Now Comes The Real Fight

Cuomo must confront the special interests

by E.J. McMahon |  | New York Post

Will Andrew Cuomo defy the special interests that have long controlled Al bany — starting with the public-sector labor unions whose political arm endorsed him — to deliver the kind of change he promised in his successful campaign for governor of New York?

The answer is simple: He has no choice. The Empire State’s fiscal problems are simply too massive to permit further dithering, buck-passing and corner-cutting.

As if to drive home that point, on the eve of yesterday’s election, Gov. David Paterson quietly issued a financial-plan update showing that next year’s state budget gap has grown from $8.2 billion to more than $9 billion. The main culprits: falling tax receipts and rising Medicaid outlays. The gap may grow even larger before Cuomo presents his first budget plan on Feb. 1.

Throughout his campaign, Cuomo explicitly and repeatedly promised to hold the line on spending and broad-based taxes. The new numbers mean he can’t keep that promise unless the first budget of his tenure cuts spending below current levels.

This will require a pitched battle with Medicaid providers and health-care-worker unions, who will spend millions of dollars on ad campaigns designed to drive the new governor’s poll ratings into the basement.

But the Medicaid fight won’t be the main event. Indeed, balancing the state budget alone is only part of the challenge he faces. The overriding pocketbook issue — one that will ultimately determine the political success or failure of the next Cuomo administration — will be property taxes.

In an audacious move, Cuomo began his campaign last May by calling for a broad limit on property taxes in New York. Moving beyond the 4 percent maximum cap on school taxes proposed two years ago by Gov. Paterson, Cuomo proposed a maximum cap of 2 percent on the annual growth in property-tax levies by all government units — schools, counties, cities, towns, villages and special districts.

This cap could only be overridden by a 60 percent “supermajority” of residents. It would allow for limited, extraordinary exceptions, like capital expenses previously approved by voters. But it would otherwise contain no loopholes.

Cuomo’s proposed cap was a half-point lower than the 2½ percent property-tax limit proposed by the man he presumed would be his Republican opponent, Rick Lazio. It rightly won him plaudits from the same taxpayer groups that had signed on in support of Paterson’s cap, only to watch the governor fumble it away after it was passed by the state Senate in the summer of 2008.

The property-tax cap — exactly as outlined in his campaign agenda — should be the first legislative-program bill Cuomo introduces next year. He will then need to anticipate, and resist, likely attempts by Assembly Speaker Sheldon Silver to shoot the cap full of loopholes meant to protect salaries and benefits for public employees.

But Cuomo can’t credibly propose a tax cap in isolation. It must be coupled with changes in collective-bargaining provisions that now make it hard for local governments and school districts to control their labor costs.

The changes should start with repeal of the Triborough amendment, which guarantees seniority “step” increases in pay even after a labor contract has expired. Above all, they must include fundamental reform of public pensions, which are about to skyrocket to levels never before seen in New York.

If Cuomo’s luck holds, yesterday’s final election returns will also confirm that Republicans have gained seats in, if not outright control of, the state Senate.

During much of the 44 consecutive years they controlled the upper house before 2009, the Republicans institutionally allied themselves with public-sector labor unions, especially the New York State United Teachers. During previous fiscal crises, they joined Assembly Democrats to enact major tax and spending increases.

But after two years in the wilderness, GOP members are now trying to position themselves as born-again fiscal conservatives.

“In many ways, we lost our way in the past, and we got the message and we’re going to correct the direction of the state,” Sen. Dean Skelos, the GOP leader, told The Post’s Fred Dicker yesterday.

Cuomo needs to remind Skelos of that quote, early and often. Skelos & Co., for their part, need to hold Cuomo’s feet to the fire.

If the new Democratic governor and resurgent Senate Republicans can work together to keep their word, everybody wins.

Read article at Manhattan Institute