From the Right: Gov. Cuomo’s fiscal games could hurt him

From the Right: Gov. Cuomo’s fiscal games could hurt him
George Marlin

Gov. Cuomo boasts he has reined in state spending by limiting budgetary growth to no more than 2 percent a year. This, he believes, sets a good example for local municipalities that must comply with the state law imposing a 2 percent spending cap.

Cuomo’s claim sounds pretty good considering his four predecessors generally pushed up state expenditures well above inflation levels.

For example, during Mario Cuomo’s 12-year tenure as New York’s chief executive, state spending grew by 123 percent while the compounded inflation rate was 65 percent. In other words, expenditures grew at an astounding average rate of 10.25 percent a year.

When it comes to our present governor’s 2 percent cap, however, the devil as always is in the details.

Cuomo was able to maintain his cap through most of his first two terms thanks to “windfall money” the state received from fines levied on various banking institutions and by abandoning his pledge to terminate the millionaire’s tax.

After factoring out Cuomo’s $1.5 billion in middle-class tax cuts, the millionaire’s tax has netted around $3 billion annually. That income paid for property tax rebates and other politically advantageous projects.

As for the “windfall money,” more than $2 billion was used as one-shot revenues in Cuomo’s state budgets.

Because Cuomo’s budgets were funded by the revenue streams described above, his narrative that “restrained spending” permitted him to do all sorts of great things was a lot of baloney.

Cuomo did not plan the fiscal outcomes: He was lucky. But now his luck appears to be running out.

Earlier this year, Cuomo utilized a fiscal trick: he quietly postponed a month’s worth of Medicaid payments from March to April, shifting $1.7 billion in spending from one fiscal year to the next.

To preserve his 2 percent spending cap pledge, it appears the governor is utilizing financial gimmicks once employed by his father.

To create the illusion of balancing budgets, Mario Cuomo raided revenues from various dedicated funds; bilked billions from the treasuries of the Common Retirement Fund for state employees, the State Insurance Worker’s Compensation Fund, the Mass Transportation and Highway Funds and the Medical Malpractice Insurance Association Fund.

He also deferred paying bills into the next fiscal year and came up with over $8 billion in “one-shots” to help fill his deficit holes.

Mario’s most notorious “one-shot” was the selling of Attica Prison to the Urban Development Corporation for $200 million raised via bonded debt.

That revenue scheme stuck the taxpayers with more than $560 million in principal and interest payments over 30 years to get $200 million to pay current bills.

Andrew is following in Mario’s footsteps.

In May, the Citizens Budget Commission released a report that dismissed Cuomo’s 2 percent cap claim. The CBC pointed out that after “accounting for prepayments, reclassifications, and other spending adjustments between fiscal years reveals State Operating Funds spending is projected to grow 4.5 percent in fiscal 2020, more than double the benchmark.”

To make it appear spending is contained, at least $4.7 billion has been taken out of the 2020 SOF. This includes $1.4 billion of the Metropolitan Commuter Transportation Mobility Tax, which has shifted off-budget. Another $315 million from the tobacco Master Settlement Agreement will be used “to pay certain Medicaid expenses off-budget.”

Other Cuomo fiscal gimmicks: “shifting State support for the State University of New York from SOF to capital; using the mortgage insurance fund to provide local aid; delaying a repayment to the New York Power Authority, and shifting certain costs of the New York State Energy Research and Development off-budget.”

In a July report on the state’s budget and financial plan, New York Comptroller Thomas DiNapoli confirmed the CBC findings. “Adjusting for the bookkeeping shifts but without counting the Medicaid deferral,” the Empire Center’s E.J. McMahon observed “DiNapoli’s estimates this year’s state spending increase comes to 5.7 percent. That number, not 2 percent, is closer to reflecting the state’s actual fiscal blood pressure.”

Blue smoke and mirror budgeting generally catches up with the conjurer, particularly when there is a serious economic downturn.

It did with Mario Cuomo. Voters rallied around the slogan that his government, “overtaxed, overspent and overregulated” and denied him a fourth term.

Will history repeat itself? If Cuomo seeks a fourth term while New York’s economy is faltering, I’ll bet his fiscal juggling will not quell voter outrage and he will suffer in 2022 the same fate his father did in 1994.

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