Tuesday, February 1, 2011

NY Governor Cuomo: “I’m Shocked—SHOCKED—That There’s Gambling Going On Here!”

New York Governor Andrew Cuomo is playing the Captain Renault card in the ongoing NY State budget negotiations. Under the laughable title “Cuomo Exposes Dirty Budget Trick”, the New York Post writes today:
Gov. Cuomo yesterday condemned the entire state budget process as a scam ginned up by special interests that added as much as $9 billion to the deficit before anyone - the governor included - laid a hand on the upcoming spending plan.
The proposal is expected to call for the most severe cuts in state history. On the eve of his first budget address today, Cuomo released a bombshell op-ed column for the state's newspapers comparing the "sham" process by which state leaders craft each year's spending plan to the best schemes of insurance companies and Wall Street bankers he battled as attorney general.
The Democratic executive expressed "shock" to find a projected 13 percent spending increase driven largely by a series of automatic spending increases buried into law by generations of lobbyists and complicit legislators.
This front-page “story” was published to support an editorial written by Cuomo that was published in every Empire State newspaper. 

In the editorial, Cuomo himself writes,
In the past 30 days, as I have prepared the state's budget, I was shocked to learn that the state's budget process is a sham that mirrors the deceptive practices I fought to change in the private sector.
The budget process is a metaphor of Albany dysfunction: special interests dominate the process with little transparency; programs continue with no accountability and the taxpayers get the exorbitant bills. The greatest challenge -- and opportunity -- in this year's difficult budget is to expose this chronic problem and reform it once and for all.
The next question is: who is responsible for setting the growth in the state's budget? The answer is shockingly, no one. It is dictated by hundreds of rates and formulas that are marbleized throughout New York State laws that govern different programs -- formulas that have been built into the law over decades, without regard to fiscal realities, performance or accountability.
The formulas operate year after year, generating liabilities that when totaled define the state's budget growth. The one thing the rates do well is increase year after year. These formulas (predominantly in education and Medicaid funding) are often inserted into the law by pressure from well-connected special interests and lobbyists.
When a governor takes office, in many ways the die has already been cast. Unbelievably, this year these rates and formulas in total call for a 13 percent increase in Medicaid and a 13 percent increase in education funding next year.
The “shocking” wording is silly: It’s not as if Cuomo—or the NY Post, for that matter—is some babe in the woods. His father Mario was governor of the Empire State for just shy of twelve years, from ‘83 to ‘94. 

So exactly one month after assuming office, Cuomo is signaling that any failure in the budget process will not be his—because as he writes, “the die has already been cast”. 

Cuomo rightly points out that these automatic formulas for budget increases are rampant throughout State budget processes throughout the United States. 

The question is, Is it too late to change them? Or are they too entrenched at this point, and only State bankruptcy will turn things around?

The way Cuomo seems to be shading it, it’s too late. 

1 comment:

  1. I hate reading articles like this, since civil service pension plans never seem to be directly mentioned. And I always feel compelled to poke around until I find out if they're addressed in these numbers or not, what cloud-cuckoo land actuarial numbers and investment returns are assumed, and so on. In this instance I shall steel myself against my baser impulses and let it go. But these payments must have some sort of COLA built into them, probably include a health insurance plan far better than medicare, and always seem to be part of plans that are always underfunded and on and on.

    Cuomo seems to be tap-dancing around what might include pension payments, viz. "the budget process," "the formulas" and so on, but might not. Last I looked, it seemed like some states have a separate "bucket" for the whole thing, while others toss in something that does in fact appear in their budget. Not a number that is based in reality, but still a number.

    And since states don't get to create money out of thin air, I'm always curious which state's plan is going to go KABOOM first. After all, you've got Defined Benefits you're obligated to pay, but you can't do what the Federal gov't. can (print $). Probably Cali's, but NY's might and kleptocracies/ corruptocracies like MA and NJ, can't rule them out, either.


Knock yourself out!

The cult of stability is a culture of death.