Tale of Two Budgets
February 3, 2003
By E.J. McMahon
WITH New York's future at risk, Gov. Pataki and Mayor Bloomberg are taking sharply contrasting approaches to closing huge budget gaps.
Or are they?
Pataki has positioned himself as the born-again fiscal conservative, stressing the need for spending restraint to avoid "job-killing" tax hikes.
Bloomberg, the self-professed liberal, has defended the efficiency of city government while imposing a record $1.7 billion property-tax increase.
But on closer inspection, the differences get blurry. For example, although his budget would press forward with $177 million in scheduled tax cuts, Pataki is also calling for $1.4 billion in new taxes and fees - the biggest such package since Mario Cuomo's "big ugly" budgets of the early 1990s.
Despite all the headlines about "cuts" and "pain," spending would (at best) remain virtually flat next year under both the Pataki and Bloomberg budgets. The governor, however, is doing little to permanently bring spending under control.
In fact, during the two "out years" after fiscal 2003-04, the overall state budget will be on track to grow by 8.2 percent - including an eye-popping 14 percent in spending from the tax-supported general fund. Bloomberg's city budget for the same period is projected to rise by a total of 5.5 percent.
To be sure, Pataki is right and Bloomberg dead wrong on the crucial issue of avoiding broad-based tax hikes, which would damage New York's economy. But the governor will find it much easier to actually live up to his anti-tax rhetoric, now and in the future, if he follows the mayor's lead in at least two areas:
Labor productivity: Bloomberg is belatedly turning up the heat on city employee unions to deliver $600 million in permanent concessions - implying that if he doesn't get it, he'll have to eliminate another 12,000 positions.
Pataki is taking a much more easygoing approach to workforce issues, barely hinting that Albany's politically powerful unions have any role to play in helping to close the state's massive budget gap. Having reduced the headcount significantly during his first two years in office, the governor seems content to rest on his laurels and settle for a minor additional downsizing and reorganization of state agencies in the year ahead. The word "productivity" was conspicuously absent from his budget message.
With the state's major employee contracts all due to expire at the end of March, Pataki could achieve significant savings by pursuing the same general collective-bargaining objectives as Bloomberg - such as lengthening the work day and eliminating automatic pay increases based on longevity.
The governor should also join the mayor in seeking reform of New York's unaffordably generous public-employee-pension system - another issue on which Pataki so far has been silent.
Medicaid: New York's outlandishly high spending on this program - more than California and Texas combined - is again in danger of spiraling out of control after a period of relative stability earlier in Pataki's tenure.
Bloomberg has joined county executives from around the state in asking for Medicaid cuts that would save the city alone $200 million a year on a recurring basis. But Pataki appears to have ignored most of their ideas, instead trotting out a $1 billion Medicaid "savings and realignment" plan that appears to do relatively little for the counties, and may actually add to the city's burden.
At a minimum, the governor needs to revive the kind of Medicaid cost-containment proposals he was willing to advance in 1995 and 1996, including the elimination of some optional services. This approach would result in real, permanent savings for the state, city and counties. Anything less will lend more credence to the notion that Pataki is less interested in cutting costs than in shifting them to local taxpayers.
On balance, Pataki is at least talking a better game than Bloomberg on the make-or-break issue of taxes and the economy. But the governor's inability to match even the mayor's all-too-modest savings goals in some key categories is not an encouraging sign for the future.
E.J. McMahon is a Manhattan Institute senior fellow.
©2003 New York Post
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