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Partly Cloudy Prepare for the pain of budget-cutting
They say misery loves company, and if that’s the case, New York state has lots of company. It’s no secret that New York is faced with a budget deficit of at least $10 billion. But compared with some of the other big states, New York’s budget dilemma may be small change. Or is it?
Illinois was the first big industrial state to take on its shortfall — $15 billion — and the results weren’t pleasant. To wipe out the deficit, the legislature passed a 66 percent increase in the personal income tax and a 45 percent increase in corporate taxes. That wiped out the deficit but didn’t provide any fresh dollars for any programs.
Illinois and New York have lots of company. There are at least 24 states that face severe budget shortfalls in the next two years, and their elected officials are hard pressed to come up with any solutions. California will have a $28 billion deficit in the next year and has no new ideas about where the money will come from.
Last year California Gov. Arnold Schwarzenegger solved his deficit problems by firing thousands of teachers, which enlarged class sizes from 20 to 28 per room. In addition, libraries and public safety facilities were closed or curtailed as a result of the financial headaches.
Because education is one of the biggest areas of expense, many states are looking at cuts in those programs. Hawaii cut 17 percent of its school aid budget, and Michigan cut 4 percent this year and 8 percent next year. Texas will be short $25 billion over the next two years but has refused to cut school aid. Instead it proposes to lay off 8,000 state workers.
Besides increasing taxes, there aren’t too many original ideas out there on how to balance state budgets. One state increased sales taxes on vending machines and decided to delay corporate tax refunds. Those measures helped, but they didn’t solve all of the problem.
So the dilemma for Gov. Andrew Cuomo is, what must be cut to solve his fiscal nightmare? Having pledged that he won’t increase taxes or fees, that leaves only programs. The No. 1 target is Medicaid. Many New Yorkers have gotten accustomed to having the most generous Medicaid program in the nation, and there is no doubt that some of its services will disappear.
After Medicaid, the next likely target is school aid. Suburban counties like Nassau and Suffolk have grown accustomed to increases in these programs, which helps keep local taxes down. But cuts are coming, and the best Long Island can hope for is to get money similar to what it got last year. To make sure school districts don’t try to raise taxes dramatically, Cuomo will push for a cap on tax increases.
In an effort to soften the blow on local governments, Cuomo has promised to try to eliminate some of the expensive mandates that force school, villages and towns to spend unnecessary dollars. Governors have pledged to do that in the past, but Cuomo insists he will succeed where others have failed.
New York taxpayers feel the same way about budget cuts as taxpayers all over America. In Illinois, 60 percent of voters said they wouldn’t favor any increase in taxes, and the same 60 percent said they didn’t want any cuts in services. So no matter how any state solves its problems, it gets no support from the voters.
The fact that many of our sister states are suffering the same fate as New York isn’t any comfort. The new state budget will inflict a lot of pain on a lot of people. But after years of free spending, the cuts to come are long overdue.
Jerry Kremer was a state assemblyman for 23 years, and chaired the Assembly’s Ways and Means Committee for 12 years. He now heads Empire Government Strategies, a business development and legislative strategy firm. Comments about this column? JKremer@liherald.com.
