From the Right: Gov. Hochul’s unsustainable budget

From the Right: Gov. Hochul’s unsustainable budget
George Marlin

In Albany, budget theatrics between the governor and the state Legislature commence every February.

There is always plenty of public weeping and moaning and gnashing of teeth by both sides in the mad rush to negotiate an acceptable spending plan that both the executive and legislative branches agree on by April 1 when the new fiscal year begins.

Here’s a brief description of how the process generally works: The governor in both the State of the State address and in the budgetary message paints a dire picture of the state’s finances.

The statements contain dreary economic projections, particularly during a recession.

Fearing rising unemployment and declining economic activity (particularly on Wall Street), the governor lowballs the revenue expected from taxes and fees.

To eliminate a projected deficit the governor calls for reducing bloated bureaucracies and cutting programs, including aid to education and Medicaid.

To share the pain, the governor announces cuts in the executive budget.

Then there are all the fiscal gimmicks employed to lessen the fiscal blow. These include raids on surplus funds, one-shot revenues, and putting off payments of various invoices until the following fiscal year.

No sooner is the ink dry on the governor’s proposal, Progressives bellyache that the cuts and layoffs are excessive, and the revenue estimates are too conservative.

As the deadline approaches both sides buckle down and do serious negotiating behind closed doors.

While the governor has the upper hand in the negotiations to get in an on-time budget – that means compromise.

“When you compromise and both sides are unhappy,” Gov. Mario Cuomo once quipped. “That’s a budget.”

And then, after numerous late-night meetings and plenty of public posturing, old-fashioned horse trading, and outright buy-offs of individual legislators with pork barrel projects for their district, the Legislature passes a budget.

But that is not the way it’s working this year. It’s not the Hochul approach.

Instead of warning legislators that fiscal restraint is necessary because there is a looming recession, that federal one-shot COVID relief money has been exhausted, that record high taxes are driving top earners to Florida, that it will take at least three more years to reach pre-COVID employment levels, and then calling for spending cuts and tax relief—Hochul did the opposite.

The governor called for more spending to be paid by raiding reserve funds and increasing various taxes.

The budget the governor proposed is a record-breaking $227 billion, up $7 billion.

Apparently, the governor is not concerned that her reckless spending is not sustainable.

This despite the fact that Hochul’s own financial plan projects $20 billion in cumulative deficits between 2025 and 2027.

Another misnomer—the governor’s budget assumes top earners will stay in New York.

In recent years the state has lost over 10% of people earning over $750,000 a year. That’s $21 billion of lost taxable income.

Experts are projecting that this trend will continue. Thus, considering 2% of top earners pay 51% of state income taxes, if 100,000 more move out, New York’s tax base will be wrecked.

To pay off teacher and healthcare unions that supported Hochul last year, school aid will go up at least 9.8%—despite declining enrollment—and Medicaid will increase 9.3%.

Here’s a few other ludicrous items buried in the budget: a 70% increase ($700 million) in tax credits for the movie and television industry.

A $455 million “loan” to the moribund New York Racing Association. Additional pension benefits for state employees and additional health care benefits for undocumented migrants.

There’s also Hochul’s budgetary line item to ban the selling of gas stoves by 2030.

And let’s not forget that Hochul’s proposal is only the first step in the annual Albany kabuki dance. Gov. Hochul has proven to be a weak negotiator and I expect legislators will bully her into agreeing to a lot more spending.

The net result, the Empire Center for Public Policy rightly predicts, “it’s sure to be the same as years past: pushing New York further down the road of higher taxes, failing taxpayers and setting back the state’s long-term fiscal health.”

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