Recently these columns expressed nostalgia for the tax-cutting, pro-growth George Pataki, the one first elected governor in the Republican Revolution of 1994, and there’s no doubt he made an appearance at the governor’s budget address yesterday. “We must control spending and reduce the tax burden that limits economic growth so we can put these fiscal difficulties behind us just as we’ve done in the past,” Mr. Pataki said. “The cornerstone of our efforts to create jobs has been cutting taxes. In fact, between 1995 and 2000 we cut taxes more than any state in the nation…By cutting taxes dramatically, we unleashed our economy, creating hundreds of thousands of new private sector jobs.” In addition to the tax cuts previously enacted, Mr. Pataki called for an additional $250 million in new tax cuts for New Yorkers.

Whether $250 million in new tax cuts will amount to a whole lot, we have our doubts, given the size of the combined state and city tax burden that is being carried by New Yorkers. And one of the things to bear in mind in respect to tax cutting is that the kind of cuts matter a lot, with the most effective at promoting jobs and growth being those on the next dollar earned. Yet the news in the governor’s budget speech was that even a glimpse of the old Pataki was a welcome return. “Let’s build on our momentum by sticking to the proven formula of fiscal discipline and tax cuts,” the governor said. “It is not a new prescription, but a proven one.”

Mr. Pataki also addressed New York’s biggest budget item, Medicaid, the costs of which are out of control. New York State’s Medicaid program spends $4,000 more per recipient than the next-largest spender, California. So it’s not a matter of the absolute size of the program. No doubt, much ink will be spilled over Mr. Pataki’s proposal to limit some services now covered by Medicare – dental benefits, psychological services, private-duty nursing, and so on – services that aren’t covered by most health plans that people actually pay for. It’s not logical for taxpayers to be asked to finance a health plan for others that is more luxurious than the plan they themselves have. These reductions of benefits are fair and necessary, but altogether they represent only $65 million of Mr. Pataki’s proposed $1.9 billion in savings.

The great bulk of Mr. Pataki’s savings come from his proposal to cut the reimbursement rate the state pays to hospitals. Since the state is the largest payer of health care costs, the hospitals will have to accept the lower reimbursement rate. But the costs will end up being passed on to the customers that purchase services from the hospital in the first place. If there is a logic to this it is that when consumers have to bear more of the cost of medical services, wasteful medical procedures will become rare. Still, we can’t help pointing out that passing the costs on to New York’s customers is a nickel-plated, monkey with a parasol way to restrain Medicaid costs.

Mr. Pataki only glossed over the issue of nursing-home care in his speech, proposing a new Access to Home Program to enable individuals to choose home care as an alternative. In truth, however, elder care costs account for about half of the state’s total Medicaid budget. Fewer than 15% of New York’s nursing-home residents pay for the service themselves. No other state in the Union is so generous. Publicly funded nursing-home care represents the largest middle-class entitlement in New York – and it’s what drives up costs in the state. While New York’s per patient expenditure is about $11,000, the Medicaid health care plans for poor recipients cost less than $6,000 per recipient. It’s the cost of nursing home care that’s pushing up Medicaid spending.

If Mr. Pataki is serious about getting Medicaid costs under control, he would be well advised to try to revise New York’s overly generous terms for putting the elderly on Medicaid. This portion of the budget promises to become even more serious as New York’s population ages more rapidly, especially upstate. The state takeover of Medicare will help alleviate the burden felt by upstate communities that continually need to raise property taxes to meet their health care costs. But this only buys time. It doesn’t solve the problem.

When it comes to school reform, we agree with the speaker of the state Assembly, Sheldon Silver, who observed that Mr. Pataki’s budget “completely ignores” the court decision in the Campaign for Fiscal Equity suit that set the stage for spending billions of dollars more on education in New York City. But, we say, good for the governor. “You and I know that we didn’t need a court to tell us that the school funding formula was broken and unfair,” Mr. Pataki said. Instead, the governor introduced his own new school aid formula. Mr. Pataki’s budget increases school funding by $526 million, a more sensible amount – and the largest increase ever proposed by a governor.

We would have liked Mr. Pataki to go further in demanding accountability. The federal No Child Left Behind Act’s “Reading First” program, for example, will fund only schools that use methods proven to be effective at teaching reading. Last year, the city’s reading program failed to qualify for funds. So if the state wants to improve outcomes in New York’s public schools, it would ensure that new funds come with the proviso that they be spent on effective teaching methods. That way, the state would move beyond tossing money at schools and actually look at what goes on in the classroom.

As for the missing billions, no one should be surprised to find it missing from Mr. Pataki’s budget – because it doesn’t exist. If Mr. Silver wants to add billions more in aid to failing schools, let the Democrats in the Assembly draft a proposal to raise taxes on New York’s families. Or let the courts order a bankrupt state to send billions of dollars to a bankrupt city. In the meantime, we applaud the governor for recognizing the obvious: You can’t spend money you don’t have.