Happy endings are more Hollywood than Albany. But last week, New York’s legislature enacted the state’s annual budget on time, closed a $10 billion hole without new taxes, dropped a so-called “millionaire’s tax” that invited entrepreneurs to leave the state, and even scrounged up a few extra bucks for the state’s schools.
OK, so it isn’t exactly a happy ending. It’s more like a good beginning. But for the first time in a long while, at least we have a reason to stick around to watch more of the movie, rather than run for the nearest exit.
Jokes about April fools aside, New York’s unusual start to the fiscal year was determined by a long-ago accounting gimmick – one of countless many in the state’s sorry financial history. (Most states’ budgets are due on the first of either January or July.) Actually having a budget on that date is rare; only six budgets have been adopted on time since 1975, according to The New York Times. Last year’s budget wasn’t adopted until Aug. 4, and it has been five years since the state met the deadline.
This is in spite of Albany’s peculiar custom in which only three people have to agree on a spending plan: the governor, who signs it, and the leaders of the majority parties in the state Assembly and Senate, who can order their minions to vote as directed and therefore relegate the opposing party members to the role of spectators.
Getting a budget passed on time is one thing. Getting a sensible budget passed is another thing altogether. Amazingly, this year, New York has done both.
First-year Gov. Andrew Cuomo, a Democrat, has received the greater part of the credit for this minor miracle. Cuomo allied himself with Senate Republican Leader Dean Skelos to hold the line on taxes and spending, despite vigorous objections from many in his own party. The governor’s manoeuvre boxed out Assembly Speaker Sheldon Silver, a Manhattan Democrat, who finally advised his fellow Democrats to take Cuomo’s deal for lack of options. Silver is, if nothing else, a man who thoroughly understands how much he can get – and how much he can’t. This year, he knew that he could not get any more than Cuomo and Skelos were willing to give.
Silver was a power centre in Albany in recent years. But that was in an Albany that had a distracted and flawed governor in Eliot Spitzer, followed by a completely dysfunctional one in David Paterson, his accidental replacement. Cuomo, on the other hand, seems to distinguish himself from his fellow Democrats by understanding that New York’s spiraling taxes and increasingly absurd tax structure will eventually drive the state’s big earners to practice their law, banking, investing and accounting elsewhere.
New York City Mayor Michael Bloomberg, whose party affiliation fluctuates with the snow depth in Central Park, certainly showed no such understanding. He called the new budget “outrageous” and “unfair.” Democrats and union allies tried to generate a Wisconsin-inspired sleep-in, but it was too little too late. State troopers denying pizza delivery and a protester hitting a legislative staffer with a cymbal might make some good comic relief for the film version, but had no real effect on the legislative process.
Of course, Cuomo risks a backlash from New York’s powerful unions if he continues to cut against the grain. But that will only matter if Cuomo faces a significant primary challenger in a potential 2014 re-election bid. It is difficult to identify such a challenger right now.
In any case, Cuomo may be positioning himself to be the kind of Democrat who can succeed in a presidential race against a Republican fiscal conservative in 2016. By that time, if Barack Obama is re-elected in 2012, the country may not be able to afford any other kind of Democrat.
New York still has a long way to go before the term “fiscal conservative,” or even “fiscally sane,” can reasonably be applied to anyone or anything coming out of Albany. State Medicaid spending exceeds that of California and Texas combined. One in four New Yorkers is on Medicaid. The state’s debts and obligations encompass scores of agencies and public authorities, whose accounting is deliberately Byzantine. Its economy north of metropolitan New York City is a nearly unrelieved mess, entirely dependent in many areas on bloated public college and prison systems for jobs. Its tax structure encourages people who run businesses – people like me – to start them elsewhere, build them elsewhere or move them elsewhere. Its cost of living encourages employees to gladly accept offers to transfer to warmer, financially friendlier climes.
Passing one reasonable and on-time budget does not come close to addressing New York’s problems. But it is still a good start. Let’s invest in some popcorn and see where Cuomo’s movie goes from here.
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