New York is best off if Albany doesn’t agree on insane new spending

New York is best off if Albany doesn’t agree on insane new spending

Negotiations for the new state budget will likely go beyond Friday’s deadline, which is just as well given the alarm sounded by the nonpartisan Citizens Budget Commission: Gov. Kathy Hochul’s plan would soon put New York in a nasty fiscal hole, while the Legislature’s plans point to utter disaster.

The CBC’s new policy brief warns that Hochul would produce a $15 billion-a-year structural deficit by 2027, while the Assembly and state Senate proposals translate to a $20 billion annual hole.

Hochul’s plan widens the state’s structural gap to $15 billion while the Legislature’s proposals, by adding about $3.9 billion a year in new spending atop her budget, widen the gap to nearly $20 billion.

Baseline state spending already grew nearly $24 billion these last three years, after growing just under $20 billion in the previous nine.

And the vast federal aid that allowed those spending hikes is expiring.

Which means that, within a few years, New York will have to either slash spending or hike already nation-leading taxes through the roof — further accelerating the current exodus of jobs and taxpayers.

Gov. Kathy Hochul’s plan widens the state’s structural gap to $15 billion.
Matthew McDermott

To avoid the fiscal cliff, the CBC recommends some modest steps:

  • Restrain State Operating Fund spending growth to 2% a year. (Hochul’s plan is for twice that; the Legislature, three times it.)
  • Allow temporary tax increases to sunset as scheduled. (They’re a big part of what’s driving New Yorkers and businesses away.)
  • Maintain or expand the “rainy day” reserves. (Be ready for an all-too-likely recession.)
  • Reform budgeting and fiscal management to improve services, stability and accountability. (Things like standardized accounting and rational debt management go a long way to avoiding nasty surprises.)

It’s late in the budget game to change to a saner course, but this year a late budget (even a months-late one) may be the most prudent way ahead. Interim agreements can keep state government working at previous spending levels with no harm except to politicians’ drunken-sailor dreams.

Albany typically pays far more attention to special interests than to fiscal experts or screaming taxpayers. Now more than ever, gridlock serves the public’s interest.

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