“Restraining overall spending” is among the accomplishments highlighted several times in the voluminous documents that make up Governor George Pataki’s 2002-03 Executive Budget.

Of course, “restraint” is a relative concept—especially in a state with New York’s taxing and spending traditions. If you want to assess how Pataki really compares to his predecessor in this regard, the answer will depend on how you count.

On the surface, it’s no contest: the state funds [1] budget rose by a whopping 123 percent in Mario Cuomo’s three terms as Governor, compared to 36 percent in Pataki’s first seven years.

But these nominal numbers include no adjustment for the annual inflation rate, which averaged 4.3 percent under Cuomo and just 2.4 percent under Pataki. When spending is converted into constant dollars and distributed into four-year gubernatorial terms over the past two decades, a somewhat different picture emerges.

State Spending Increase by Gubernatorial Term*

total (millions of 2001 dollars) Percentage
Cuomo I $9,379 25%
Cuomo II $2,153 5%
Cuomo III $1,405 3%
Pataki I $1,312 3%
Pataki II $6,028 12%
* Not including proposed 2002-03 budget. State spending figures from the New York State Division of the Budget for all years were adjusted to reflect inflation as reported in the U.S. Department of Labor Consumer Price Index (CPI) for All Urban Consumers, NY-NJ-CT-PA.

As shown above, nearly three quarters of the real spending increase under Cuomo was packed into his profligate first term (i.e., from state fiscal year 1982-83 through 1986-87).  Otherwise, measuring the state funds budget in constant dollars:

  • the rate of spending growth in Pataki’s first term was roughly equal to the rate of growth in Cuomo’s third term; and
  • spending in Cuomo’s second term increased at only half the projected rate of increase for the first three years of Pataki’s second term;

or, to look at it yet another way,

  • spending during Pataki’s first seven fiscal years in office has risen almost twice as fast as it did in Cuomo’s last eight years—and this will remain true even if the Legislature adds no spending to Pataki’s no-growth proposal for 2002-03.[2]

The trends are further detailed in the chart of real spending on an annual basis, which shows that the state funds budget peaked at the end of Cuomo’s second term and resumed its steady rise in Pataki’s second term.

New York State Spending, Fiscal Years 1983-2003*

fwm2002-02graph-3944947

Source note for chart: Spending for fiscal 2002-03 is from proposed Executive Budget. The assumed inflation rate for 2002 is based on the Division of the Budget’s forecast “composite CPI of New York.” All other years is as reported by the U.S. Labor Department for consumers in the NY-NJ-CT-PA region.

Of course, these spending totals tell only part of the story.

For example, the increase in Cuomo’s last term would have been slightly higher if his last budget had not been cut by Pataki, who took office in the final quarter of the 1994-95 fiscal year. [3]

Moreover, state budgets enacted under Cuomo were rife with fiscal abuses, including a heavy reliance on non-recurring “one-shot” revenues and the sale of state assets to public authorities.  Pataki, by contrast, eliminated or minimized such practices (prior to this year, at any rate).

Cuomo’s budgets also featured a massive expansion of state debt, which has continued to increase (but at a slower rate) under Pataki. Most significantly, Cuomo responded to New York’s last recession by raising taxes, making a bad situation much worse. Pataki—so far—has pledged to hold the line on taxes and to move forward with scheduled tax cuts in the face of the state’s current economic downturn.

Austerity was forced on Cuomo by economic circumstances during his last two terms, while Pataki reduced real spending in order to finance tax cuts during his first few years in office. During economic boom times, Cuomo spent nearly every nickel of new revenue generated by economic growth, while Pataki used a portion of the money to continue paying for tax cuts and to build up reserves (which, in Cuomo’s time, were non-existent).

The bottom line of the inflation-adjusted analysis is this: Real state spending in New York has risen 54 percent over the past two decades. About one-third of the total dollar increase occurred under Pataki.

As for “restraint,” there are some red flags on the horizon. Although the proposed 2002-03 budget represents a slight decrease in real terms, it also projects that state funds spending will rise in fiscal 2003-04 and 2004-05 by a total of 10 percent—more than twice the projected inflation rate for that period.

