Spending Watch


Bulletin #1: April 12, 1999
Surplus? What surplus? Long-term, New York has none

The tax-and-spend crowd says New York has a huge surplus. Reflecting the old political culture of Albany, they believe the only choice is to spend more. They want more money for hospitals, even though our per-capita spending on hospital services is more than twice the levels of California, Ohio, Pennsylvania, and other states. More school aid, even if we're already spending 50 percent above the national average. Higher raises for state workers, who have better wages and benefits than colleagues in other states or the private sector.

And the ideas for more spending are not just for this year. Virtually every one would expand the state's base spending, permanently (in most cases, with higher costs in the out-years than in the current fiscal year).

Yes, state government has a surplus today - thanks to an economy that is finally growing again, and to four years of more prudent fiscal management. For taxpayers, it's worth noting, and for Governor Pataki and the Legislature, something to brag about, because of what it says about the progress New York has made. But keep in mind: A surplus, by definition, is a one-time event.

No guarantee extra money will be there next year

The Budget Division projects a $2 billion gap in 2001-02, even if the Legislature adds zero spending to the Executive Budget. And, as Comptroller McCall points out, the outyear gap rises by $1. 8 billion if reserve funds that the Governor wants to set aside are spent, instead. That scenario leads to truly serious problems, just down the road.

And let's not forget the $42 billion gorilla looming over state finances. That's the level of state-supported debt we will reach in 2002-03, under existing plans. Albany's borrowing over the last 10 years has brought annual debt service to an unheard-of level, nearly $4 billion a year. The Governor's budget proposes doing more capital projects on a pay-as-you-go basis, to limit the growth in debt. Again, that will be impossible if other "needs" claim the money.

An above-inflation spending binge would endanger scheduled tax cuts, increase our debt, invite a lower credit rating, and raise the specter of a return to the disaster years that started a decade ago. That's far too great a cost.