‘Stop playing games with the budget deficit’

In Columns by Hal PetersonLeave a Comment

On April 5, New York state Comptroller Thomas P. DiNapoli released a report showing that the state has, for decades, masked budget deficits by “shifting funds dedicated to a specific cause or program to provide one-time influxes of cash for the General Fund.” Net result: it is impossible to pin down the state’s real fiscal condition. He stated that every time this type of game is played, taxpayers lose.

On August 20, Gov. David Paterson proudly announced the Enacted Budget Financial Plan for 2010-11 “closes a $9.2 billion gap without deficit borrowing, reducing the multi-year (2013-14) budget deficit by $29 billion or 44 percent.

On January 20 Gov. Andrew Cuomo indicated he will close a $9-10 billion deficit by eliminating 15,000 state jobs, closing 20 percent of state agencies and departments and cutting Medicaid and education spending.

Watch the bouncing ball on what were are reading and hearing. The mess described by DeNapoli remains problematic, Paterson’s pronouncement fallacious and, Cuomo’s plan subject to practical and political machinations well beyond his control.

On a practical level the oft- quoted budget deficit continues to hang over our head as a dark cloud. It’s no wonder, with 159,656 individuals employed by 1,094 public authorities at a cost of $9.7 billion; and, an additional 131,000 attributed to the executive branch. The force reductions cited by the governor are not indicative of what actually needs to be done.

Operational costs add to our fiscal nightmare. Using information available on the Office of the State Comptroller’s web site, the operation of our state’s Senate and Assembly totals $142 million annually, 80 percent of which is wages and salaries.

Even more startling, the current budget defect we are dealing with is substantially understated because, unlike other state and local government obligations, our public authorities issue more debt than they can afford, “back-loading” the payment of principal. Game playing the repayment of debt is probably as disingenuous as reducing the number of agencies by 20 percent.

Gov. Cuomo is expected to shortly release his budget plan for 2011-12 which assumes a one- year salary freeze on the vast majority of public employees whose contracts are up for renegotiation as of April 1, 2011; and a cap limiting spending growth to the rate of inflation — most of which will fall into next year’s litany of unrealized expectations.

In summary, the need to stop the use of accounting gimmicks (and game-playing) is long past due. New York state’s public authorities continue to remain a massive and largely unrecognized influence on public policy and the use of public resources. Revenues are down and will continue to remain down, hardly offset by unsupportable tax increases. There are no easy fixes left with a balanced budget due April 1st.

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