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New York Post

 

Gov's Hidden Perils: Dubious Details in New Budget

January 28, 2013

By E. J. McMahon

Dubious details in new budget

A few days before his latest state budget presentation, Gov. Cuomo did his best to dampen expectations that it would produce any surprises, telling The Post’s Fred Dicker: "I’m going to be taking it as more of an opportunity for what we can be doing affirmatively, but there’s not going to be any major problems revealed."

In other words: Nothing to see here folks — move on.

Sure enough, there was little to gawk at in the 2013-14 Executive Budget unveiled last Tuesday — on the surface, at least. We’ve certainly seen worse from Albany over the past 30 years. We’ve also seen better.

Two years ago, Cuomo closed a $10 billion gap with politically daunting spending cuts. Since then, while the governor’s rhetoric has stayed tough, his policies have reverted to a more traditional Albany approach: muddling through.

On the plus side, he continues to hold the growth in state-funded spending (not counting, for example, Sandy-inflated federal grants) below the anticipated rate of inflation, in large part by continuing to streamline and consolidate agency operations while keeping a lid on local assistance.

In what is likely to be his main bone of contention with a mostly tame Legislature, Cuomo wants to pad a 3 percent increase in aid to public schools outside New York City by redirecting a chunk of the $240 million that the city forfeited by failing to settle on a teacher-evaluation plan. The budget also assumes the state will continue to live within a 4 percent cap on the growth of Medicaid spending, although this requires a deal with the federal government that has yet to be firmly nailed down.

Meanwhile, to finance some capital spending next year and to help close budget gaps in later years, Cuomo plans to tap the off-budget State Insurance Fund for up to $1.75 billion over the next four years. From the fund’s standpoint, the money will become "excess reserves" as the convenient byproduct of a change to workers’-compensation accounting rules, part of a package of proposed reforms that are also expected to generate modest rate reductions for businesses.

The maneuver inevitably calls to mind a series of shameless state budget raids on the same fund between 1982 and 1990, which left the government-run insurance carrier with $1.3 billion in worthless IOUs on its balance sheet. No empty repayment promises will be required this time around, but the insurance-reserve shuffle is a sobering reminder that, even after repeated spending cuts and tax hikes in the wake of the Great Recession, New York state still can’t soundly balance its budget and meet its capital needs with recurring revenues alone.

While it doesn’t directly affect the budget’s bottom line, Cuomo also wants to let local governments and school districts outside New York City dramatically underpay their pension bills over next few years, on the pretext that they’ll make it up with bigger savings in the long term as a result of his recent "Tier 6" pension adjustments for newly hired workers. Fortunately, this gimmick can’t move forward without the approval of state Comptroller Thomas DiNapoli and the trustees of the state teachers’ pension fund, who have good reason to block it.

As advertised, the budget contains "no new taxes" — no brand new taxes, that is. But it does extend a couple of temporary tax hikes enacted just four years ago.

The largest will raise nearly $1.8 billion over the next four years from maintaining what is technically an "assessment" on utility ratepayers. The other tax increase eliminates a chunk of the charitable deductions that can be claimed by taxpayers at the rarified income level of $10 million and up. Since these folks give a lot to charity, the revenue haul will be a cool $420 million between now and fiscal 2017.

Another troubling budget detail establishes an unprecedented $84 million operating subsidy for the state Thruway Authority, to which the governor agreed late last year after its board was forced to back down from a toll hike.

For nearly 60 years, the Thruway Authority was able to get by on its own ample revenues. Now it will be indefinitely dependent on the state’s general tax base to help make ends meet. The same tapped-out agency will be responsible for building the new Tappan Zee Bridge, which Cuomo has adopted as an overarching symbol of his ability to Get Things Done.

But the scarcity of fiscal resources hasn’t stopped Cuomo from proposing a five-year, $2 billion allocation of state tax credits for made-in-New York film and TV productions. Whatever else is lacking in the governor’s vision of "NY Rising," the entertainment industry will continue to enjoy a hefty subsidy from New York’s taxpayers.

Original Source: http://www.nypost.com/p/news/opinion/opedcolumnists/gov_hidden_perils_4gL26VqOo8U3Y9Sx5IV6YM?utm_medium=rss&utm_content=OpedColumnists

 

 
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