Remember these two numbers. The first is how much higher New York state’s local tax burden is than the national average. The second is the rate of growth of America’s economy in the third quarter of 2003 — growth that has passed over the Empire State. It is no stretch to say that the state’s tax number goes quite some way toward explaining why New York has been left out of the nation’s impressive growth number. All politicians like to spend, but those in New York state have made an art of it, and in doing so they have stifled the state’s economy.

The institution that came up with the 72% figure, the Citizens Budget Commission, reckons, in a report titled “Fixing New York State’s Fiscal Practices,” that there are a number of reasons behind the state’s sky-high taxes. One is that New York state has the most expensive Medicaid program in the country. The state spends double the national average for every beneficiary, and Albany pushes an unusually high portion of the state’s spending on Medicaid to New York City and the 52 counties.

In fiscal year 2002–03, the Medicaid match cost the city about $4 billion and took up 13% of its local tax dollars. As the CBC report explains, “A multitude of state policies create these high costs, including relatively generous eligibility rules for the elderly seeking Medicaid coverage for long-term care, high payment rates for nursing homes, and use of Medicaid funds to support graduate medical education programs at teaching hospitals.” This is what happens when the state government makes decisions that leave the city and county governments on the hook financially.

Another factor is the excessive number of government employees and the overly generous pay and benefits public-employee unions have secured. New York has 508 government employees for every 10,000 citizens, putting its ratio at 125% of the national average and second only to that of sparsely populated Wyoming. The salaries of these employees, in New York City, are 131% of the national average.

Outside New York City, according to the CBC, the State Public Employee Relations Board “has sometimes permitted unions to ‘whipsaw’ local government employers by arguing for large increases in the wealthiest jurisdictions based on ‘ability to pay’ and then arguing for similar compensation in other places based on comparability of work.” Furthermore, the CBC cites the state Legislature’s tendency to legislate enhanced benefits over the heads of the local governments.

The CBC proposes a number of reforms to bring the size of the state’s government under control, in the interest of lowering taxes. One is for Albany to adopt a balanced-budget requirement. Another is to create a nonpartisan Legislative Budget Office. Another is to create a “rainy day” fund large enough to stave off tax hikes during lean times. None of these ideas, however, sounds terribly promising. As E.J. McMahon told The New York Sun on Monday, “We have the heaviest tax burden in the country because we have the costliest government in the country.…And that’s because Albany made it that way.”

To get things under control, Albany would have to reduce the size of the state’s government — something the unions will be trying to block the Legislature from accomplishing. In the meantime, Mayor Bloomberg may be largely powerless to reduce Medicaid costs. But he could certainly be taking on the municipal unions, something he has failed to do to date. As the rest of the country booms with the aid of President Bush’s tax cuts, Mr. Bloomberg’s excuses for raising taxes as opposed to cutting spending are wearing thin.