Eliot Spitzer is asking voters to forget what he did after dark and focus instead on the supposedly stellar way he handled his day job.
But a close look at Spitzer’s dollar-and-cents track record shows that he could be just as reckless with the public’s money as he was with his personal life — and raises further doubts about his fitness to be city controller.
As New York’s chief fiscal watchdog and manager of five pension funds worth $140 billion, the controller needs to be a tight-fisted, glass-half-empty kind of guy who obsesses about potential financial disasters around every corner.
And the last time Spitzer was entrusted with large amounts of tax dollars — during his 15 roller-coaster months as governor — he was anything but that.
When he took office in January 2007, New York had just experienced four straight years of torrid economic growth — the inflation phase of what turned out to be a huge financial bubble. Tax money had poured into state coffers from Wall Street, and state lawmakers spent it almost as fast as it came in.
If Spitzer had been the fiscal whiz he cracks himself up to be, he would have known the flush times were too good to last — and braced for the inevitable downturn to come. Instead, he put the pedal to the metal, proposing a first budget that ramped up state-funded spending (not including federal aid) by almost 8%, about three times the inflation rate.
Included in it was a massive boost to school aid, increasing it $1.7 billion, or 10%, in the first year of a four-year, $7 billion plan. This was supposed to fix a long-standing imbalance in the school aid formula that shortchanged New York City and other high-need districts.
In truth, Spitzer sent more money to all schools, including the wealthier ones. On top of that, he threw another $1.3 billion into a school tax relief program that disproportionately benefited schools on Long Island and in the northern suburbs.
Whatever the pros and cons of this effort, it soon fell apart.
Before the year was out, a slowing economy threw Spitzer’s budget out of balance, forcing him to dip into reserve funds inherited from Gov. George Pataki to make ends meet.
Despite that reality check, Spitzer stuck to his bullish ways in his second budget, proposing to increase spending by another 5%. He spun this as a fiscally responsible benchmark, claiming the state would be okay so long as spending was kept in line with the long-term average growth of personal income, which he projected at 5.3%.
“By following this approach, the state will build up reserves in good years that can help prevent harsh funding cuts when the economy slows,” Spitzer’s budget documents stated at the time.
There were, however, problems with his math. First, his own budget division’s calculations showed that the average growth of personal income for the previous 20 years was 4.6%, not 5.3%.
Second, he was ignoring the reality that the Legislature would always push to spend more — especially in those “good years” he was anticipating.
Third, and most problematically, he missed signs that the state was heading into some of the worst years it had ever seen — which would tear massive holes in Spitzer’s best-laid plans.
He resigned just two months after proposing this disaster-in-the-making, leaving the cleanup job to his successor, Gov. David Paterson. Despite calling two emergency budget-cutting sessions of the Legislature during his first nine months in office, Paterson still had an unprecedented $15 billion deficit to close the next year.
“The state would have confronted big fiscal problems under any governor once the economic meltdown began in 2007-08,” says E.J. McMahon of the Empire Center for New York State Policy. “But Spitzer’s lax management and rash promises made a bad situation worse — and dumped a mess in Paterson’s lap.”
How out of whack were Spitzer’s projections? Had the state budget really kept tracking upward at 5.3% a year — as Spitzer intended and sketched out in his budget documents — it would stand today at $164 billion. That’s $27 billion more than what New York is actually spending under Gov. Cuomo’s third budget. To squeeze that much more money out of taxpayers — in what’s already the highest-taxed state in the country — Albany would have had to hike income taxes by 57%.
As for that big investment in schools — which Spitzer so proudly touts in his current campaign ads — it turned out to be a chimera. To this day, school aid is $5 billion shy of where Spitzer promised it would be in 2010-11.
Despite all this, Spitzer recently told the Daily News Editorial Board: “I could not be prouder of the budget we passed in ’07.” He likewise rated his ’08 proposal as “superb.”
Apparently, the man who would be controller of New York City has not learned a lesson about overly rosy scenarios.
©2013 New York Daily News
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