The news that the Empire State will lose two more seats in the US House of Representatives should be an urgent wakeup call to all New Yorkers, particularly our elected officials.
We’ll drop to just 27 House seats after 2012, the lowest number in 200 years — because the latest Census reveals that our state’s population grew at about half the national rate over the last decade.
Many New Yorkers have no choice but to flee our confiscatory taxes and dismal job climate. Can our policymakers turn things around?
The immediate future is going to be difficult. Early next year, newly inaugurated Gov. Andrew Cuomo will have to set forth an austere budget, cutting more than $10 billion from projected state spending — cuts that will send shock waves through local governments and school districts, themselves reeling from declining revenue and recession-related spending demands.
But the greater challenge will be crafting policies that fundamentally change our long-term economic prospects. The state needs to radically alter prevailing assumptions that have governed New York state for the last half century if it is emerge from this recession with brighter prospects.
State leaders lost a chance to make this transition less wrenching when they used federal “stimulus” money to sustain existing levels of spending, rather than to ease the changes that must come now. But then, they’ve spent the last decade ignoring the warnings from budget watchdogs that state and local spending was unsustainable.
Now reform must be part of the brutal budget-cutting process.
First, Cuomo should propose a bill declaring a statewide fiscal emergency and suspending salary increases for all state and local government employees for at least the next two years. This would save taxpayers more than $2 billion and is far preferable to mass layoffs of public workers and teachers.
Cuomo also wants a cap on property taxes — but unless he also embraces a panoply of structural changes, any cap will fail dramatically. For example, New York needs pension reform so that all new government employees are placed into 401(k)-type plans. Also vital are sweeping changes in how public-employee contracts, including retiree health insurance and work rules, are negotiated.
Second, the state must become a place where businesses choose to locate, without having to be bribed with taxpayer-funded “incentives.” The nonpartisan Tax Foundation earlier this year found that New York ranked 50th in the nation — dead last — as the state most hostile to business. Changing that means wholesale regulatory reform — drastrically simplifying rules to encourage private-sector development. Our environmental laws are cumbersome and costly — and not effective in protecting the air and water. Laws favoring excess litigation also needlessly add to business costs without enhancing worker safety.
Third, the tax system requires drastic changes — lowering personal and business rates and eliminating loopholes, preferences and exemptions. A simpler, flatter tax system could generate virtually the same revenue, with much lower compliance costs.
New York also taxes inherited wealth at the absurdly low $1 million level. While this satisfies the class-warfare instincts of some, it drives away the successful and actually lowers state revenue collections. President Obama just agreed to impose the federal “death tax” only on estates worth more than $5 million; New York should quickly follow suit.
Fourth, New York needs to cut up its credit card and only use long-term debt, approved by voters, for projects that have true long-term benefit. Our debt is now at dangerous levels; interest alone will soon cost the taxpayers more than $5 billion a year. Meanwhile, state government has virtually ignored our genuine capital-spending needs for roads, bridges and mass transit.
Many other changes will be part of making our state a place where business prospers and private-sector jobs flourish. But before any of that can happen, we all need to recognize that we live in a competitive national and global economy.
More than a million New Yorkers have left in the last 10 years, voting with their feet for lower taxes and better opportunity. Our decreased representation in Congress is just the latest manifestation of New York’s bipartisan political failure. We can either choose to ignore our continued decline — or adapt and change.
John Faso, the 2006 GOP candidate for governor, is a former minority leader of the state Assembly.