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For Release — April 8, 1999

BIG SPENDING INCREASE COULD BRING BACK 'THE DISASTER YEARS,'
BUSINESS COUNCIL REPORT SAYS

ALBANY—An unaffordable increase in state spending this year could lead to "the return of the disaster years" like those that brought huge tax increases and drastic funding cutbacks throughout the early 1990s, The Business Council of New York State said in a briefing paper released today.

For five straight years starting a decade ago, state leaders enacted tax increases of $1 billion or more annually, hitting both businesses and individuals. Those tax increases were "significant contributors" to New York State's loss of more than 500,000 jobs during that period, The Council said.

The tax increases were brought about by uncontrolled spending - starting in a year, like this year, when the spending lobby thought there was a huge "surplus" to spend, the briefing paper says.

Besides tax increases, the fiscal crisis created by too-high spending resulted in education aid cutbacks in the middle of the school year, sharp reductions in state employment, SUNY and CUNY tuition increases, "lagged" pay for state workers, lowering of the state's credit rating and other problems.

"What happens to all the money state government spends now?" The Council asked. In New York, school spending totals nearly $10,000 per student, 50 percent above the national average. And, the paper says, "Medicaid spending is the highest in the nation by far - on a per-capita basis, 58 percent above the second-highest state."

The briefing paper says that, a decade ago, huge spending increases "turned out to be a big mistake." It concludes: "Let's not make that mistake again."

Daniel B. Walsh said the briefing paper is the first step in what will be an ongoing effort by The Council to call attention to the need for spending restraint in this year's budget.