Safely assured of a third term as governor of New York, George Pataki must tackle the state’s worst fiscal mess in at least a dozen years.

Effective today, Albany’s official tune on budget matters changes from “Don’t Worry, Be Happy” to “A Hard Rain’s A-Gonna Fall.”

With tax collections continuing to erode, “It is now becoming more likely that the state will experience a decline in its revenue situation in 2002-03,” the governor’s budget staff warned in a widely overlooked report last week.

The state’s $710 million rainy-day fund should be enough to cover this year’s possible shortfall. But next year’s gap will be that much worse: Anywhere from $5 billion to $8 billion seems entirely possible.

Of course, New York isn’t the only state to have encountered financial trouble in the wake of the 2001 recession, the busting of the stock market bubble and the 9/11 attacks. What’s really unique about the Empire State (and about New York City as well) is the extent to which its elected leaders have been able to postpone the tough choices necessary to fix the problem.

Last spring, the governor and Legislature agreed to burn up their accumulated surplus and plunder most of their remaining reserves in order to push the problem beyond Election Day – ensuring it will be even worse next year.

For example, while Pataki declared a hiring “freeze” last year, there’s been little evidence of a concerted effort to significantly reduce the state workforce.

To the contrary: The latest payroll records from the comptroller’s office indicate the state government’s estimated total headcount of more than 234,000 employees remains larger than it was in the fall of 2000. This, despite the early-retirement buyouts offered to thousands of state workers last summer.

Can the governor find a way to close New York state’s growing budget gap without resorting to economically damaging tax hikes or to fiscal gimmicks that would drive the state bond rating even lower? Yes – but only if he returns to the kind of spending discipline that characterized his first term.

That means going beyond a slushy “freeze” and really reducing the payroll through attrition and more buyouts if at all possible and demanding concessions from state employee unions when their contracts expire next spring.

And workforce savings are just the start. He will need to rein in school aid, and reverse his recent expansion of the costly Medicaid program.

Eight years ago, when Pataki closed a $5 billion budget gap without tax hikes in his first budget, some religious leaders denounced his proposal as immoral.

Labor unions spent millions on TV ads attacking him, hunger advocates predicted starving in the streets, SUNY students staged mock funerals outside the Capitol and Al Sharpton walked from New York to Albany to dramatize the unfairness of it all.

If the news media is reporting on similar developments next spring, you’ll know the governor is finally getting serious about this budget problem.

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

Bear market spells big trouble for NY state and city budgets

Wall Street generates an outsized share of New York’s tax revenue, so the recent drop in stock prices should worry both Gov. Kathy Hochul and Mayor Eric Adams. Read More

Kathy Hochul will have to prove she can hold the line on state spending

Hochul’s specific priorities were lowest-common-denominator stuff: “combating” the spread of COVID-19 linked to the Delta variant, pushing billions in stalled federal rent relief out the door to tenants (and ultimately their landlords) and “beginning to change the culture in Albany.” Read More

Calling Tax Cut “Theft,” Cuomo Continues to Push For Federal Bucks With Phony Math

The results of this week’s Georgia Senate runoffs, assuring Democrats will soon control both houses of Congress, as well as the White House, had to come as a huge relief to Gov. Andrew Cuomo. Read More

Students Need Reforms, Not HEROES

Families and businesses are watching their bottom lines and stretching each dollar. But House Democrats are pushing a plan to prevent America’s schools from doing the same thing. Read More

Washington shouldn’t fund NY’s “normal” budgets

With the coronavirus lockdown continuing to erode tax revenues, Gov. Andrew Cuomo has turned up the volume on his demands for a federal bailout of the New York state budget. In a weekend briefing, the governor repeated his estimate that the Empire State will need help closing a deficit of $10 billion to $15 billion. “I don’t have any funding to do what I normally do,” he said. Read More

Cuomo’s Plate Spinning

Governor Cuomo’s license plate design contest was a PR ploy masking a nickel-and-dime revenue raiser. Read More

How Cuomo is cooking New York’s books

When lawmakers in Albany passed the state budget last spring, Gov. Andrew Cuomo declared it “both timely and fiscally responsible.” Timely was true enough. But fiscally responsible? Not so much. Read More

Cuomo’s SALT Flop

By midnight Monday, more than 9 million New Yorkers will have filed their income tax returns for 2018. And most will then have cause to wonder what the Great New York SALT Panic of 2018 was all about. 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

General Inquiries: Info@EmpireCenter.org

Press Inquiries: Press@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 Enjoying our work? Sign up for email alerts on our latest news and research.
Together, we can make New York a better place to live and work!