ALBANY - In his first State of the State address, Gov. Eliot Spitzer issued a clarion call to New York's Legislature to “end the culture of spending that is out of control.”
It is a message other governors - most notably fellow Democrat Hugh Carey in 1975 with his warning that “the days of wine and roses are over” - have also tried to deliver with varying degrees of success.
A major problem facing Spitzer in getting lawmakers to join him in trimming back the dramatic rate of growth in state spending in recent years - up 13 percent alone in the current fiscal year - is that the state he inherited from Republican George Pataki may, at least in the short term, be too well-off.
At the end of October, Pataki announced the budget was running a projected $1.1 billion surplus for the fiscal year that ends March 31.
Then, in mid-December, came word that Wall Street's year-end bonuses were expected to hit almost $24 billion, up 17 percent from 2005's record bonus payments. That means hundreds of millions of dollars in additional state income tax revenue.
That prompted Spitzer to warn the Legislature in his State of the State message Wednesday that “despite a momentary cash infusion, we are operating in a deficit environment, with out-year deficits conservatively estimated in the tens of billions of dollars.”
While the message seemed clear, lawmakers have a way of being hard of hearing when it comes to calls for fiscal restraint.
“Legislators have a tendency to confuse short-term revenue flows with the long-term health of the economy and the state of the budget,” said E.J. McMahon, a senior fiscal analyst with the conservative Manhattan Institute. “They are always looking at last month's cash report. If your fixation is on last month's cash report, then everything is rosy.”
Put in simple terms, legislators like nothing better than to cut taxes and increase spending, often at the same time. That is, of course, a recipe for fiscal chaos when hard times hit. The problem for Spitzer will be convincing legislative leaders that chaos is lurking just around the corner.
“Obviously, it is good news that that (Wall Street) sector is performing well. It is a sector that is very much at the heart of the New York City metropolitan economy,” Spitzer told The Associated Press in a pre-inauguration interview when asked if the bonuses might make it harder for him to sell the need for spending restraint.
“It generates substantial revenues for the state and the city as well as for citizens, so that's all wonderful news. It helps this year's budget, there is no question,” he said. “There has been a bit more revenue coming in than might have been predicted because of that spike and yet it is not wise budgeting to presume that those numbers continue next year.”
“The big question is does it make it harder to sell the need for drastic change when people see a bit more cash coming in right now?” Spitzer told the AP.
Spitzer said he doesn't think so, especially when he explains to legislators that the state faces multibillion dollar deficits that are expected to grow.
“I'll be somewhat persuasive in telling them what the reality is,” he said.
Spitzer said Wednesday, after delivering his State of the State message, that the budget proposal he presents on Jan. 31 will call for a “dramatic decline in the rate of increase from prior years.”
While that sounds impressive, when you are coming off a year that saw state spending increase by 13 percent, one could still have quite an increase in spending and call it a dramatic decline.
Pataki brought in budgets in 1996 and 2002 fiscal years that actually reduced the level of state spending.
McMahon, an expert on New York's state budget, noted that when Democrat Mario Cuomo became governor in 1983, “he inherited a $1.8 billion budget gap. Pataki inherited a $5 billion budget gap.”
“Spitzer is fond of saying a crisis is a terrible thing to waste,” McMahon added. “In this case, he doesn't have the kind of obvious crisis that hits you in the face that Pataki and Cuomo had.”
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Marc Humbert has covered New York state government and politics for The Associated Press for more than 25 years. He can be reached via e-mail at: mhumbert(at)ap.org.
AP-ES-01-04-07 1456EST
A major problem facing Spitzer in getting lawmakers to join him in trimming back the dramatic rate of growth in state spending in recent years - up 13 percent alone in the current fiscal year - is that the state he inherited from Republican George Pataki may, at least in the short term, be too well-off.
At the end of October, Pataki announced the budget was running a projected $1.1 billion surplus for the fiscal year that ends March 31.
Then, in mid-December, came word that Wall Street's year-end bonuses were expected to hit almost $24 billion, up 17 percent from 2005's record bonus payments. That means hundreds of millions of dollars in additional state income tax revenue.
That prompted Spitzer to warn the Legislature in his State of the State message Wednesday that “despite a momentary cash infusion, we are operating in a deficit environment, with out-year deficits conservatively estimated in the tens of billions of dollars.”
While the message seemed clear, lawmakers have a way of being hard of hearing when it comes to calls for fiscal restraint.
“Legislators have a tendency to confuse short-term revenue flows with the long-term health of the economy and the state of the budget,” said E.J. McMahon, a senior fiscal analyst with the conservative Manhattan Institute. “They are always looking at last month's cash report. If your fixation is on last month's cash report, then everything is rosy.”
Put in simple terms, legislators like nothing better than to cut taxes and increase spending, often at the same time. That is, of course, a recipe for fiscal chaos when hard times hit. The problem for Spitzer will be convincing legislative leaders that chaos is lurking just around the corner.
“Obviously, it is good news that that (Wall Street) sector is performing well. It is a sector that is very much at the heart of the New York City metropolitan economy,” Spitzer told The Associated Press in a pre-inauguration interview when asked if the bonuses might make it harder for him to sell the need for spending restraint.
“It generates substantial revenues for the state and the city as well as for citizens, so that's all wonderful news. It helps this year's budget, there is no question,” he said. “There has been a bit more revenue coming in than might have been predicted because of that spike and yet it is not wise budgeting to presume that those numbers continue next year.”
“The big question is does it make it harder to sell the need for drastic change when people see a bit more cash coming in right now?” Spitzer told the AP.
Spitzer said he doesn't think so, especially when he explains to legislators that the state faces multibillion dollar deficits that are expected to grow.
“I'll be somewhat persuasive in telling them what the reality is,” he said.
Spitzer said Wednesday, after delivering his State of the State message, that the budget proposal he presents on Jan. 31 will call for a “dramatic decline in the rate of increase from prior years.”
While that sounds impressive, when you are coming off a year that saw state spending increase by 13 percent, one could still have quite an increase in spending and call it a dramatic decline.
Pataki brought in budgets in 1996 and 2002 fiscal years that actually reduced the level of state spending.
McMahon, an expert on New York's state budget, noted that when Democrat Mario Cuomo became governor in 1983, “he inherited a $1.8 billion budget gap. Pataki inherited a $5 billion budget gap.”
“Spitzer is fond of saying a crisis is a terrible thing to waste,” McMahon added. “In this case, he doesn't have the kind of obvious crisis that hits you in the face that Pataki and Cuomo had.”
---
Marc Humbert has covered New York state government and politics for The Associated Press for more than 25 years. He can be reached via e-mail at: mhumbert(at)ap.org.
AP-ES-01-04-07 1456EST
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