Up until very recently, I was a doomsayer.
I had surveyed the fiscal landscape, found it wanting and confidently predicted that the upcoming budget season would be filled with unpleasantness.
New York faced a staggering $15 billion budget deficit. Local governments were reeling from the pandemic-induced recession, and a precipitous drop in sales tax revenue. Addressing these shortfalls seemed to require hard choices – tax hikes, layoffs, steep cuts to government services.
“It’s going to get worse before it gets better,” I wrote, in late September.
That prediction was wrong.
Things didn’t get worse – they got better.
Thanks to $12.6 billion in one-time, federal stimulus funds, New York is now flush with cash. Municipalities preparing for belt-tightening and hardship now find themselves in the enviable position of having to figure out how to spend unprecedented and extremely generous windfalls.
The gloom and doom of last year is gone, replaced by carefree optimism and big spending.
For evidence, look no further than the New York state government, where leaders have behaved like drunken sailors on shore leave, agreeing to a whopping $212 billion budget that increases spending nearly 10 percent from the previous fiscal year.
Rather than respond to a devastating, once-in-a-lifetime crisis by stabilizing the state’s finances, helping those hurt by the pandemic and planning for a more sustainable future, the Legislature has opted to throw caution to the wind and spend like there’s no tomorrow.
Will New Yorkers come to regret it?
I suspect we will – that New York has only postponed a long-overdue budget reckoning.
As the fiscal watchdog group the Citizens Budget Commission put it, “Overall, the budget grows significantly and rapidly, temporarily inflated by one-time federal relief, and it is devoid of systemic improvements needed to make recurring spending sustainable and maximize New York’s competitiveness.”
I’m not in favor of big cuts to state services, and I’ve always believed some federal aid to states to offset the damage caused by the pandemic was needed and appropriate.
If there’s one thing the long recovery from the Great Recession taught me, it’s that I’d rather see too much stimulus than not enough.
But is it too much to ask state leaders to learn from the past year, show some restraint and plan for a rainy day as New York looks to recover from a pandemic that is still very much with us?
Here’s hoping that local governments exercise better judgment than the state, and use their stimulus funds wisely, to craft sensible spending plans and make crucial investments that might otherwise be neglected or postponed.
The speed with which New York’s fiscal fortunes changed is enough to cause whiplash – and to raise questions about whether the state is missing a valuable opportunity to use its newfound billions to chart a better course.
The federal stimulus money helped New York avert a worst-case budget scenario, but it’s also enabled some of the state Legislature’s worst habits.
Reach Sara Foss at [email protected] Opinions expressed here are her own and not necessarily the newspaper’s.