Gov. David Paterson painted a scary picture of New York’s finances in a statewide address this week, pointing out a $6.4 billion state budget deficit and calling the state Legislature back into a rare summer session to address a situation that he said, “will get worse before it gets better.”
But just how did it get so bad?
For starters, Paterson said that the 16 banks which pay the most taxes on their profits remitted only $5 million to the New York State Treasury in June, down from the $173 million they remitted last June. Revenue from Wall Street – which represents about 20 percent of all state income – is way down, and the state is facing a $26.2 billion budget gap over the next three years. And in calling the Legislature back to Albany to address the crisis, Paterson ordered executive state agencies to reduce their spending by $630 million this year, part of a series of steps that he says will produce $1.2 billion in savings, eliminating the current year shortfall in the budget.
But the problems run much deeper than this year’s budget cycle. New York has continually been one of the most mismanaged states in the union, ramping up school aid unabated and shifting burdens (like Medicaid) to counties and towns rather than address the funding at the state level. State leaders have continued to spend even as it became clear that they were running a deficit. It’s a simple financial truth – don’t spend more than you take in. But that message has gone unheeded in Albany for the past several decades, and with the country now facing a recession, New York is in an equally grim position.
In his speech on July 29, Paterson hit on a key point. He said: “New York’s families are already making the tough choices. Every time you fill up a tank of gas or go to the supermarket, you are learning to do more with less. New Yorkers are prioritizing spending every day. … Now your government is going to follow your lead.”
Easier said than done, governor, but at least Paterson had the frankness to address the entire state, an unusual move for a sitting governor. By ordering spending reductions, instituting a hiring freeze on state agencies and forcing the Legislature to reconsider this year’s budget, he clearly understands the gravity of the situation. Whether our other elected officials do as well still remains to be seen, but regardless, the state must cut spending immediately. Continued high oil prices and a lack of consumer confidence mean that the state won’t be seeing an increase in revenue any time soon. It’s not a time for panic yet, but we must force our legislators to make tough decisions about this state’s financial future without placing additional burdens on our local municipalities. The time for responsible action is now.