NY State Budget Crisis

At a recent Independent Neighborhood Democrats meeting Assemblywoman Joan Millman gave us a grim outlook for next year's state budget. I hear the same issue was discussed at Central Brooklyn Independent Democrats as well. This was the same day the MTA forcasts an equally grim picture (but in their case we always have to question the numbers of an agency that keeps two sets of books depending on whether they want to show a surplus or a deficit). And from Governor Paterson we are hearing ideas like raising CUNY and SUNY fees and cutting education and health programs (our biggest outlays).

Let's face facts. The Republican Party has for nearly 8 years (more if you count the actions of the Gingrich Congress) been mismanaging our economy, running massive deficits, deregulating many industries (including lending) without regard to economic stability (witness the panicked imposition of regulation now that it is all collapsing!), shifting the tax burden onto the lowest tax brackets (thus redistributing wealth to the richest), running an expensive and ill-managed war in Iraq with no strategic importance, and making our economy more and more dependant on foreign oil. All of this put together has brought us to an economic crisis. The economy declined during Bush's first two years and has never really been good since. It has been the mirror image of the years of Clinton prosperity that I, for one, look back on with considerable nostalgia (low unemployment, low inflation, good stock markets). With Bush we had what sure seemed like Stagflation to me (unemployment and inflation) which now has imploded into what is looking like a nascent Depression (increasing unemployment and deflation).

It's a mess. What makes it more of a mess is that nearly a decade of Republican irresponsibility has left us with the largest deficit we have ever seen...after Clinton left us with a surplus that Greenspan felt was in danger of paying off our debt too soon!

NY State has a massive budget crisis. I know Joan Millman, my Assembly woman, has been warning about this for some time and now seems more concerned than ever. There is considerable debate (as there should be) over what to do. Cuts in transportation, education and healthcare are among the bad ideas. Yes, perhaps some cuts are unavoidable, but cuts in these damage our economy long term. Public transportation keeps NYC running, plain and simple. Cut this and you make everything in NYC harder and less efficient. Raising fares may be unavoidable and I have to admit the fares are lower than other public transit systems I have used (e.g. Tokyo and other places in Japan). But remember raising fares is regressive, further putting the burden of government on the lowest income people after nearly 8 years of Republicans doing the same thing year after year. I should note that the current Republican regressive policy comes after Reagan and the elected Bush ALSO effectively raised taxes on the poorest while cutting them for the richest, so we have had nearly three decades where the bulk of government policy has shifted the tax burden lower and lower on the income scale. If that isn't redistribution of wealth I don't know what is. Fare hikes continue that bad trend.

Cutting education damages America's future competitive edge. We already have more and more trouble competing in the high tech industry. Education funding improves our future economic edge and is pretty much always correlated with lower crime, lower drug use and lower poverty. Education is one of the best investments government can make long term, because education cuts future costs and improves future economic prospects. Cutting education may free up money now, but creates future problems.

Healthcare. America already has one of the most expensive healthcare systems in the world yet our outcomes are on par, I kid you not, with nations like Solvenia, Portugal, Albania and, get this, Cuba. We have an existing healthcare crisis that is forcing businesses to flee to Canada where healthcare is cheaper, better, and is less of a burden on businesses. We cannot as a nation afford to further erode our healthcare...unless we are aiming for outcomes more like Somalia.

What can we do? A number of ideas worth considering were discussed yesterday. And this is NYC centric, I admit, but includes statewide issues as well.

Taxes. People say that you can't raise taxes in bad economic times. In some ways I agree. But NY State is somewhat unique. NY State's HIGHEST tax bracket is 6.85% for any indivudual earning over $20,000. Yes, if you earn $21,000 a year you pay the SAME precent tax as Billionaire Bloomberg. From Bankrate.com:

New York collects state income taxes using a progressive, five-bracket system.

For single taxpayers:
-- 4 percent on the first $8,000 of taxable income.
-- 4.5 percent on taxable income between $8,001 and $11,000.
-- 5.25 percent on taxable income between $11,001 and $13,000.
-- 5.9 percent on taxable income between $13,001 and $20,000.
-- 6.85 percent on taxable income of $20,001 and above.

For married persons filing joint returns, the rates remain the same but the income brackets are doubled.

This is a pretty regressive tax structure. Seems to me there is room for some tax cuts at that lower end and considerable room for increases at the upper end. This tax structure needs considerable overhaul. Currently it is desiged to redistribute wealth from the poorest to the wealthiest in typical Republican style. Would it be so awful if people earning over, say, $250,000 a year paid 8% or 9%? Make NY State tax more progressive.

STAR program. This is among the stupidest things I have ever seen. Raise property taxes then give it back to taxpayers so that the Governor's signature can be on a check voters get. Stupid stupid stupid. Personally I say repeal the STAR rebate. But even if you don't want to take that money in taxes, well, just don't collect it in the first place! To collect it then rebate it is about as inefficient as you can get. Reform or repeal the STAR rebate. It can be at least a small savings.

