Friday, September 12, 2008

New York State Fiscal Mess

With all the attention given to the presidential campaign, I have only recently focused on the New York State races. There is no gubernatorial race but our assembly persons and senators are running. In the vast majority of cases, incumbents are re-elected. Surprise, surprise. Each year both incumbents and challengers rail against the broken New York government and promise the voters that they will lead the effort to "clean up Albany." Nothing much happens except finger pointing a variety of scapegoats. In my twenty plus years in New York, I have distinct impression that our elected representatives are powerless even if motivated to change things.

Now, however, the situation has become so desperate that those running for office must come up with workable solutions to a worsening fiscal problem. Here is an outline of the situation:

  1. New York routinely ranks first or second among the states in the percent of personal income paid in state and local taxes: income, property, sales, and others.
  2. New York ranks far from second in the basic social indicators of a healthy state: poverty, health, and education.
  3. This year the governor called the legislature into special session to deal with projected deficits in the billions of dollars. When an agreement was finally reached, the governor and the leaders of the legislature proudly announced that they had made progress without raising taxes. They made that progress by drastically reducing state funding for health care, child care, education along with most other social services. The governor has indicated that more cuts will be needed and clearly these same areas will be hit the hardest.
  4. New York's total tax burden is highly regressive. The lowest twenty percent of families int terms of income pay 12 percent of their income in state and local taxes while the highest twenty percent pay 6.5 percent. The tax cuts of the late nineties massively benefited the highest income families while providing almost no relief to low income families and marginal benefits to middle income families. This is consistent with national tax policy that provided massive decreases to the wealthiest. As is true at the national level, New Yorkers in the low and middle income levels have seen very little growth income while costs continue to rise. Over the past year, this situation has worsened appreciably. The situation is even worse if state sponsored gambling is included. Given the demographics of participation, the state lottery is simply another regressive tax on lower income families.
  5. In fiscal 2007 the budget included $200,000,000 in what are called "member items." This is the New York terms for "pork barrel" or "earmarks." In New York, this has been raised to a high level. The budget includes a single comprehensive item. $80 million goes to the head of the Assembly and $80 million to the head of the Senate. These funds are allocated in some mysterious fashion to individual members and are major factors in party leaders maintaining control over members in each body. The governor received another $40 million to allocate in some equally mysterious fashion. There is no publicly available list of projects. When information is sought under public information laws, only individual grants are disclosed, not the name of the legislator responsible. These funds are used for very specific organizations/projects. This allows them to tell constituents that they have delivered funds back to their home district. There are no guidelines, no priorities, and no accountability. In fact, I have heard that some legislators have had their names placed on structures as though they had contributed their own money. My own state senator lists his member items on his web site. This is a step in the right direction. However a reform is needed so that this $200 million can be allocated in some rational way to address major state priorities rather than multitudinous local projects.
My concern in this state election is not how much money someone delivers back home but what will he or she do to right this precarious fiscal ship. We must elect people who have the courage to think anew about the way in which New York government and governments are funded. To continue tinkering and cutting will only make matters worse. I have not yet heard any one address the above issues in a realistic way.

If we think we need change in Washington, we clearly need change in Albany.

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