It’s a good thing the property market is still hot in the city, because, if Governor Pataki doesn’t veto the legislature’s budget, New Yorkers are going to have to mortgage everything in sight to pay for it. Residents of the five boroughs in particular might see headlines about the $11.2 billion in capital funds for city schools and think the city has come out a winner, but a glance at the details shows that they would be wrong. That money will have to come from somewhere, and “somewhere” in this case happens to be the pockets of future generations of New Yorkers.

The legislature has come in nearly $2 billion over the governor’s executive budget proposal. The legislative plan increases spending by anywhere between 6% and 9%, depending on whom you ask. The head of the Manhattan Institute’s Empire Center, E.J. McMahon, has been quoted in the press calling this the “biggest budget blowout since 1994.” Legislators haven’t learned their lesson on spending restraint, and they haven’t gotten the message on tax cuts, either. Leaders are trumpeting sales tax reductions, property tax rebates, and child tax credits. But there are no reductions in corporate or personal income tax rates, and that $330 child tax credit is but a shadow of the $500 education tax credit the governor had proposed, which itself was a mere shade of the $1,500 tax credits some lawmakers had suggested.

So if they’re cutting some taxes, albeit not enough, while hiking spending far too much, where exactly is the money going to come from? The future. Consider the vaunted $11.2 billion in school construction funds Albany plans to ship to New York City. It’s just Three-card Monte with 10 zeroes. The first $1.8 billion will come from bonds issued by the state’s Dormitory Authority – yes, there is such a thing. The rest will come from bonds to be issued by the city Transitional Finance Authority. The city will actually borrow that $9.4 billion, but will pay it back with money to come from the state.

The last thing New York needs, however, is more debt. Last year’s budget authorized $13 billion in new borrowing between 2005 and 2010. So coming into this year’s budget process New Yorkers were already facing debt that, by 2010, will total nearly $56 billion, an increase of more than 287% since 1990. While California has a larger debt in absolute terms, on a per capita basis New York edges out the nation’s most populous state by 60%. Before Albany got warmed up this year, every New Yorker was going to owe $2,881 by the end of the decade. It’s too soon to say how much that will increase by the time the dust settles this year.

Now, instead of using a projected surplus of between $2 billion and $4 billion to take even a small bite out of that debt, lawmakers are piling on top of it. Some will blame the $4.1 billion in various tax cuts for eating up the surplus, but that’s a dodge. If legislators aren’t going to pay down the debt, they could at least have avoided making it bigger. If Mr. Pataki doesn’t use his veto pen to provide some adult supervision, start preparing yourself now for the shock that awaits when the state’s comptroller, Alan Hevesi, prepares his next annual report on the enacted budget.

All this debt will come due one day, and pity the Empire State’s taxpayers. If lawmakers don’t succeed in cutting spending – there’s always hope, but not much after this latest performance – taxpayers in the future will be saddled not just with the costs of tomorrow’s current spending but the bitter aftertaste of today’s, with interest. New Yorkers already pay some of the highest taxes in the country, and they aren’t even funding the state’s full current spending.

There is still hope. Mr. Pataki has struck a skeptical pose. He could do every New Yorker a favor by vetoing this budget compromise and forcing the legislature back to the drawing board. Doing so would force the budget to come in past the nominal April 1 deadline, but a tardy good budget is better than a timely terrible budget. The choice now is between being a day late or a dollar short. We’ll take the former.