Tagged: budget solutions 2011

I’ve been asked to write about “solutions” to the state’s budget crisis. Would that I had one.

In financial terms, New York has two severe problems, which have come together politically this year. The first problem is short-term, and is something afflicting all the states to some degree: states are obligated to balance their budgets, and cannot weather financial downturns by running deficits the way that the national government can.

In this regard, we are actually better off than many other states. The governor is only talking about a 3 percent cut, after all.

But the “longer short-term” prospects may be bleaker, as normally the effects of the economy on state finances involve a greater lag time than the effects at the national level. We shall see.

For every dollar appropriated by state and lo­cal government in Cayuga Community College, taxpayers will see a return with a cumulative added value of $3.30 in the form of higher tax revenues and avoided social costs attributable to education.

The return on the community college investment nearly doubles the performance of stocks and bonds on the market. My point is this: While we at Cayuga Community College recognize the enormously challenging time New York State is facing, the proposed budget cuts (which drop our funding back to 1999 levels) make no sense economically.

But instead of simply adding my voice to the cacophony of complaints, I would like to propose a few fiscally healthy choices - a "recipe" for the state to find some savings.

When families are in debt, they are supposed to "tighten their belts" and cut back on expenses. However, if most families cut back at the same time, the economy would suffer from lack of demand.

Leading economists such as Joseph Stiglitz, Paul Krugman and Christopher Pissarides argue that austerity measures go in exactly the wrong direction and are more likely to result in lower economic growth, worsening unemployment and protracted recession.

Even if that's true, if you don't have the money, there is no choice but to make sacrifices, right? Not necessarily, depending on why the family is in crisis and who makes the sacrifices. If the parents were paying lavish allowances to the children and everyone was dining out on lobster every night, the solution is obvious.

It appears the state budget will not include a property tax cap, but – because many politicians ran on the issue – we should expect that it will happen this year.

Why are counties so worried about the proposed property tax cap? Because they provide state programs called “mandates," without accompanying state funding. Consequently, counties are forced to raise property taxes to pay for these state programs.

These mandates are actual bills counties have to pay, including for health care and legal defense for the poor, services for children with disabilities, welfare, and pensions for employees. These mandates – created, designed, and regulated in Albany – account for 90 percent of county tax levies around the state. In other words, we don't control the majority of our budgets.

New York spends two times the national average on Medicaid and cost per capita here is 100 percent higher than the next highest state. Since nobody in the Empire State is arguing that we get anywhere near our money’s worth from this bloated program, deep cuts should be in store.

Every year since 2005, New York State Assemblyman Robin Schimminger (D-Kenmore) has trotted out the same draft legislation that directs counties to set their own Medicaid options and eligibility levels.

His point: providing costly optional Medicaid benefits should not be required in this enduring recession, so let the locals decide. It’s a good idea that saves real money in hard times.

My assignment for this guest commentary was presented in rather enticing terms: to share a solution for New York State’s budget woes. “It can be an untapped revenue stream, it can be a cut, it can be a wild pipedream - it's up to you,” the invitation went.

If you’ve been around the state Capitol long enough, you would undoubtedly say that I chose the “pipe dream” option, because my proposed solution for New York’s fiscal woes is for lawmakers in Albany to provide school districts with relief from some of the big-ticket state mandates that often drive up school district costs.

Why a pipedream, you ask? Because these items often involve personnel costs, or come straight up against powerful special interests.