So, what’s the problem? The economy

Hal Peterson

I believe David Brooks described what we are witnessing best in a recent New York Times column dealing with two apparent economies. One, he named the ‘tradable sector’ that requires continuous innovation and streamlining to survive. Economy II takes into consideration primarily “government–sector’ entities that do not have the sword of Damocles hanging over them and as a result “tend to get bloated and inefficient over time.” He cites health care spending, which has increased twice as fast as the G.D.P with no comparable gains in health outcomes and, education spending/results as two prime examples. He concludes, the “bloated Economy II has become a burden that Economy I, can no longer afford.”

On October 12th, the state comptroller released an assessment of the state’s financial condition that can be used to assess the ability of the government to meet current and future financial and service obligations.

The report identifies a wide range of serious concerns, including evidence that while tax receipts have increased $17.4 billion since 2008, spending during the same period of time, almost doubled the rate of inflation.

New York has the third highest combined State and local taxes as a percentage of personal income in the nation with local taxes ranking first. New York relies more on personal income taxes as a source of revenue (our share 40 percent) than most states.

This report is not gaining the attention it should. Newsday posted a ‘clip’ notice with the heading “State Spending on New Yorkers is down.” The amount is 1 percent from the prior year, to a current level of $133.5 billion. No mention was made of $3.8 billion of borrowing used to offset current spending; or, projected budget gaps of $3.6 billion and $4.4 billion in the fiscal years starting in 2014 and 2015, respectively.

State Comptroller Thomas DiNapoli mentions in his cover letter “A truly sustainable fiscal course would become more attainable if the State implements comprehensive reform of both our budgetary, spending and debt practices.” I couldn’t agree more. Our lawmakers, starting with the governor, have not sufficiently focused on how our resources must be better managed to reduce the cost of operations to an affordable level. Is this a provable indictment? You be the judge!

When Governor Cuomo first took office he established a Spending and Government Efficiency (SAGE) Commission to study how to reduce the number of existing agencies and authorities by 20 percent. Twenty-two months later and counting, not a creature is stirring, not even a mouse, and any thought of doing anything worthwhile has been left to yet another day.

On July 1, the governor’s office received from the Authorities Budget Office a report on the financial operations, practices of some 850 agencies. The report found we have more, not fewer agencies in operation, spending that approximates 40 percent of our current state budget, 26 state authorities with insufficient revenue streams to cover the cost of operations, hardly productive property tax abatements; and, evidence that some “board members lack the knowledge in the financial or operating practices of the authority they serve.”

Has this report been used? Absolutely not! Discussions with a staff member reveal that the Authorities Budget Office has “never gotten an official reaction from a state elected official concerning any aspect of their findings or recommendations.”

So, we’re back to square one. Intent has been long established and performance lags behind. If you want a more optimistic assessment consider the following narrative in 30- and 60-second TV commercials endorsed by governor Cuomo at a cost of $50 million:

“This is New York State. We built the first railways and the first trade routes to the West. We built the tallest buildings, the greatest empires, pushed the country forward. Then, some said we had lost our way. We couldn’t match the pace of the new business world, etc. We are building a new New York, Promises Made/Promises Kept.”

Problem solved! We’ve been had!