Remember what Oliver Hardy would do when the going got particularly tough? He'd turn to Stan Laurel and proclaim, "Here's another nice mess you've gotten me into!"
Now in the comic's defense, he legitimately could get away with deflecting the blame. And it was entertaining.
But that's not the case for many of our legislative leaders, union heads and others across the state who want to coat themselves in Teflon when talk turns to closing a projected state budget gap that would run as high as $12.5 billion deficit next year. Not only do they insist they're not part of the mess, they're also unwilling to be part of the solution.
Gov. David Paterson, to his credit, has stepped up as a leader and laid out the facts. New York State has long relied on Wall Street revenue and raising taxes to cover its spending needs.
In fact, Wall Street accounted for 3 percent of New York State's employment, 9 percent of its gross domestic product and 20 percent of the state's tax revenue.
That brings the current nationwide financial crisis particularly close to home. The governor has estimated as many as 45,000 layoffs in New York's financial sector, and as many as 160,000 private-sector jobs statewide this year, with more expected next year. He has said he expects Wall Street bonuses-a great source of state tax revenue-to fall 43 percent in 2009 and 21 percent in 2010. And despite lawmakers in August cutting $600 million from the current fiscal budget, the deficit has since mushroomed to $1.5 billion. If current trends continue, that will climb to $12.5 billion next year, $15.8 billion in 2010-11 and $17.2 billion in 2011-12, for a total of $47 billion over four budget years.
The governor has said that given the enormous size of the gap and scope of the crisis, all areas of the state budget must be up for discussion. Nothing is sacred, he said, including health care, education or the state's work force and its benefits. That seems fair-a form of sharing the pain for the greater good. But he also asked state leaders to share in crafting a solution, and the lack of response-or in some cases counterproductive response-is what I find most unsettling.
When faced with a large gap between revenue and expenses, a CEO calls together the company's management team to look for ways to raise revenue, as well as aggressively cut expenses. That's the model the governor is following, but he's not getting a lot of helpful feedback.
Leaders of the Unshackle Upstate coalition were among those the governor asked for budget-balancing suggestions. We were pleased to be included in the discussion, and last month we sent a letter to Gov. Paterson, Assembly Speaker Sheldon Silver and Senate Majority Leader Dean Skelos outlining our ideas. We started by stating emphatically that the state must not raise taxes. New Yorkers already bear the highest state and local tax burden in the nation, which has helped fuel the exodus of businesses and residents to lower taxing states with better job opportunities. For those same reasons, raising taxes on the wealthy is not an answer either.
We also offered suggestions for $7 billion in cuts, including $2.2 billion that could be saved by holding school aid spending flat to the 2008-09 level, $2.4 billion by holding Medicaid spending at current levels, and more than $2 billion in savings that could be achieved through consolidating and centralizing state government functions and restructuring public employee compensation. Our letter includes very specific suggestions for achieving those savings in each of the areas.
Some will question why we chose those areas to target and the answer is simple: Education and health care comprise 70 percent of the budget, so to achieve any real savings, these areas must be carefully scrutinized. And in proportion to its population, New York has more public-sector employees than any other state in the nation, so the size of the work force and the scope of its benefits also deserve serious study.
I'm sure there will be many that will disagree-some vehemently-with Unshackle Upstate's analysis and suggestions. But at least we're putting something out on the table for discussion, which is more than I can say for others.
So far, the governor's request for input has been met with a lot of talk about what various groups aren't willing to do-make any cuts to education, make any cuts to health care, renegotiate state employee's contracts. There have even been suggestions that the governor has overblown the crisis, and that it should be handled only by increasing revenues, such as tapping into reserves or imposing new taxes.
It's that kind of talk, that lack of cooperation, that so frustrates me. This is a nice mess we've all gotten ourselves into, through years of overspending, overtaxing and overreliance on streams of revenues that were not guaranteed. As we told the governor and legislative leaders, in this crisis lies the opportunity for state leaders to undertake long overdue reforms, to undertake a much more thoughtful and enduring response-a restructuring of state government programs that brings their cost in line with realistic, long-term revenue projections.
The business community, through Unshackle Upstate, plans to be part of that discussion. We urge other leaders around the state to change their tune and join in.
Sandra Parker is president and CEO of the Rochester Business Alliance Inc. Contact her at SandyP@RBAlliance.com.
11/21/2008 (C) Rochester Business Journal