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On the brink

Gov. David Paterson can force state lawmakers to return to Albany, but getting them to deal responsibly with New York’s fiscal crisis could be beyond the power of mere mortals.

The governor was perfectly blunt when he addressed the Legislature 10 days ago:

“Right now we stand (on) the brink of financial challenge of unprecedented magnitude in the history of this state. … I know that (some) say that the deficit is not even as deep as we have described it. Some say that the revenues are coming back, and others say that Wall Street will bail us out. I suggest to you that that is wishful thinking.”

On the same day, state Comptroller Thomas DiNapoli delivered the same message. The state is facing a three-year budget gap of more than $27.5 billion, he said, and is on a path to spend $4.1 billion more this year than it will take in.

“That is irresponsible and unacceptable,” he added. “The state has to stop treating New Yorkers like ATMs. The cash machine is empty.”

Did these warnings spur the Legislature to action? No.

To the Democrats’ leadership in the Senate, the state’s fiscal crisis is illusory, nothing that more borrowing and a grab bag of one-shot revenue items won’t cure.

It’s almost scary to imagine they truly believe this. More likely, they have no stomach for the sharp spending cuts that must be made.

Wall Street’s implosion worsened New York’s fiscal mess, but it is not the root cause. Spending is the core problem, especially in the areas of Medicaid and education, where New York’s per capita expenditures are highest in the nation.

There is no way to fix the state’s long-term fiscal problems without reining in runaway spending.

Those who think more revenues are the answer need look no farther than the first quarter of this year, when general fund personal income tax collections sank by 35 percent even though the highest tax rate jumped.

For many, the rate hike was little more than an incentive to defer or shelter income. And for some wealthy New Yorkers, it was reason enough to move elsewhere.

In his speech, Mr. Paterson told lawmakers “we’re going to have to make historic decisions.” Let hope they are not ones New Yorkers live to regret.

11/20/09 (c) 2009 Rochester Business Journal. To obtain permission to reprint this article, call 585-546-8303 or e-mail rbj@rbj.net.

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