Reviving New York
This article is from the archive of The New York Sun before the launch of its new website in 2022. The Sun has neither altered nor updated such articles but will seek to correct any errors, mis-categorizations or other problems introduced during transfer.
For three terms or the last 12 years, Governor Pataki’s administrations have produced little more than statewide economic stagnation. Some critics might even say these years produced retrogression.
If spending is one criterion of administrative drift, it is notable that the state budget went from $62 billion in 1995 when Mr. Pataki took office to today’s $110 billion.
It is instructive that the governor ran as a fiscal conservative vowing to control spending. So much for campaign promises.
It is also revealing that the Cato Institute’s report card of governors gave Mr. Pataki an A grade for “controlling expenses” in his first year in office, even though the so-called reduction involved financial legerdemain, to wit, transferring many social costs to off-budget expenditures. His final term grade is a generous D. As the recent Cato report noted, “He ended up as a big spender seemingly hell-bent on overturning anything good he had done in his first term.”
Now New York has a new governor and an old mess. Governor Spitzer not only has to try to clean up the errors of the past, he also has to pave a road for himself. Here then are 10 ideas that might set him on a useful course of action.
First, the governor ought to eliminate Member Items, which are appropriations earmarked for Assembly and Senate members. Although this is “only” a several hundred million dollar budget item, it reflects a legislature with provincial, rather than statewide interests. These expenditures are tantamount to a campaign fund, since providing lacrosse equipment or funding a cheese museum, which actually were items, simply gives incumbents exposure and photo opportunities. If the governor is serious about cutting expenses, this is an easy way to begin.
Second, state taxes can be cut by at least 25% if there are corresponding cuts in the budget. Should Mr. Spitzer entertain this idea, pressure can be put on the legislature for retrenchment. Tax cuts would make New York more competitive with contiguous states for capital and business investment, thereby offsetting budget cuts. This would be the New York State equivalent of supply-side economics.
Third, Medicaid — one of the state’s largest budget items — must be reduced. Mr. Pataki gets on TV and says, as children are running up stairs, “These are healthy New Yorkers,” encouraging poor New Yorkers to join the New York health care system, i.e., Medicaid. What he doesn’t say is that New York spends more on Medicaid than California and Texas combined. Are New Yorkers more than twice as healthy as Texans? Don’t these ads bloat the already bloated health care budget? Is it possible they are designed to burnish the governor’s image?
Fourth, the newly elected governor should examine the subtle “takings” in Adirondack Park, the nation’s largest public park. The state Parks Department has an acquisitions budget designed to expand the park further should an opportunity arise. As a consequence, properties are earmarked for purchase unbeknownst to property owners, thereby reducing the price of said property or making it impossible to sell.
Fifth, the State University of New York is invariably described in college guidebooks as “one of the great tuition bargains in the United States.” If Mary is deciding between, say, SUNY Binghamton and New York University, a private university, dad might argue that the difference between $3,500 annual tuition at a state school and $30,000 at a private one means that Mary can get the Dodge convertible she covets if she attends the state institution. Is it any wonder there are a host of new cars in the parking lots at the state universities?
A means test for tuition payment should be applied. Families with income over $250,000 would pay full tuition, and the rate would scale down to zero for families with income under $25,000. That would be fair. It also would engender true market-related decisions regarding college choice and greatly reduce government expenditures on state universities.
Sixth, the state government should finally bite the bullet and eliminate the last vestiges of rent control in New York City. This “temporary” postwar policy has long outlived its utility. Eliminating rent control would lead to an increase in real estate tax revenue and possibly would be a catalyst for desperately needed middle class housing development in the city.
Seventh, pension benefits for state employees have spiraled out of control. While those already receiving benefits might be grandfathered, future public employees should be put on a defined contribution rather than a defined benefit program. Under the former, retirement benefits are based on what an employee has put into the system, and which has been invested according to a strategy the employee selected. Under the latter, retirement benefits are predetermined based on a percentage of the employee’s salary for the last years of his formal employment. In time, this change would reduce budgetary pressure and give state retirees some control over their investment portfolios.
Eighth, New York State under the leadership of Mr. Pataki and friends has become a “pay to play” arena, where potential contractors must pay lobbyists. In one legendary instance, as reported in 2004 in the Daily News, Senator-now-lobbyist D’Amato received $500,000 from real estate developer Tamir Sapir for telephoning Virgil Conway, the MTA chairman, and convincing him to lease Mr. Sapir’s downtown building for the MTA’s headquarters. While such lobbying may not be illegal, in many instances questions arise whether deals are in the best interests of taxpayers and whether competitive bidding has truly occurred. Governor Spitzer would be wise to eliminate such influence pedaling.
Ninth, the borrowing formulas based on a Byzantine calculus of population and income provide too much latitude for a government that cannot manage a mandated balanced budget. The result is a huge budget line that is needed to finance the debt. If borrowing were narrowly circumscribed, debt relief would be just over the horizon.
Tenth, New York is saddled with commissions of every kind from power to horse racing. To put it plainly, these are patronage plums. Those fortunate to serve receive handsome dividends for infrequent meetings. It’s a great job if you can get it, and you can get it if you know the right people or you make the right connections and contributions.
Governor Pataki, as almost everyone in Albany knows, for some time has been detached from state affairs. Driven by ambition, he was planning his presidential candidacy two years ago. It is hardly surprising that the ship of state has been rudderless.
Now Mr. Spitzer has his opportunity. My proposals aren’t exclusive, and they certainly aren’t partisan. But they can set a tone. If Mr. Spitzer is interested in leadership, he might embrace these ideas and be the New York equivalent of the Nixon who went to China.
If not, if he goes along to get along, New York will be set on a path from Empire State to Vampire State with the blood of taxpayers leaving a trail as they leave this once majestic environment for places with economic life.