Drawing A Line In New York

The present state of dysfunction that prevails in New York government is not the cause of our fiscal crisis. Rather, it is a reaction to the cumulative effect of years of reckless spending and ill conceived policies, born of self serving motives. These policies of big government spending and high business taxes have become synonymous with Albany politics. The precipice on which New York now finds itself, with deficits rising and revenue in decline, is a recipe for economic disaster. It has led to a legislative stalemate in which Republicans and Democrats have dug in their heels, refusing to budge on their principles. Republicans are unwilling to raise taxes while Democrats are loath to cut spending. These differing points of view represent long held convictions of both political parties and at present, are clearly and refreshingly visible. Seldom in Albany have philosophical lines been so clearly drawn and seldom have voters been able to discern so vividly the differing ideologies of their representatives. In November, the New York electorate will have the opportunity to determine which route they prefer to follow and they will cast their votes accordingly. An overview of the policies that have led to this legislative malaise may prove far more instructive in identifying New York’s economic deficiencies than merely focusing on governmental paralysis. The predicament in which New York presently finds itself is attributable to years of mismanaged government and fiscally unsound policies. It is these policies that must be addressed and understood if we are to achieve an economic recovery.
The American Legislative Exchange Council (ALEC) has rated New York as having the worst economic forecast of any state in the nation. The recent report titled “Rich States, Poor States” has its findings based on New York’s chronically high taxes, its excessive government spending and the size of its public sector workforce. New York’s taxpayer funded expenditures on Medicaid, pensions and education are among the highest in the nation, yet these programs consistently underperform. This is due mainly to inefficient management, widespread corruption and a system of promotion based on seniority rather than on merits.
With regard to the New York City school system, taxpayers supply $8.60 for every dollar that employees contribute to their pensions. This drastic disproportion between contributor and benefactor is typical of New York’s policies. The state is projected to spend $49.2 billion on Medicaid in 2010 alone, far more than any other state in the union. By law, the federal government matches all Medicaid funds provided for by a state. These federal funds act as incentives for states to expand their healthcare initiatives. New York politicians use a Keynesian logic to justify these funds as ‘free money’ and have expanded the program accordingly. Up to 30% of our next state budget will consist of Medicaid expenses.
The burden of funding these massive public programs has inevitably fallen upon the taxpayers. The Empire State’s 12.62% top marginal personal income tax rate and 15.95% top marginal corporate tax rate are the highest in the nation. These excessive tax rates have resulted in limited economic growth, lackluster job creation and diminishing capital investment. They have served as a catalyst for New York’s economic demise, resulting in the mass migration of its citizenry.
Throughout the course of 2000 to 2008, New York has experienced the largest loss of residents of any American state. We have witnessed a net migration outflow of 1.5 million people or 8% of our population since the onset of this decade. The migration of New Yorkers to more reasonably taxed locations has yielded a loss of revenue for the state and a loss of capital for investment. Our government inevitably makes up for this revenue shortfall by continually raising taxes.
These policies of excessive government spending coupled with chronically high taxation have resulted in a vicious and counterproductive cycle. The answer to fixing our current fiscal crisis lies not in passing a budget that will merely postpone the inevitable, but in the complete reformation of New York’s fiscal policy. As high taxes and excessive spending have resulted in the near economic collapse of our state, it is reasonable to assume that lower taxes and limited expenditures are the surest path to recovery. The initiation of such policies will not be an easy task. A drastic change in state strategy and leadership will be required to achieve such results.
The budgetary gridlock in the New York State Legislature may in fact be a blessing in disguise. By drawing a distinction among our representatives, based on core beliefs rather than on politics, voters are becoming better informed. A clear distinction of where the candidates stand is a rare New York commodity. This opportunity may prove to be the beginning of true reformation. Seldom have New Yorkers been granted the chance to genuinely affect state policy. Heretofore, the inmates have been running the asylum. It falls on the people to set the course of government by electing true representatives of the state. It is time for New Yorkers to draw a line in the sand and insist on a voice in their fate. We know where our representatives stand. We know what needs to be done. What is now required to effect real change is to remain alert, to keep well informed and to respectfully acknowledge and wisely utilize the enormous power of our vote.

Jeremy Pitcoff