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.”
New York State
On October 12th, the Office of State Comptroller released a current assessment of the financial condition of New York State that can be used to assess the ability of the government to meet current and future financial and service obligations. This 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. The trickle down affect of spending beyond means should be our number one concern. 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 also relies more on personal income taxes as a source of revenues (our share 40%) than most states, an increase of 7.2% since 2008.
The OSC report is not gaining the attention it should. Newsday posted a ‘clip’ notice with the heading “State Spending on New Yorkers is down.” Really! The amount is 1% 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 also 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%. 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.
Equally serious, on July 1st the Governor Office received from the Authorities Budget Office a report on the financial operations, practices of some 850 agencies. It found (1) we have more, not less agencies in operation, (2) spending that approximates 40% of our current state budget, (3) twenty-six state authorities with insufficient revenue streams to cover the cost of operations, (4) unproductive property tax abatements and, (5) 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 the 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!