GOV. Paterson has rightly called for an immediate $800 million cut in pro posed state spending for the coming fiscal year. That’s a necessary first step, but Albany should keep the erasers handy: We have more to do.
I spent 20 years in the Legislature. I understand the pressures to spend more, especially in an election year. Call me a reformed sinner, but as comptroller, I must urge that we change that paradigm.
The fact that we’re debating whether we’re in a recession is reason enough to take action. Wall Street, which provides up to 20 percent of the state’s revenues, is on a roller coaster.
The subprime mortgage crisis hasn’t hit bottom yet, but the credit crunch is already hitting virtually every sector of our economy. Flour prices in New York City have nearly doubled – even a slice of pizza may not be a bargain anymore. And the price of gas is driving up the price of everything else.
New York has a long, not-so-glorious tradition of budget shortsightedness. We budget for this year and ignore what might happen next. Our budgets make spending commitments for future years that simply aren’t sustainable.
But our state can’t afford to operate the same old way. Everyday New Yorkers are facing hard choices; government must do so, too.
In February, my office released an analysis of the budget proposed by then-Gov. Eliot Spitzer – which included out-year budget gaps of $3.6 billion in 2009-10, $6.1 billion in 2010-11 and $7.2 billion in 2011-12.
The state is simply spending more than it’s taking in. General-fund spending is on track to rise an average 7.4 percent a year from 2008-09 to 2011-12, while revenues are only expected to grow an average of 4.7 percent. That simply can’t continue.
The old strategies are getting pretty tired. The state can’t borrow its way out of a budget hole; we’ve already borrowed too much for too many wrong reasons.
As a result, our debt costs are skyrocketing: Over the next five years, yearly debt-service payments are set to rise from $5 billion to $7.5 billion.
And some $11.5 billion of debt has gone to cover deficits or for budget relief. At the same time, vital projects like the replacement or restoration of the Tappan Zee Bridge (price tag: up to $20 billion) go unfunded – we have no comprehen- sive planning or prioritization for such capital projects.
But there’s a way out: The fact that almost everyone agrees that New York is in rough economic shape should let us enact measures that will leave us better positioned to grow a powerful and more resilient economy for our state:
* Cut the growth in state spending. Stop spending like there’s no tomorrow; use those erasers. There must also be clearly defined parameters for spending. Revenue projections have traditionally been a moving target, adjusted for the level of spending we want, not what we can afford. Let’s set an amount and stick to it.
* Focus on the long-term implications of new spending programs. Albany has become well practiced at avoidance. Programs get announced one year – with the costs pushed to out years. It’s a great press release, but poor policy. Whatever today’s budget promises, next year’s budget will have to fulfill. And today’s economic pain will affect next year’s budget, too. It’s time to start measuring things for the long haul.
* Reform debt. New York still needs to borrow, but we have to understand there are limits, and borrowing must be for legitimate purposes.
The debt-reform legislation passed in 2000 was so loosely worded that it didn’t cover $33 billion in outstanding state debt, and the “reform” allowed borrowing for budget relief – the same as using your home-equity loan to pay for groceries.
New York needs real, binding debt reform that limits the use of debt and requires a long-term capital plan that sets priorities and details how to pay for projects.
THESE difficult times, when everyone sees the perils ahead, are an opportunity to get all of Albany pulling in the same direction. We have a chance to make real change. If we don’t, New York will lag economically long after the rest of the country has recovered.
Thomas DiNapoli is the New York state comptroller.