With less than two weeks until the end of the month, Gov. David Paterson and state lawmakers are staring at another annual budget deadline with little apparent progress toward on-time completion.
The big budget question this year, however, is not whether they will meet the April 1 deadline. It’s this: Will the Legislature act on the Ravitch plan?
This sweeping proposal, submitted last week by Lt. Gov. Richard Ravitch, calls for radical changes to longstanding budget practices in Albany. In a number of important ways, it goes to the heart of the state’s fiscal crisis.
But lawmakers, who must approve the plan, are certain to balk at relinquishing some of their prerogatives, as Mr. Ravitch proposes. And objections to borrowing for operating costs during a transition period—which the plan calls for, with strict limitations—could obscure the other elements of the proposal.
The lieutenant governor has a deep understanding-drawn from his experience helping to pull New York City from the brink of insolvency in the 1970s-of what needs to be done to fix the state’s structural budget imbalance.
Make no mistake, tinkering at the margins will not do. As Mr. Ravitch noted in his report: "A long-term, unsustainable divergence between state revenues and expenditures has led directly to a large and growing structural budget deficit that is masked, year after year, through accounting techniques, borrowing and one-time actions."
Indeed, the state’s current budget gap—officially estimated at more than $9 billion—actually tops $13 billion on a structural basis (with both temporary revenue items and recession-related shortfalls factored out).
The Ravitch remedy includes adopting a multi-year financial planning process, changing to a July 1 fiscal year and balancing the budget according to generally accepted accounting principles versus cash-basis accounting, which makes it much easier to "game" the numbers.
And yes, he also calls for a Financial Review Board with oversight powers and for the use of "transition bonds"—but only in the first three years of the plan and totaling no more than $6 billion.
The state’s budget woes can be solved only if Albany gets serious about fiscal discipline. Does anyone have a better plan for how to get there?
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