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New York Post

 

Eliot's Spending Surge

February 01, 2007

By E. J. McMahon

WHEN it comes to overall spending, Gov. Spitzer's "new paradigm" looks a lot like the old one.

The state-funded portion of Spitzer's $121 billion Executive Budget (excluding federal aid) calls for a spending hike of 7.8 percent - three times the projected inflation rate for the state's 2007-08 fiscal year, which begins April 1.

This is larger than any of the spending increases that George Pataki proposed in his last eight years as governor. In fact, it's the biggest proposed hike since Pataki ended three years of tight fiscal austerity with an election-year budget blowout in 1998.

The unveiling of Spitzer's budget only marks the start of a process that will inexorably drive the total upward. In Albany, as in most state capitals and in Washington, lawmakers customarily view the executive's spending proposals as a floor for further negotiations.

As shown in the chart nearby, New York's Legislature usually adds significant spending to the governor's budget before agreeing to a final deal. (A similar chart for Mario Cuomo's 12 years as governor would show a similar pattern.)

The rare exceptions to the rule in the Pataki years include:

* 1998-99, when Pataki proposed an exceptionally big spending increase of nearly 9 percent - and then succeeded in vetoing many legislative additions.

* 2001-02, when the Legislature's spending demands were necessarily tempered by the revenue downturn in the wake of the 9/11 attacks.

* 2002-03, when further sharp drops in revenue forced the governor to make significant mid-year adjustments in enacted spending.

In his last four years as governor, the cumulative total of Pataki's proposed hikes in state-funds spending was 17 percent. But the budgets enacted over this period - including legislative add-ons that Pataki agreed to, and others he unsuccessfully tried to veto - raised spending by 35 percent.

This included a net increase of more than 11 percent in fiscal 2006-07 - the biggest surge in state spending since Cuomo's heyday in the 1980s.

And Spitzer's proposed hike in state-funds spending is even bigger than what Pataki proposed last year.

The factors driving up Spitzer's first budget include a whopping $1.4 billion jump in school aid, a $1.5 billion rise in state-subsidized property-tax relief and $1.6 billion in capital projects (mostly supported by bonds). But Spitzer's proposed reforms to the health-care-financing system would hold the growth in state-funded Medicaid spending to $268 million, avoiding further added costs of over $1 billion.

The state can continue to afford all this new spending thanks to billions of dollars in accumulated surpluses generated by Wall Street activity and real-estate gains - the same factors that have pumped up Mayor Bloomberg's city budgets.

But this is only a temporary cash surge. Even assuming the governor's proposed budget is adopted without any changes, the state will be facing a $2.3 billion budget shortfall a year from now - growing to $6.3 billion by the end of his first term in 2010-11 if no further changes are made.

Spitzer acknowledged as much yesterday, when he said the budget represented the start of his efforts to exert more control over spending.

New York's new governor obviously is confident he can succeed where his predecessors failed by curbing the Legislature's propensity to spend like there's no tomorrow. Having set a high floor in other areas, he clearly is devoting most of his political capital to winning the pivotal fight to control Medicaid spending.

If he fails, his term is likely to begin with another year of double-digit spending growth.

Original Source: http://www.nypost.com/seven/02012007/postopinion/opedcolumnists/eliots_spending_surge_opedcolumnists_e_j__mcmahon.htm

 

 
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