Thursday, October 1, 2026
I’m happy to report that a bill has been submitted in Albany that follows through on the suggestion of the Center for Cost Effective Government that a spending cap be imposed on the state budget.
In 2023, the center published a white paper on how spending caps have been successful in limiting spending and taxes in various states, counties and schools. We exposed, as well, that the State Legislature was being hypocritical in imposing tax and spending caps on schools and local governments while exempting itself from these controls.
We noted that had the state been forced to comply with the same spending cap placed on other jurisdictions, the state budget would be $80 billion smaller than the massive $252 billion behemoth proposed by Gov. Kathy Hochul this year.
Our white paper prompted Long Island State Sen. Mario Mattera to cosponsor a bill to cap spending, and to write an op-ed that was published in Newsday earlier this month.
Our analysis stressed that prior to the spending cap, school district taxes were increasing at a clip of 6 percent a year, while after the 2012 cap was implemented, that figure dropped precipitously, to roughly 2 percent. According to Newsday, the 2 percent property tax cap changed long-term trends and saved New Yorkers nearly $25 billion. On Long Island alone, it saved taxpayers $8.7 billion, with a typical Nassau taxpayer saving $7,611 and a typical Suffolk taxpayer saving $6,284.
Spending caps work because they force prioritization. Just about every special-interest group can make the case that their state funding is worthy. Without a cap, they can all find their way into the budget. With a cap, only the most essential, proven and effective programs would make the cut this year. Others can try again in the future.
The lack of a cap gives a false sense of security to budget-makers when revenues are flowing in from other sources, such as the federal government’s avalanche of aid during the coronavirus pandemic. Had a cap been in place during the Covid years, state spending would not have increased by an astonishing 30 percent from 2020 to 2024. The one-shot grants that came flowing in from the federal government were spent eagerly by the State Legislature, which it thereupon incorporated into the base. That higher spending became the new normal.
Even before Covid, however, spending by the Legislature was out of control. While inflation was rising well under 2 percent a year from 2014 to 2018, state spending surged by 19.1 percent during that period.
Roughly 30 states have some form of spending or tax cap in place. High-spending states underperform low-spending states in key growth and productivity metrics. Lower taxes lead to greater economic growth, which relieves pressure to raise taxes.
As of 2018, New York was spending about the same on Medicaid as Florida and Texas combined. New York’s Medicaid spending rate per enrollee is 30 percent above the national average, and its range of benefits is the most generous in the nation. But its oversight and fiscal controls are among the worst.
Immense infusions of additional state education aid over the past decade have done little to nothing to improve students’ scores. Our spending of $36,000 per student is the highest in the nation and double the national average, yet our test scores languish in the middle of the pack.
New York’s taxation of its highest earners is among the highest in the nation. But when it comes to spending, New York was near or at the bottom of the list in almost every category, according to the Tax Foundation’s State Business Tax Climate Index.
We noted that Florida, which has 4 million more people than New York and no state income tax, is able to deliver better services and produce higher test scores than New York with a budget that’s half that of the Empire State.
If that’s not reason enough for a spending cap, we don’t know what is.
Steve Levy is executive director of the Center for Cost Effective Government, a fiscally conservative think tank. He has served as Suffolk County executive, as a state assemblyman and as host of “The Steve Levy Radio Show.”
