Spending Cap Plan Called Inadequate

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Governor Spitzer’s plan to attempt to link state spending to economic growth is getting a cold reaction from budget watchdog groups, which are urging Mr. Spitzer to set a more ambitious long-term goal of fiscal restraint.

Mr. Spitzer said yesterday he plans to tie future operating fund increases to state income growth, establishing a new benchmark he said would set spending at levels high enough to prevent an escalation in local taxes and small enough to expand the state’s “rainy day” reserves.

In recent years, state income growth has risen by an average of two to three percentage points more than inflation, which has been roughly 2.5%.

Assuming income growth continues apace, the state going forward would be increasing its operating budget at a slower rate than this year — it was 6.7% —and at a slower rate than during the final years of the Pataki administration.

Albany, however, would be spending at a faster rate than during the early Pataki years and during parts of the Carey administration.

Critics of the plan say Mr. Spitzer is using a razor when he should be using a machete. They questioned linking the growth of the public sector to the growth of the economy.

“Personal income is too generous a measure,” the executive director of the Empire Center for Public Policy, E.J. McMahon, said. “Why should the cost of state operations be allowed to grow at the same pace as the overall economy?”

“When the economy is strong, that’s the time when the public sector can afford to cut back,” the president of the Center for Governmental Research in Rochester, Kent Gardner, said.

The governor announced his fiscal plans during a speech last night before the Citizens Budget Commission’s annual dinner in Manhattan.

Mr. Spitzer also said he would roll out parts of his budget in November — two months before his deadline — and would hold public hearings on “major budget issues.”

For Mr. Spitzer, a governor who is known to keep a keen eye on public opinion, the changes are an attempt to muffle the loudest criticisms of his first budget.

By moving up the starting line of the budget process and holding public hearings, the governor is trying to create an aura of transparency around a traditionally secretive process. With a new spending benchmark, Mr. Spitzer may be trying to redefine what a responsible budget looks like — enabling him to claim success by meeting a goal he set himself.

For the most part, Mr. Spitzer spoke of broad goals, according to a prepared text of his speech. For instance, he said he was “committed to continuing to reduce taxes,” but did not provide clues about which taxes would be lowered.

While stressing how the high cost of local government has made it difficult for the state to lower state spending without forcing cities and counties to raise taxes, Mr. Spitzer was silent about how he plans to make local government less expensive.

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