It’s the perfect storm of perfect storms: A pandemic socks the economy, erodes tax revenues and widens already gaping budget holes. Spend-happy Democrats win control of both houses of the state Legislature, with veto-proof majorities. Radical progressives are emboldened. And Gov. Andrew Cuomo, a relative moderate, is hobbled by scandal.
Short-term, multibillion-dollar shortfalls are on course to grow only worse, perhaps threatening the state’s fiscal solvency down the road.
Washington Democrats race to the rescue and rush boatloads of cash to the state, wiping out the short-term crisis — but whetting the appetite of Albany’s big splurgers.
The state’s long-term fiscal outlook: dicey. Yet for the radicals, it’s time to spend, spend, spend.
Next week, lawmakers are to finalize a budget for the fiscal year that starts April 1. Early signs suggest it’ll be a doozy.
The plan could boost general-fund outlays a mind-numbing 22.6 percent. And tax hikes supposedly to pay for them — to the tune of $7 billion.
It’s a disastrous combination. As spending spirals ever higher, tax revenue will fall as wealthy residents and businesses move out of state, as 250 major employers warned in a letter Tuesday. And that’s more likely given that, post-pandemic, many employees will continue to work from homes outside the city.
“This is about our people voting with their feet,” the executives told Albany. “These new taxes may trigger a major loss of economic activity and revenues as companies are pressured to relocate operations to where the talent wants to live.”
What would Albany’s drunken sailors shower money on? Brace yourself — some of the ideas aren’t just unaffordable but positively ridiculous:
- A one-year, $5.7 billion boost for schools and $790 million more for Medicaid, even as a new Empire Center report warns New York spending in these areas “will leave a yawning hole in the state budget after federal COVID relief money runs out.” (And never mind that the state already spends more per student and more on Medicaid per capita than any other state.)
- $624 million to boost wages for health care workers.
- $2.1 billion for illegal immigrants without jobs.
- $300 million for zoos, botanical gardens, aquariums and “farmland preservation.”
- $175 million in additional funds for state-worker raises.
- $23.5 million for “community safety and restorative justice.”
- $6.4 million for video slot machines.
- $1 million for implicit-bias training for teachers.
- $500,000 for the Hispanic Federation.
- $300,000 for a racially and culturally inclusive curriculum.
Of course, all this would be on top of Cuomo’s $196 billion budget plan, pushing the bottom line to $208 billion, including federal aid, up from $195 billion this year.
Oh, and that doesn’t even count handouts in the form of “tax credits,” like the one to the TV and film industry for nearly half a billion (taxpayer) bucks.
Sure, before the novel-coronavirus outbreak, Cuomo kept spending growth below the levels of previous governors. But the budget Gov. David Paterson left him was already a lavish $135 billion. This year’s tab is up 44 percent from that, and while that includes a hefty chunk funded by Washington, not even DC Democrats can provide huge handouts to Albany forever.
Meanwhile, the state will continue to face huge shortfalls after next year. If lawmakers cared about the Empire State’s future, they would be working to close those out-year gaps without raising taxes that could send wealthy taxpayers fleeing. Which means spending restraint, not more growth.
Instead, one pro-tax-hike lawmaker is urging millionaires who don’t want to pay the higher rates to leave: “I will open the door and make sure it doesn’t hit them on the ass on the way out,” brayed Sen. Luis Sepúlveda (D-Bronx), promising to find “other millionaires” to take their place.
That kind of attitude has fueled New York’s decades-long population decline. With yet more taxes and spending and a precarious long-term budget to boot, Florida and Texas are sure to roll out the welcome mat.