When Gov. Andrew Cuomo delivers his State of the State address Jan. 9, he will be able to mark progress on many fronts. And he will be able to do so knowing that voters give him high marks for his job performance.
But what would be most impressive is if the governor took the opportunity to speak frankly about what remains to be done-in particular, to restore New York’s fiscal foundation.
Those who doubt that the state cannot continue on its present course should read the new analysis issued by the State Budget Crisis Task Force, led by Richard Ravitch, a former New York lieutenant governor, and Paul Volcker, a former chairman of the Federal Reserve. It is an update to the group’s July 2012 report on the six major fiscal threats facing New York and other states.
"New York has had a structural deficit, papered over with gimmicks, for decades," the task force states bluntly. "When the economy is booming, so is spending; when times are bad, revenues crash and spending remains."
Faced with the need to balance each year’s budget on a cash basis, lawmakers have turned to a seemingly endless series of one-shot actions. Over the past decade, these have totaled roughly $25 billion.
Examples of these one-shots in the 2012-13 budget include $2.6 billion in temporary income tax provisions, deferrals of business tax credits totaling nearly $1 billion and $782 million in borrowing for pension contributions.
Among the many fiscal challenges that lie ahead, the report states, two loom largest: the need to maintain and upgrade New York’s crumbling physical infrastructure, and a growing number of "illiquid cities and counties with their own structural budget deficits."
The task force had a note of caution for those who think the solution is simply to demand that the wealthy pay more: "Albany has increased dependence on a small group of very wealthy taxpayers to keep the state going, which worsens revenue volatility and budget instability and heightens the state’s exposure to risks outside its control."
At the moment, the fiscal cliff might be at the top of the list of risk factors, but it’s hardly the only one.
Mr. Cuomo has earned a great deal of trust over the past two years. He should put it to good use by stating plainly what New York must do to put itself on a sustainable course.
12/28/12 (c) 2012 Rochester Business Journal. To obtain permission to reprint this article, call 585-546-8303 or email email@example.com.