Morning Read: Cuomo’s plan to take on the ‘Albany sham’

Normally I don’t link in the morning to op-eds, but Gov. Andrew Cuomo has published an essay in newspapers around the country that gives some insight into his plan to battle the $10-plus billion budget deficit.

He’ll lay out his exact plans this afternoon.

For the first time, Cuomo is suggesting that a big part of his “cuts” will simply be a sharp curtailing of projected growth within the state bureaucracy and pass-through grants.

He argues that his staff has found a patchwork of buried formulas that automatically grow the government.

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.

A 13 percent increase, in this economic climate, is wholly unrealistic.

Wouldn’t you like your salary or savings account to be based on a formula that gave you a 13 percent increase even though inflation was under 2 percent? The world doesn’t work that way — except in Albany.

The governor then goes on to argue that simply by reining in these automatically-triggered growth mechanisms, most of the deficit evaporates.

[I]f one assumed these programs would increase at the rate of inflation (instead of 13 percent) the $10 billion deficit is really a $1 billion deficit.

The Albany Times-Union is calling Cuomo’s essay “part-spin, part-common sense and part-laying down the policy gauntlet.”

So what do you think?  As we await this afternoon’s budget address (which will air live here on NCPR and NCPR.org starting with some pre-speech chat at 12:45 pm) consider this your Albany open thread…

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15 Comments on “Morning Read: Cuomo’s plan to take on the ‘Albany sham’”

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  1. JDM says:

    Sounds like smoke-and-mirrors and baseline budgeting.

    Sounds like the government spending will continue to grow.

    For example, if the budget was going to grow by 13%, but Cuomo only grows it by 11%, he claims he “cut the budget” by 2%.

    He may fool the “smartest-guys-in-the-room” with that logic, but the rest of us say is growing the government by 11%.

  2. dbw says:

    Governor Cuomo’s deficit cutting plan is not realistic if it doesn’t include tax increases. With $40,000,000,000 deficits over the next three years, I don ‘t know how you can close that gap without a combination of real cuts and additional revenue. I suspect is desire not to tax the rich is to try and keep Wall Street types in the state and paying taxes. After all Wall Street accounts for 20% of the state revenue stream.

  3. Brian Mann says:

    Actually, JDM, I think Cuomo is saying EXACTLY what you’re saying. He’s saying that if he promises to “cut” the Medicaid budget by 6%, it still means an overall 7% increase. (Read his essay and you’ll see what I mean.)

    That said, he does appear to be saying that if he limits growth to the rate of inflation (2% according to his numbers) the budget “cuts” would only have to total $1 billion.

    This raises a lot of questions.

    1. Is the rate of inflation for healthcare (Medicaid) really only 2%? I’m guessing it’s higher.

    2. Do the rate and formula increases that he describes include scheduled and contracted salary increases for public workers? If so, how do you curtail those without union concessions?

    3. Is sharply limiting Albany’s growth really enough in terms of reform? My sense was that Cuomo was promising a larger vision of changing the way the state bureaucracy works.

    –Brian, NCPR

  4. Bret4207 says:

    Somehow I can’t seem to muster up much faith that the Young Prince will actually fix anything, cut anything or really address Albanys shortcomings.

  5. newt says:

    Interesting unsigned AP “analysis” article in SUnday’ Press-Republican,”
    (http://online.wsj.com/article/AP94e047ac5e9c47e98ab7ec184b2828f9.html, if this link to the same article in WSJ works ) Cuomo expected to threaten state layoffs.” makes the following points:

    -Some experienced Democratic and independent analysts in Albany are predicting there could be “far fewer, if any, layoffs by the time the 2011-12 budget is finalized..,”

    Why?

    1. Major unions’ contract in March, and their leaders have signaled that they are ready to deal.

    2. by the State Civil Service Department stated that “the state could shed as many as 10,700 jobs through attrition, in one year, without a single layoff”

    3. 32,000 employees are expected to retire between 2011 and 2015, and a modest retirement incentive to those over 55 yrs could increase this dramatically, as happened in 2002-03.

    4. Major State layoffs might endanger the NYs small private economy recovery, since, as everyone knows, unemployed workers produce less “income tax revenue, reduced local spending by families to fuel sales taxes and other taxes,” as well as negatively impacting private business income by radically reducing spending on goods and services.

    5. “Because of months if required notices, vacation time, and other factors the state would likely see only half the savings in the 2011-12 fiscal year. (Assuming victory in the inevitable political battles that would be fought over layoffs).

    Cuomo has stated that his goal is to cut expenses, not jobs, and he will certainly do this if he can. Not that he might not propose layoffs in his budget, or make them if he can’t get concessions.

    Neither would it mean that eliminating State jobs by attrition instead of layoffs will not still result in closing of State facilities and serious reductions in services.

  6. I read the editorial. What he’s saying is that we need to start the budget from where we are rather than a set of built in increases and we need to look at what value we are getting from spending to determine whether to even continue it. Any inflation should be based not on a formula but on actual increases in cost and returned value. Programs that don’t provide value should be cut or eliminated rather than rewarded at some fixed amount.

