“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

Budget Deal Slows Medicaid Growth But Plants Seeds for Future Spending

The growth of New York's Medicaid spending is projected to slow but not stop as Governor Hochul and the Legislature effectively split their differences over health care in the newly enacted state budget. Read More

Albany Lawmakers Push a $4 Billion Tax on Health Insurance

Legislative leaders are proposing an additional $4 billion tax on health insurance plans in the upcoming state budget – but withholding specifics of how it would work. Read More

As migrants flow to NY, so does red ink 

The influx of foreign migrants to New York could cost the state $4.5 billion more than expected next year, Governor Hochul today warned.  Read More

The Bill Arrives: NY Faces $9B Budget Gap Next Year 

New York’s outyear budget gaps, the shortfall between planned state expenses and state tax receipts over the next three years, has exploded to more than $36 billion, just-released documents show.  Read More

NY school spending again led US, hitting all-time high in 2020-21

Public elementary and secondary school spending in New York rose to $26,571 per pupil in 2020-21, according to the latest Census Bureau data Read More

A Tale of Two Levies

New York school districts are getting record levels of state aid. But how many are using it to cut taxes? Read More

Albany’s Belated Budget Binge 

State lawmakers have begun passing the bills necessary to implement the state budget for the fiscal year that began April 1. Read More

Courts set a limit on NY’s tax reach

Just in time for tax season, New York State's tax agency just lost a major legal challenge to its policy of pursuing maximum income tax payments from wealthy vacation homeowners—even when they live elsewhere. Read More