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Don't Hike Taxes, Cut State Spending


Don't Hike Taxes, Cut State Spending

April 7, 2003
Urban PolicyNYC

Not only did labor unions and health-care groups stage a big rally in Albany last week, they're mounting a multimillion-dollar ad campaign to shock and awe the Legislature into restoring billions in spending to Gov. Pataki's proposed budget. As a result, the conventional wisdom in Albany is that a big state tax increase is inevitable.

But there is another, better choice. To minimize risky borrowing and avoid imposing higher taxes on a struggling economy, the governor and legislators should be looking at more ways to save money.

What follows is a by-no-means-exhaustive list of suggestions for saving at least $1 billion more in 2003-04:

Cut the state payroll. Pataki has proposed a cut of 5,000 jobs out of roughly 220,000 full-time positions in the executive, legislative and judicial branches of state government. Eliminating another 15,000 jobs would generate at least $550 million in savings next year, after the cost of severance pay and benefits for affected workers. In the next year, the savings would be more than $700 million.

Revisit Medicaid. Enacting some of Pataki's first-term proposals to eliminate several optional Medicaid services such as dentistry and private-duty nursing would save at least $200 million a year and generate roughly equal savings for county governments and New York City, which share in financing Medicaid.

Rein in health expenses. The $4 billion Health Care Reform Act program needs to be greatly reduced over the next few years. The state can immediately save $96 million by eliminating two clearly dispensable offshoots: discretionary health care grants controlled by legislative leaders and the Healthy New York program of subsidized health insurance for small businesses.

Shrink unnecessary borrowing. At least $47 million a year in debt service could be saved by eliminating nonessential economic development projects and low-priority items such as open-space acquisition, recycling, farmland preservation and preservation of historic barns.

Reduce arts grants, eliminate public broadcasting subsidies. Reducing the state Council on the Arts budget to the current 50-state average of $1.22 per capita would save $21 million. Eliminating state subsidies to educational TV and radio would save an additional $11 million.

Eliminate rent regulation. Allowing the city's rent-stabilization laws to expire June 15 would unleash free-market forces to help solve New York's housing problems. It also would save the city and state nearly $40 million a year in administrative costs.

Empty the pork barrel. The state should cancel $75 million in low-priority legislative items for everything from economic development grants to improvements at Little League fields.

Repeal the Wicks Law. Repeal of Wicks, which requires most public construction projects to use multiple contractors, would mean at least $105 million in savings on state aid to school districts alone. Tens of millions more could be saved by enacting the governor's proposed reform of prevailing-wage laws, which create competitive advantages for more costly unionized contractors.

It's time for the state Senate and Assembly to start making tough choices. The alternative, as Pataki has forcefully stated in opposing broad-based tax hikes, will be to risk destroying private-sector jobs and doing more damage to New York's still-shaky economy.