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N.Y.’s harsh reality

  
  As he unveiled his 2011-12 spending plan, Gov. Andrew Cuomo said his recent root canal surgery offered a welcome break from painful budget cutting. Anyone who takes a good look at the governor’s proposal will realize he was only half-joking.

  Mr. Cuomo’s executive budget reduces state spending for the first time in a decade and a half while closing a roughly $10 billion gap-without raising taxes or borrowing. To do so, it cuts Medicaid and education spending, two of the biggest budget items. And the plan calls for up to 9,800 state layoffs if negotiations with unions fail to produce necessary savings.

  "New York is at a crossroads, and we must seize this opportunity, make hard choices and set our state on a new path toward prosperity," the governor said. "We simply cannot afford to keep spending at our current rate. Just like New York’s families and businesses have had to do, New York State must face economic reality."

  As Mr. Cuomo noted, this is what reality looks like: State spending has increased more than 5.7 percent a year over the last decade, while tax receipts have grown only 3.8 percent, personal income has increased 3.7 percent and inflation has risen 2.4 percent.

  He is not the first New York governor, of course, who has flagged the state’s structural budget imbalance. Only a year ago, then-Gov. David Paterson offered his plan, saying "the mistakes of the past-squandering surpluses, papering over deficits, relying on irresponsible fiscal gimmicks to finance unsustainable spending increases-have led us to a financial breaking point."

  Yet in the end Mr. Paterson buckled when confronted with resistance to spending cuts.

  Gov. Cuomo too will face fierce pressure on many fronts. Health care and education groups immediately attacked his proposed reductions, saying the consequences will be dire.

  But what about the consequences of continuing down the road New York has traveled for years? The state’s tax burden has fueled an exodus of jobs and people. Worse still, as the governor noted, "not only do we spend too much, but we get too little in return," especially for dollars invested in education and health care.

Yes, the remedy Mr. Cuomo has proposed will be painful. But that’s what comes of postponing the day of reckoning over and over again.

2/4/11 (c) 2011 Rochester Business Journal. To obtain permission to reprint this article, call 585-546-8303 or e-mail rbj@rbj.net.
 

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