Politicians have a habit of crying wolf over budget cuts – even when the “cuts” actually amount to smaller-than-desired spending increases. But amid all the other noise surrounding the final stage of budget negotiations in Albany late this week, New York’s county executives made a strong case against what would be one of the more outrageous intergovernmental rip-offs since the creation of the Medicaid program over 40 years ago.

At issue is a proposal in the executive budget – originating with former Gov. Eliot Spitzer and continuing under Gov. Paterson – to shift a larger share of welfare costs to New York’s county governments.

Since the Great Depression, the welfare split has been 50-50, and New York is now one of only a handful of states to require any significant local share of these outlays. The Spitzer-Paterson budget would reduce the state share to 48 percent and raise the share for counties and New York City to 52 percent.

Adding insult to injury, the cost shift would take effect April 1 – three months into county fiscal years and nine months into New York City’s.

Spitzer and his budget office didn’t even try to offer a policy justification for the shift. Its sole purpose was clearly to allow the state to claim a “savings” of $40 million – at the expense of local taxpayers, mostly in New York City and surrounding suburbs.

Sure, that’s a microscopic amount in the context of a $124 billion state spending plan. But welfare costs could grow more rapidly in the future – so this is a way for the state to appear restrained while raising the local taxpayers’ share of the bill.

Cost-shifts to county and municipal governments have been common in New York over the past two decades, even in stress-free years. The proposed change in welfare shares in the 2008-09 Executive Budget wasn’t even the largest affecting counties and New York City. (That dubious distinction goes to a separate proposal to shift $60 million in pre-trial juvenile-detention costs from the state to the local level.)

But the welfare move, in particular, exposed the rank hypocrisy and cynicism at the heart of the Albany budgeting process, especially where the interplay between state mandates and local taxes is concerned.

Spitzer insisted he was determined to lift the burden on local taxpayers, even appointing a commission to recommend a property-tax cap – yet his budget was meanwhile doing precisely the opposite.

As of yesterday, Paterson reportedly wasn’t budging off his predecessor’s welfare proposal. Meanwhile, Assembly Democrats and Senate Republicans had offered to split the difference and reduce the welfare ratio to 51-49 in the state’s favor – making the change less expensive for local taxpayers, but no less indefensible.

If the welfare proposal had one good effect, it was to provoke some refreshingly straight talk from county executives in both parties – like Suffolk County’s Steve Levy, a fiscally conservative Democrat who previously served in the state Assembly.

In a conference call with other executives yesterday, Levy noted that many counties have held their spending below the rate of inflation – while the next state budget will grow by about 5 percent.

“We all recognize as executives that with a downturn in the economy, every level of government is feeling the pinch,” Levy said. “The question is how you address the problem. Be a big man, stand up [and] make the cuts you have to make. Don’t be a coward and shift the costs to others to pick up.”

Tom Santulli, the Chemung County executive and a Republican, contrasted the cutbacks he’s been making on his own payroll with the continuing expansion of the state’s headcount, to which Spitzer had added more than 2,000 employees.

“What I’m observing out there is wholesale hiring [by state government] . . . trying to fill positions before this budget becomes a reality,” Santulli said. “They’re in a hiring frenzy,” he added. “I think it’s disgraceful.”

Disgraceful is right.

Read article at Manhattan Institute

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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