Notes

  1. The New York State budget reports spending in three ways.  The “all funds” total includes federal aid. The “general fund” consists solely of state taxes and fees whose use is not restricted to any purposes or category of spending. But over the past 20 years, the general fund has shrunk from nearly two-thirds to less than half the total budget. For comparative purposes, the best current available measure of spending is the “state funds” total, which includes all appropriations supported by state taxes and fees.
  2. In 2001 constant dollars, state funds spending increased by about $3.6 billion, or 8 percent, in Cuomo’s last two terms, and by $7.3 billion, or 15 percent, in Pataki’s first seven years. The 2002-03 Executive Budget would increase state funds spending by 1.6 percent, which would be below the projected  2.4 percent “composite CPI of New York” for 2002.
  3. Spending in 1994-95 ended up $300 million to $500 million lower than Cuomo had projected in his final mid-year forecast—equivalent, at most, to just over 1 percent of the total state funds budget.

Originally Published: FISCALWATCH MEMO

About the Author

E.J. McMahon

Edmund J. McMahon is Empire Center's founder and a senior fellow.

Read more by E.J. McMahon

You may also like

Tax hike and huge spending increase seem likely in next NY budget

New York state today began its 2022 fiscal year without an adopted budget—which, in itself, is not a big deal. The state government can continue to pay bills and employee salaries next week if either final appropriations Read More

DiNapoli Predicts $3.8B More in State Tax Receipts

New York State's tax receipts in the current fiscal year will exceed Governor Cuomo's latest projections by $3.8 billion—still down from last year, but a big improvement over the governor's worst-case scenario—according to updated estimates from state Comptroller Thomas DiNapoli's office. Read More

With Hopes Dashed for “Blue Wave” Bailout, Cuomo Needs to Deal With Budget Shortfall

With the national election results still unclear, Governor Cuomo can no longer put off tough decisions on how to balance New York's pandemic-ravaged state budget. Read More

For State Lawmakers, Secrecy May Pay

New York state legislators may get a raise on January 1, 2021—but the people who elect them may not get to find out before voting ends next week. Read More

In Pandemic Recovery, New York’s Tax Base Is More Fragile Than Ever

New York's exceptionally wealthy state tax base is also exceptionally fragile, due to its heavy dependence on the highly volatile (and portable) investment-driven incomes of Wall Street workers and fund managers. Read More

Not a Moment Too Soon, Bill de Blasio Is Setting a Good Fiscal Example

After months of flailing, floundering and stalling on desperately needed cuts to New York City's pandemic-ravaged budget, Mayor de Blasio just made a smart and appropriate move to save money—in the process defying one of New York's most powerful government employee unions. Read More

What a New Jersey “Millionaire Tax” Really Means for New York

Hoping to jumpstart a bandwagon effect, advocates of soak-the-rich tax hike proposals in New York State are hyping a tax increase in New Jersey as evidence that New York needs to do the same. Read More

On Measuring School Quality, Education Week Misses the Mark

Education Week’s rankings do not measure what counts. New York’s substandard achievement coupled with highest-in-the-nation spending and above-average wealth means that when it comes to school quality, New York fails to pass the mark. Read More

Subscribe

Sign up to receive updates about Empire Center research, news and events in your email.

CONTACT INFORMATION

Empire Center for Public Policy
30 South Pearl St.
Suite 1210
Albany, NY 12207

Phone: 518-434-3100
Fax: 518-434-3130
E-Mail: info@empirecenter.org

About

The Empire Center is an independent, non-partisan, non-profit think tank located in Albany, New York. Our mission is to make New York a better place to live and work by promoting public policy reforms grounded in free-market principles, personal responsibility, and the ideals of effective and accountable government.

Empire Center Logo "...the Empire Center is the think tank that spent months trying to pry Covid data out of Mr. Cuomo's government, which offered a series of unbelievable excuses for its refusal to disclose...five months after it (the Empire Center) sued, Team Cuomo finally started coughing up some of the records." -Wall Street Journal, February 19, 2021

SIGN UP TO READ ABOUT THE ISSUES IMPACTING NEW YORKERS.