State lawmakers who’ve already exhausted their summer reading lists of Patterson novels and John Meacham bios might want to sit down in a comfy chair and browse through a report issued by state Comptroller Thomas DiNapoli last week about the future of state finances.
Sounds like a real thriller, huh?
The report is only 23 pages long, so even the slowest readers among them should be able to finish it between now and when they reconvene six months from now.
And judging from their free spending ways this spring that resulted in $18 billion in additional state spending to create the largest state budget in history, $212 billion, they might be surprised by the ending.
The report starts off like it’s going to have a happy ending. But as often happens in novels and in real life, things take a turn for the worse as it goes on.
Burgeoning debt and years of excessive spending, combined with the depth and uncertainty of the covid economic crisis, threatened to drive up state debt to impossible levels and force lawmakers to make significant cuts to critical state budget items like education and social programs.
But then the cavalry arrived in the form of billions of dollars in federal aid, billions more in higher-than-anticipated tax revenue and revenue from higher taxes imposed on high earners.
That helped reduce a projected four-year budget deficit of nearly $39 billion down to a much more manageable $3.4 billion, the report states.
That’s including all that giddy spending lawmakers did when they got that big check from Uncle Sam. The comptroller calls the change of fortune “encouraging.”
But don’t put down this page-turner yet. The comptroller devotes an entire chapter to “Risks to the Financial Plan.” Ut-oh.
Those risks include having to continue to support spending initiated to help individuals, families and businesses recover from the pandemic; projected significant growth in spending on education and Medicaid; the need to repay debt with operating funds; and the loss of revenue from temporary sources like the corporate franchise tax and the PIT surcharge on high-income taxpayers.
Overreliance on revenue from high-income earners and the loss of revenue from people leaving the state also threaten New York’s long-term financial health.
State lawmakers have an opportunity to write their own ending to this story by doing the unexpected — reining in spending and being more fiscally responsible, reducing the state’s reliance on debt, creating long-term sustainable revenue sources, and enacting policies that don’t drive away individuals and businesses — along with their tax money — to other states.
Every good story has a hero and a villain.
Which one do state lawmakers want to be?