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Editorial: Bailout may be mixed blessing

Editorial: Bailout may be mixed blessing

New York's real day of reckoning with structural deficit put off again

The $2.6 billion in extra Medicaid funding and education aid the federal government has decided to shower New York state with is good news for the most part, but there is something about it that gives cause for concern.

Assuming the state Legislature reconvenes in the near future and the windfall is formally appropriated, it will help restore an estimated 7,100 school jobs cut in anticipation of this year’s 5 percent state aid reduction and obviate the need for the extra $1 billion in tentative general fund cuts the Legislature had to make to balance this year’s budget.

The only problem with the unexpected windfall is that, once again, it allows the Legislature to avoid addressing the state’s structural deficit. Unless the economy stages a remarkable recovery, the federal government decides to go even deeper into debt, or lawmakers have a change of heart about seriously raising taxes, the state will be right back in the soup next year.

Note that to balance this year’s budget (four months late), lawmakers decided to suspend the sales tax exemption for clothing under $110 — something many consumers don’t even know exists because most counties didn’t pass accompanying exemptions for their sales taxes. But this remedy was only temporary: The exemption, which won’t be suspended until Oct. 1, will come back part way next April, for clothing under $55; a year after that, it will return in full, covering clothing up to $110.

Lawmakers, meanwhile, bowed to pressure from beverage industry lobbyists and refused to implement the tax on sugar-sweetened beverages; and they bowed to pressure from liquor store lobbyists and refused to let grocery stores sell wine; and though the Senate has passed a 4 percent cap on local property taxes, the Assembly seems unlikely to follow suit because the move is opposed by the all-powerful teachers union, to which Democratic lawmakers are particularly beholden.

So permanent moves to raise some real money, and limit the local property tax hikes that are killing homeowners, were resisted. And the state’s financial condition — though brightened somewhat by the federal one-shot — remains quite shaky. Some hard decisions were made this year, but unless there’s an unexpected turnaround, similar budget crises are likely to occur next year and in the years ahead.

Paterson has to bring lawmakers back to town, anyway, to formally spend the federal windfall. He should use the opportunity to redirect their attention to some of the reforms that fell by the wayside during this year’s budget dance. For once, let them earn their full-time salaries.

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