Commentary By Henry J. Stern
CaribWorldNews, NEW YORK, NY, Thurs. July 2, 2009: Yesterday, July 1, was the 24th day of dereliction for the New York state senate. It was also the first day of the city`s new fiscal year (FY 2010).
Each level of government has its own unique calendar; the Federal government`s fiscal year begins on October 1 and the State`s on April 1. The only year that begins on January 1 is the calendar year.
July and August are the only two months named for people: the Roman emperors Julius and Augustus Caesar. The two are long months (31 days each) because they were named for very important people. Augustus was adopted by his great uncle Julius in 44 B.C.E, the same year that Julius` troubles with the Senate peaked and he was stabbed to death by Brutus, Cassius, et al – on the Ides of March, as Shakespeare has told us. The lesson this teaches us is that even strong leaders can have problems with rebellious Senators.
The latest Albany antics are so lame that one feels somewhat ashamed to be writing about them, as if reporting to the public makes one an accessory to the nonsense. Tuesday was the silliest day yet for the fragmented senate, because a brief walk across the back of the chamber by Republican Senator Frank Padavan,, (he was looking for a can of coke), was seized upon by mischievous Democrats who claimed Padavan could be counted as a 32nd member in the chamber, and that the Democratic voting body therefore represented a quorum.
The Democrats then passed about a hundred bills, 62-0, voting every Republican in the affirmative even though none was present.
But there is another, larger issue in this dispute – one that has been largely avoided by the squabbling partisans. New York State is spending much more money than it is receiving through taxes and fees, just like California and New Jersey, among other states. The legislature, unwilling to raise sufficient taxes to balance the budget or to reduce expenditures through layoffs, (which is where most of the savings would have to be), simply resorts to more borrowing and subsidies to pay for current expenses and to fund a construction program (which requires further borrowing).
Although the federal government has the option of printing money for the Federal Reserve, state officials who did the same thing would be prosecuted for counterfeiting; the state may not operate its own mint. What the state has traditionally relied on is off-budget borrowing by selected public authorities. This is from the Enron playbook: keep the bad stuff off the balance sheet. It works until the house of cards collapses, which with any luck will be after you leave office..
New York relied on billions in Federal stimulus money to alleviate the deficit for FY 2010, whose second quarter begins today. Instead of being used to create new jobs, the stimulus money was used to preserve existing jobs for public employees, maintaining an artificially inflated public sector, and leaving the layoffs to the taxpaying private sector of the economy. The state argues that the result is the same. Is it really? Will subsidizing bloat provide the same stimulus to the economy as the creation of green jobs, the repair and construction of roads and rails, scientific research and technology, etc? Could a reasonable person conclude that we are mortgaging future prospects to serve current needs because we lack the power or the courage to confront the spenders?
Preparation of the FY 2011 budget begins in a few months, and the governor`s budget proposals will go to the legislature in January. Will a similar stimulus package be in place by then? That is highly unlikely, but since 2010 is an election year, another bailout is possible. With all the money the Federal government has spent to fatten banks and save automobile companies, the states can argue for their place to receive handouts, especially if the relief comes from bills that have been printed and coins that have been minted for the occasion.
The voters will decide in the November elections next year whether they want the spiral of spending to continue. They may very well do so and the Republicans` artificial Senate majority could easily collapse.
Meanwhile, the state, like its legislature, is divided. On one side, there are millions of taxpayers: people with earned or unearned income, workers, homeowners, corporations doing business in the state, and visitors who shop in our stores.
On the other hand, there are millions who are net tax receivers, even though some are also taxpayers. These are public employees, pensioners and prospective pensioners, people on Medicaid (Medicare is funded entirely by the federal government), food stamps, or unemployment compensation, and beneficiaries of other government assistance. Hospitals and their patients, and non-profit educational institutions are exempt from real estate taxes.
When reckoning public expenditures, don`t forget the sums paid to the thousand or so plaintiffs who sue the State every year. The State, however, has one enormous advantage over the City of New York. If one sues the state, the case goes to the judges of the Court of Claims. If one sues the city on a similar issue, the case goes to a jury which knows the state has deep pockets. The state will not give the city equal treatment in defending lawsuits because of the power of the trial lawyers, whose wishes are law in the Democratic-controlled New York State Assembly. That is a major reason why the City pays over 500 million dollars a year in tax dollars to pay judgments and settle cases.
The recipients of state funds for salaries, pensions and benefits are generally not freeloaders. Many supply essential services in exchange for their compensation, which was much lower years ago than it is today. Other public employees add to the quality of life, and make New York a more attractive place to live and work. It is fair and reasonable for employers to defer some compensation to provide pensions for those late in life. The problem is that many noble programs have been taken to wretched excess, for the simple reasons that the tax-recipients are more numerous, better organized and more effective in lobbying than the taxpayers. That is how the balance of power works in New York.
The political aspect of the state`s fiscal problem is complicated by the reality that financial conservatives are often social and religious conservatives, rejecting proposals to protect human rights, fight discrimination wherever it occurs, expand gay rights, secure women`s right to control their bodies, etc. The Republican Party has drifted rightward; the idea of a Nelson Rockefeller or Jacob Javits as Republicans is an anachronism. Looking at the picture, geographically, the Republicans today appear to have written off the Northeast and much of California. The voters, particularly young people, who reject conservative social attitudes, will vote Democrat and elect people whose fiscal decisions are often made by lobbyists on behalf of the tax receivers. Both ends work against the middle, and the result is polarization.
This is not a scholarly presentation, but we have tried to describe the heart of the matter. Moderates in both parties are reviled, even as people are willing to vote for moderate candidates – if they can survive the polarized nomination process. This has led to the rise in bloc voting in Congress and the legislature, and the increasing limits on the capacity and ability of senators and assembly members to cast independent votes. Most of them don`t want to be independent, because it requires some familiarity with the issues to make judgments. Those who do understand what is happening often do not dare to deviate from the party line, since they would jeopardize their committee chairmanships and their lulus, and possibly face expensive primary challengers, supported by organized tax receivers.
The Senate dispute, now in Day 24, is a symptom of the malaise that pervades the legislature. One of the few solutions I`ve read on the subject is outlined in a column by former Mayor Edward I. Koch, which he published on one year ago. In it, he proposes the creation of a new reform party, in the same vein as the state Democratic reformers of the 1950s and 60s. His suggestions makes enormous sense. The problem, however, is the issue raised in the classic Rule 17-C: `Who will bell the cat?`
EDITOR`S NOTE: Henry Stern is a former NYC Parks Commissioner.