    In relation to your #2 question Brian, he has already proposed a freeze on state salaries and yes, that will require negotiation with the unions just as getting rid of increases built in to the enabling legislation will require cooperation from the legislature and the legislature standing up to the lobbyists.

    I did not get the sense that Cuomo was saying that was all there was to it. He admits that would still leave a one billion dollar deficit but he is saying this is necessary as a foundational step. His editorial appears to me to be an attempt at counter-spin, a way to shed some daylight on what has really been happening with our state budget over the years.

    Unfortunately writing the budget is not for the governor alone and he has to drag the legislature along. This editorial is meant to elicit support from the public to help him in the battle to eliminate these automatic increases.

  7. dbw says:

    If the union contracts are not resolved for a year or more, as is often the case–that will be the same as a freeze. So Cuomo’s wage freeze statements are a gimmick.

  8. scratchy says:

    dbw says:
    You just don’t get it; the deficit is cause by uncontrolled spending not by declining revenue. If the state was to hold spending flat, or, better yet, reduce spending there would be no need for a tax increase.

  9. dbw says:

    Scratchy – I do get it. We can’t get there by spending cuts alone. We can’t ignore the revenue side. If there hadn’t been a recession, and the state was getting 20% of the revenue it used to get from Wall Street, would anyone being attention? Things would be perking along.
    As for our current situation; a $10,000,000,000 deficit this year, 14.7 billion next year and $17.000,000,000 the year after that. I just don’t see a realistic way to meet $40,000,000,000 in deficits by spending cuts alone. Like the family that ends up in debt, they can cut only cut spending so far. Sometimes a second job (more revenue) is necessary to get out of the hole. That’s the situation we find ourselves in.

    Like or not, whether I or not voted for the rascals who got us here, we have debts and obligations to meet. as New Yorkers. I am on board for spending cuts, and I am also ready to have my taxes increased because this is about paying our bills.

  10. verplanck says:

    I read this as some pre-emptive defense for drastic cuts in medicare and education.

    It’s BS for him to say that the automatic increases were new to him, if not he is unqualified for office.

  11. scratchy says:

    dbw,
    Perhaps it would be useful to do a recap of budgeting 101. When you say cutting spending I assume you mean reducing the growth rate from 13% to somewhere near 10% and not actually spending less this year than last. Keep in mind, those 13% annual increases are what’s driving the deficit. If we cut spending a little this year and hold it flat the next 2 years, I bet there would be a surplus by year three. How can that be? 3 years of 13% increases would be a more than 40% increase in spending. 40% of 130 billion is about 52 billion a year by year 3, 12 billion more than 40 billion. Once you enact “cuts” this year it lowers next year’s budget because you’re starting from a smaller level of spending.

    We’re in a low inflation and zero population growth era, so don’t say that it can’t be done. And, we lead the nation in health care and education spending, outspending many states more than 2:1 on a per person basis. We also have the nation’s highest tax burden, when is enough enough?

    Verplank,

    Holding spending flat on education and medicaid aren’t “Drastic cuts.” Now, a 20% cut could be considered “drastic,” but we are nowhere near that. But, don’t worry, we’ll still probably spend more on those two programs than any other state even after the “drastic cuts” have taken effect, though I suppose that level of spending won’t be enough to satsify the public unions.

  12. Bret4207 says:

    This is interesting. I’m seeing people discussing Tea Party/conservative ideas as though they were suddenly mainstream! My hat is off to you guys, kudos!

    Talking with some of my former co-workers I get the impression people are expecting actual layoffs. I haven’t heard anything about early retirement incentives yet. That used to be the common ploy, but I don’t know how it would work with my agency. They tend to be rather young compared to other sectors. The vast majority of people I’m familiar with are gone by age 50. I suppose that’s the price you pay when the hiring age limit is effectively 35ish, if not younger. It’s a rare person who comes on after 30 yoa.

  13. verplanck says:

    scratchy,

    i agree for education. Medicare, however, is tied to our nation’s double-digit increases in health care costs each year. Holding the line will end up with less buying power than last year.

  14. dbw says:

    State workers are the least of problem when it comes to changes in the state budget. Check out the Quinnipiac poll from last week at:

    http://www.quinnipiac.edu/x1318.xml?ReleaseID=1552

    Briefly, 79-18 oppose cuts to public education
    69-28 oppose medicare cuts

    Of course, they don’t want more taxes either to maintain the services.

  15. scratchy says:

    verplank,
    I think you’re confusing Medicare and Medicaid. Medicare is a purely federal program for the elderly while Medicaid is a program for the disabled and low income jointly run by the state and federal governments.

    dbw,
    And most of the poll respondents think a “cut” means spending less this year than last and not just slowing artificial growth rates. It would be interesting if the poll asked if they thought a 12% increase was a “cut,” which is considered a cut by Albany lobbyists. I wonder what percentage would say i such an increase is in fact a “cut”? But, in any event, I don’t form my opinions on the basis of polls, I form my opinions based on the facts and the facts are that we have the highest tax burden in the nation and have seen recent spending increases exceed the rate of inflation – with state pension costs being among the fastest increasing expense.

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