April 13, 2006

Governor Pataki cut an interesting swath yesterday with 202 separate vetoes of spending items and tax cuts approved by both houses of the state legislature.  His decisions were the lead story in this morning's New York Times, a lengthy account by Danny Hakim (pp A1 & B7).  It was analyzed in a column on B7 by Albany correspondent Michael Cooper, a veteran observer of our dysfunctional state government.  Cooper's lede: "Gov. George E. Pataki showed this week that sometimes even a lame duck can roar."
 
Wonks of all stripes will find a list of the Governor’s vetoes, and his line item veto message.  Link to all New York City dailies appear at the end of this article. 

The vetoes extended to tax cuts as well as new spending.  The legislature is likely to override most or all of them but the governor may maintain that the Court of Appeals will give him final authority in the matter.  He did not, for example, veto the new state borrowing for school construction, or the authority for the city to borrow $9.4 billion to build schools, which would be likely targets for a governor ostensibly concerned with the increasing public debt.  That decision may be a nod to the Court as well as to construction unions, indicating that money designated for education takes precedence over fiscal responsibility.
 
Predictably, the education budget was denounced by Richard Iannuzzi, president of the New York State United Teachers, nominal parent of the UFT, who called the vetoes "cruel and unusual".  He went on: "These are the desperate acts of an administration yearning for relevance."  Iannuzzi added: "If you're a homeowner with two school-aged children, the governor just took $1,000 out of your pocket."  This unusual display of solicitude by a teachers union apparatchik for the pockets of taxpayers should ingratiate him with Majority Leader Joseph Bruno and Speaker Sheldon Silver, who intend to macerate the governor's vetoes when they and their charges return from Spring Break.
 
There is some oddity in Governor Pataki, with the cornstalks of Iowa on his mind and a lick of hay on his brow, wearing the cloak of fiscal restraint.  True it was the theme of his first term (1995-98), but as his second term waned and he sought a third, he doffed that cloak to lavish billions of dollars received through one-shot revenue (conversion of an HMO to private ownership) to raises for Dennis Rivera's Hospital Workers Union.  Rivera returned the kindness by endorsing Pataki for re-election in 2002 over Democrat Carl McCall, the natural object of the union leader's bounty.
 
The governor's vetoes are thoroughly justified in terms of preventing the state from sliding further into its economic abyss.  They do not, however, offer much in the way of pulling state government out of the trap into which it has fallen through years of excessive spending, particularly its near total loss of control over Medicaid costs, which now exceeds 46 billion dollars, one half of which comes from New York State and county budgets.  Medicaid imposes an enormous tax burden on New York's 62 counties, whose share of the costs is nearly equal to what Albany pays.  In some counties, the cost of Medicaid alone exceeds the property tax levy.   Whether or not upstate is Appalachia, it is certainly not Shangri-La.
 
State finances are, however, in better shape than those of the federal government, where there is no longer any pretense of budget balancing.  Under the Bush II administration, the national debt, which was about $5.6 trillion when he took office in January 2001, has now risen 53% to $8,411,858,774,331.60, according to the national debt clock.  You can find the clock on what appears to be the eastern wall of 110 West 44th Street, the building which houses the mid-Manhattan office of the Internal Revenue Service.  In fact, the clock is on the western wall of 1133 Avenue of the Americas, a Durst office tower whose plaza is adjacent to the IRS.  Although the figures appear to change constantly, the change is always in one direction, up.
 
On the other hand, the city budget, under Mayor Bloomberg, is increasing at a slower pace.  Most of the increase is due to the so-called mandatory items; Medicaid, pensions and debt service.  Billions more go to entitlement programs, where eligibility standards and payment requirements are set in large part by the federal government and the state, with the assistance of the courts, who find no problem in imposing additional unfunded mandates on local government. 

Nonetheless, the city has made valiant efforts to reduce spending, which have been recognized by bond rating agencies.  The recent sharp run-up in real estate prices, and the number of transactions resulting from the boom, has led to an unprecedented budget surplus of $4.5 billion, and the mayor has wisely set aside two billion dollars to pay the anticipated rising costs of health care, a decision in which the City Council will, hopefully, concur.
 
The three levels of government operate with different standards of fiscal responsibility.  To some extent, this is the result of circumstances (wars, floods, etc.) but it is also the result of the decisions of the men and women who prepare and approve the budgets.  Unfortunately, there is a strong impulse to place fiscal burdens on the next generation, trading long-term stability for temporary relief, and pushing problems into the next administration.  To remedy that situation will require stronger measures than now comprise our legal armamentarium.
 
The best way to reform state government is by the Legislature placing on the ballot in 2006 a proposal for a Constitutional Convention for New York State.  The last time this question was on the ballot was in 1997, when it was defeated by a well-financed special interests campaign who believed, with some justification, that their power and privileges might be adversely affected by a new state Constitution.   Under existing law, the matter will not come on the ballot again until 2017, twenty years after the last referendum.  The legislature can save eleven years by acting now. 
 
This is a question on which the four gubernatorial candidates should be heard.  We should ask them for their opinion.  The issue would give an indication of what influence, if any, the next governor will have on his own political party.  That would depend to some extent on the new governor's political ability.  He will be facing some very clever rascals, their political pockets lined by lobbyists more numerous than locusts.  Perhaps the legislative lions will be so distressed by the Court of Appeals rulings on the balance of power that they will turn to a convention which they feel they can dominate (its delegates being elected under gerrymandered senate district lines).  

We are not at the end of the beginning of the budget conflict, much less at the beginning of the end, but we are no longer at the beginning of the beginning.  (Churchill, 1942)     


New York Times:
Danny Hakim "Governor Vetoes Albany Spending and Tax Breaks".  Pg. A1 & B7
Michael Cooper "Pataki's Supervetoes". Pg. B7

Daily News:
Joe Mahoney "Gov slaps back on vetoes".  Pg. 24

New York Post:
Kenneth Lovett and Fredric U. Dicker "Bruno vows 'veto' war".  Pg. 2

New York Sun:
Mark Johnson "Pataki Vetoes $2.9 Billion From State Budget".  Pg. 4

Newsday:
Errol A Cockfield Jr."Scene set for a budget battle".  Pg. A19


#290 4.13.06 1138wds