
OK, New York has slightly higher percentages of poor and elderly than California. But can anyone seriously believe that New York is so different from California that our state and local governments need to spend $38 billion more on a per-capita basis to provide the needed services?
Contrary to the conventional wisdom in Albany, New York’s state and local governments can cut their spending without drastically impairing the level of services they provide. It won’t be easy, but it is possible.
Manhattan Institute senior fellows E.J. McMahon and Josh Barro laid out a comprehensive plan for reducing state spending in their recent “Blueprint for a Better Budget.” The study includes suggestions for much-needed structural budgetary reforms to help every level of government save money as well as a 30-point plan that could pare $30 billion from the state budget over the next three years.
The “Blueprint” discusses at length how reforming and restructuring New York’s Medicaid program — which spends nearly three times as much per enrollee as California — could save the state $1.8 billion next year. Reducing and capping school aid could save another $1.6 billion. And freezing wages for state employees and requiring them to contribute more to their health-care plans could save another $670 million.
The savings in the report would accrue to some $14 billion a year by 2012-13.
Over time, reform of public pensions would save billions more. New York’s public-pension costs, like those in other states, are skyrocketing. To prevent the long-term burden from growing even heavier, it’s essential to shift the government workforce to a defined-contribution system, based on the kind of 401(k) plans that now predominate in the private sector and in public-university systems.
Across the Hudson, New Jersey Gov. Chris Christie is making the hard choices and difficult cuts that are needed to get the Garden State’s fiscal house in order. And, per capita, New Jersey already spends some $2,800 less than New York on state and local government each year. If New Jersey can cut spending, so can New York.
The startling truth is that New York could still spend more per capita than any state (Alaska and Wyoming excepted) while cutting spending by billions. Unfortunately, our economic future is being held hostage by a public sector that’s allergic to fiscal responsibility.
It’s time for New York taxpayers to demand that their elected officials get serious about cutting spending.
Lawrence Mone is president of the Manhattan Institute for Pol icy Research.