Those “Empire gold” license plates now cropping up on cars and trucks around New York state aren’t the only retro look coming out of Albany these days.
State officials may cope with a looming cash crunch by issuing New York’s first short-term revenue notes in nearly 20 years.
This gambit — akin to the state’s annual “spring borrowing” of the 1970s, ’80s and early ’90s — should not be confused with the somewhat longer-term “transitional” deficit-financing that would be authorized under a plan floated by Lt. Gov. Richard Ravitch.
All this talk of new borrowing underscores the state’s chronic inability to curb excessive spending.
But Gov. Paterson, the Jekyll and Hyde of fiscal responsibility, now seems to be pushing back harder against the rising tide of red ink. To that end, he wrote a column in Monday’s New York Times that took a backhanded swipe at his own lieutenant governor’s borrowing proposal.
Ravitch’s “core objective” is to restore structural balance to the state budget, Paterson noted — but the Legislature has taken advantage of Ravitch’s suggested linkage of fiscal reforms to $6 billion in deficit bonds in order to avoid deeper spending cuts over the next three years.
Paterson — overlooking the billions in tax hikes he has signed into law or proposed over the last 18 months — wrote that deficit borrowing would saddle New Yorkers with a “dysfunction tax” for years to come. Issuing $2 billion in bonds to help close the fiscal 2010-11 budget gap would cost $2.5 billion to repay over 10 years, he said, while recurring spending reductions of $2 billion a year would generate savings of $20 billion over the same period.
Good for the governor. But talking about the need for more spending cuts isn’t enough. To put lawmakers on the spot, Paterson needs to show them how to do it. He took a step in the right direction yesterday by issuing another $620 million in reductions, including $100 million already backed by the Legislature.
But he could and should go further. Paterson needs to unequivocally reject legislative proposals to restore or add more than $1.7 billion in spending to the budget he submitted. He also needs to recognize that his $1 billion in proposed tax hikes — on sugared soft drinks, cigarettes and health insurance — cannot get through the Senate and Assembly.
So the governor needs a more ambitious budget-reduction agenda. As detailed in the Empire Center’s “Blueprint for a Better Budget,” other potential savings include:
* More than $1 billion in Medicaid reforms, including $114 million from tightening eligibility and postponing a scheduled expansion of the program.
* $340 million by requiring state employees who retire early to pay a larger share of health-insurance premiums.
* $198 million in welfare reforms, including the cancellation of a scheduled rise in welfare benefits.
* $70 million by eliminating what’s left of the state’s reserve for legislative pork-barrel “member items” after the reduction proposed by Paterson.
* $66 million from doing away with the state stem-cell research fund.
* $25 million by scrapping the Council on the Arts and reducing state arts grants by more than Paterson has proposed, to the national per-capita norm.
* More than $14 million from canceling subsidies to public broadcasting and Amtrak’s Adirondack train service.
* $110 million from cutting in half the legislative budget, which at $1 million per member is 2.7 times the national average.
* $60 million next year and more than $100 million in future years by reducing state court staffing to 1999-2000 levels.
With or without a budget deal, the state will face its next cash-flow crisis in June, when Albany’s available resources are expected to fall $1 billion short of scheduled payments for school aid and other purposes. One way to find the cash, some key legislators suggest, would be to borrow it.
But under the terms of a 1990 law that converted the old spring borrowing into long-term bonds, the state can re-enter short-term credit markets only if the governor and legislative leaders first jointly certify the “emergency or extraordinary factors” that make it necessary.
In that case, renewed short-term borrowing can provide another impetus for the kind of state-imposed wage freeze that accompanied past fiscal “emergencies” in New York City and Buffalo. Freezing public-sector pay would save the state and its local governments, including New York City, roughly $1.6 billion in the next year.
With just over eight months left in his term, Paterson has scant time to salvage any semblance of a positive legacy from his troubled tenure. The overdue 2010-11 budget is basically his last chance.
E.J. McMahon directs the Man hattan Institute’s Empire Center for New York State Policy. ejm@empirecenter.org