Commuter tax. I don't remember the commuter tax, but from all I hear the repeal of it was one massively bad idea. Personally I'd need to learn more about it, but I have been hearing a push for the commuter tax for some time and perhaps NYC needs this now.

Consolidation of local governments. Joan Millman discussed the fact that many places upstate have overlapping and redundant government offices and agencies that could be made more efficient by incorporation into larger units. I saw this happen in California where several tiny communities incorporated into a larger town, combining services and offices and saving money. This might not be a huge savings, but it would be a definite savings and would make local governments more efficient. I don't know what the process would be to do this, but it sounds reasonable. Redundancy of government offices has been the bane of many a government and is a drain of money.

Reservation revenue. I am not familiar with the treaties and laws governing Indian Reservations. In general these laws are made to the detrement of the Indians. But apparently gas and tobacco sold on Indian reservations, not to mention casinos, COULD be taxed by the state, but aren't. What is the reason for this? What would the impact be of collecting those taxes? It is a source of income that seems needed and it seems the fact that these taxes are not collected is unfair to the rest of the state, but again, I am not sure if this is the complete picture.

Sane Development. This state and city has a bad habit of pouring money into ill conceived development projects with little oversight. They do this largely based on promises of affordable housing. Yet there are few guarantees that these promises will ever be carried out. Bruce Ratner is merely the most obvious and egregious example, using his connections and family donations to Pataki, Bloomberg, Vito Lopez, etc. to get massive amounts of tax money from the people of NYC and NY State. Yet he is now saying he will largely back out of all promises regarding affordable housing. In the end, these development projects become more about patronage and political donations than about improving our city, and taxpayer money is wasted with little return for the community. The job creation is anaemic, the affordable housing non-existant or not affordable, and the only people to benefit are the developer and his political cronies. I am for devlopment if it is sane development, and I am for giving tax breaks to developers if they make enforceable promises and are held accountable if they don't keep them. But this habit of giving development projects to a low bidder, paying for his land purchase anyway, pouring tax money into his pockets, then getting nothing out of it is a huge waste of our time and money.

Prison reform. Among the biggest drains on our society are prisons and crime. Reducing crime rates and recidivism rates save our society money and distress. Brooklyn DA Charles Hynes, who I am not always in agreement with, particularly on local politics, has some programs that seem extremely successful in reducing recidivism and keeping people out of prison. His Alternative Sentencing for drug users program has a lower relapse rate than most programs, and a greatly reduced recidivism rate. Graduates of this program have re-arrest rates that were 33% lower; re-conviction rates that were 45% lower; and were 87% less likely to return to prison than those of a matched comparison group leading to an estimate savings for society of $45.1 million dollars. Here is a Columbia University analysis of this program (PDF). Hynes also has a program for re-introducing prisoners who have served their time back into society. It combines substance abuse treatment and work programs. The DA's office claims participants in this program were 30% less likely to be arrested and had a 90% employment rate. Harvard University has done a study of this program (PDF). Finally Hynes also has a Youth and Congregations in Partnership program which he claims "has an 18 percent recidivism rate compared with 77 percent recidivism rate for this age population (16-22 years)." All of this is a savings not only of money, but of people's lives. Wider application of these programs could save the city and state considerable money.

Voting. This is related in some ways. Our voting process is inefficient and out dated. But the current generation of voting machines are not reliable, are not secure and they work using programs that are secret so the process is not transparent. Several elections may have been faudulent because these machines CAN be used fraudulently with no way to detect the fraud. This is either a massive design flaw or a deliberate design flaw intended, as some Republicans have alleged in specific instances, to steal elections (e.g. Florida, Georgia and possibly Ohio, according to REPUBLICAN whistle blowers). NY State can save money by not making the mistake so many states have made: buying expensive voting machines on vendor promises that wind up not working and have to be replaced within a few years. This has happened all over the country and is just not reasonable. To NY State: DON'T DO IT! Insist on machines that WORK, are SECURE and where the entire process is transparent and auditable. An additional way the state can save money, and this is something I originally opposed because it was pushed by the Greens, but I now see as efficient, is instant runoff voting for elections that otherwise would have to go into a second, runoff election if no candidate gets over a certain number of votes. This has come up many times at CBID and even at IND recently when a representative from Citizens Union brought it up for use in primaries that might require a runoff. Instead of having to fund two eletions, it all can be decided in one election using instant runoff voting. That saves money.

New Deals. What we need is investment in infrastructure, particularly energy infrastructure. We need green sources of energy and that will take investment. In return it will generate jobs and prosperity. We need an FDR style new deal which will rebuild the roads, bridges and levees neglected by Republicans and retool our energy infrastructure. That takes money and Republicans have run us so deep in debt it is hard to know where that money will come from. But it can't be ignored. Let's face it, as long as the Iraq war continues, we do not have the money to do anything to pull ourselves out of this hole. Ending the Iraq war would free up money that we can use for a Green New Deal which will create jobs and improve our desperately neglected infrastructure.

Any other ideas? Any politicians want to give their opinion?