by Richard Brodsky and E.J. McMahon

No matter how much the left wants to expand government, no matter how much the right wants to cut taxes, both ought to observe a fundamental rule of government spending: Never use one-shot revenues to fund recurring operating expenses.

Never use an occasional windfall to pay for ongoing programs or tax cuts that will need new cash when the windfall is exhausted.

Don’t be like Detroit in the 2000s. Or New York City in the 1970s. Liberal or conservative, just don’t do it.

The rule is especially relevant with New York set to inherit $3.3 billion — one time only — due to sanctions violations by the French bank BNP Paribas.

Gov. Cuomo and the Legislature now face a test of their commitment to fiscal responsibility in an election year, with all kinds of political pressures and self-interest emerging.

Suggestions for the cash already are percolating. Progressive education advocates want to redeem the state’s broken promise to significantly boost school aid. Conservative Republicans in the Senate want to use some of the windfall to pay for tax cuts.

Such ideas are tempting — and wrongheaded. In both cases, the state would have to eventually find new money to support continued higher spending or tax cuts.

The state budget remains structurally unbalanced. That’s because, for more than 30 years, governors and lawmakers have repeatedly relied on one-shots: selling prisons, raiding off-budget surpluses and more to fund operating expenditures and tax cuts. The new windfall presents a choice: break that bad habit or continue it.

We propose a sustainable, prudent and socially beneficial approach: Use the revenues to fund capital programs. It’s a perfectly sound fiscal policy. And we have enormous, unmet needs across the state and in almost every part of our physical infrastructure, particularly transportation.

If you’re interested in long-term economic growth, there’s no better capital investment. Good jobs and economic activity require roads, bridges, trains and subways that move people and goods.

The Metropolitan Transportation Authority has a capital plan that would keep it in a state of good repair and expand service. It’s unfunded. The state’s road and bridge funds are similarly broke, even as the deterioration of the system becomes more apparent. The can has been kicked down the proverbial road by Republicans and Democrats alike.

So, put all the money into transportation infrastructure. Set aside half for the next MTA capital plan to buy new train and railroad cars, expand service infrastructure and improve safety and comfort. Half should go to the state Department of Transportation’s next highway capital plan, to reduce the reliance on borrowed money for routine repairs and reconditioning, and help local governments with their own deteriorating roads and bridges.

Sounds simple. It is. And for those who also want the praise of voters this November, it has political virtues: It stimulates new jobs in the short and the long run, and it avoids the fiscal irresponsibility we see in Washington and states and cities across the nation.

It meets the political needs of both the right and the left.

Beware alternatives that are actually budget gimmicks. Holding the money in an unrestricted “rainy-day” reserve might sound responsible but would create a slush fund likely to be tapped for operating expenses in the future. And forget about “memorandums of understanding” — the three-way deals in which the Senate, Assembly and governor split up the money as they see fit.

All candidates for statewide and legislative office should declare themselves before the election, as the Republican gubernatorial candidate, Rob Astorino, already has done with his own proposal to spend the windfall on transportation infrastructure. Cuomo has been silent, but has long preached fiscal restraint of this kind.

Can we finally, without regard to left or right, act in a fiscally responsible way?

Brodsky, a former Democratic assemblyman, is a fellow at Demos. McMahon is president of the Empire Center for Public Policy.

About the Author

E.J. McMahon

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

Read more by E.J. McMahon

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