This Op-Ed by Assemblyman Lancman in the Daily News, is in response to Governor Paterson's Op-Ed in last Sunday's NY Times...
Of all the arrows in a New York governor's quiver - and there are many, New York's governorship being one of the nation's constitutionally strongest - perhaps none flies with greater effect than the power to frame the debate, both through the budget the governor alone can propose and the bully pulpit from which the governor alone can command statewide attention.
This is why Gov. Paterson's increasingly frequent flings against the modest borrowing proposed by the state's lieutenant governor, Richard Ravitch - his own appointee - are so unhelpful. These shots are way off target, and more importantly are poisoning hopes for a speedy and rational resolution of the current state budget stalemate.
The governor has compared the state to a household or small business, arguing each faces the same strictly binary choice - "cut spending or increase revenues" - and that "borrowing accomplishes neither of those goals." The governor likens borrowing to "getting a bank loan to buy your groceries," and concludes that Ravitch's suggested borrowing will merely "delay our inevitable day of fiscal reckoning past one more November election."
However, limited borrowing has its place in our financial order, particularly as constructed by Ravitch, and particularly where, as here, the budget deficit confronting the state is not, as the governor argues, the result of "years of overspending" (another frequent fling of the governor) but instead the result of a violent economic downturn plaguing the entire nation and pushing hundreds of thousands of New Yorkers to the edge of a financial precipice of their own.
The national scope of the problem is undeniable. As detailed by the nonpartisan Center on Budget and Policy Priorities, at least 41 states experienced shortfalls in their 2010 fiscal year budgets, and 42 states have estimated gaps in their projected 2011 fiscal year budgets. New York's current and projected budget gaps, as a percentage of the state's overall budget, are about average as states go. This is why New York isn't contemplating the draconian cuts and sometimes wacky gimmicks being proposed in other states: Hawaii cut its school week to four days; Arizona sold its state capitol building; California . . . well where does one begin?
Because our budget deficit is demonstrably not rooted in any unique dysfunction in New York's fiscal policies or in our choices as a state to invest in our schools and health care system, the general admonition against making borrowing a part of the state's deficit reduction plan is misplaced.
We are not bailing our budget process out; we're bailing our people out. By employing restricted, short-term borrowing to cover approximately 10% of our projected four-year budget deficit, we are not aggravating a problem of our own making, but rather mitigating the already punishing impact on New York families of a national economic crisis and ongoing cuts in education, health care, mass transit, infrastructure and everything else.
The alternative? Even deeper cuts, resulting in greater pressure on local governments to raise property taxes, lay off workers and suspend capital projects. In other words, the exact opposite of what is broadly acknowledged to be necessary to pull our economy out of recession.
This is why, even in the worst of times, parents might sensibly decide to borrow for a child's college tuition while paring expenses elsewhere, and a small firm might increase its total long-term debt obligation by re-financing existing debt at lower interest rates with more manageable monthly payments.
Finally, the short-term borrowing proposed in the Ravitch plan cannot be viewed in isolation from the rest of the plan. It also includes such long-sought-after-reforms as moving the beginning of the state's fiscal year from April 1 to July 1, applying generally accepted accounting principles to the state's budgeting process, and mandating multiyear financial planning with obligatory adjustments on a periodic basis if the state budget goes off track. (The plan's creation of an appointed review board bears closer examination as a potentially unwise delegation of power to a body of people unaccountable to the electorate, but that's a different issue.)
As a whole, the plan, including its modest borrowing component, is structurally sound and puts New York on a path to fiscal stability. We owe it to future generations of New Yorkers to leave platitudes aside and make the hard, pragmatic decisions which will keep our people working and move this state forward.
Lancman is a New York State assemblyman representing Queens.