In his first State of the State speech, Mr. Cuomo proposed competitions such as one among school districts for a shot at a $200 million pool of funds for improvements. He said he wanted to modernize the state's oversight of banking, insurance, and consumer protection by moving the departments into one huge agency. And, he forcefully told state leaders and citizens attending the speech at the Albany Convention Center, “It is time for New York to change.”
However, on Wednesday he said little about another “c” word, “cutting” which is likely to be one of the main messages the legislature gets when he submits his budget proposal in a few weeks. Instead of specifics, he told lawmakers, “New York spends too much money.”
Like other states, New York faces a large and growing structural budget deficit of $10 billion. By next year, the gap is projected to swell to $14 billion and then to $17 billion by the state’s 2014 fiscal year.
New York faces common plight
New York is far from alone in having to find ways to rid itself of red ink, which it is required to do by its constitution. According to the Center for Budget and Policy Priorities, there are 12 states whose shortfall as a percent of their prior year’s budget is larger than New York’s gap. All total, the CBPP estimates 42 states will have a combined deficit of $140 billion. And, unlike the past two years when the gaps were just as large if not larger, it is unlikely they will get any help from Washington.
Most of the states will have several months to debate how to bridge those gaps. However, in New York’s case, the new fiscal year begins on April 1, meaning Albany has a very short time to get a budget passed.
In his speech Wednesday, Cuomo even joked about past years when the Republicans and Democrats seemed like ships passing in the night, unable to agree on budgets until well past legislatively-mandated deadlines. To illustrate the point, the new governor had a slide that showed cartoon warships going in opposite directions, with Sheldon Silver, the Speaker of the Assembly on one vessel and Sen. Dean Skelos, the Senate president on the other. He got some laughs.
In fact, Cuomo, in a first for the state, invited both legislative leaders to make short speeches before his own address.
He will need all the good will he can get. He wants Albany to pass tough new ethics rules requiring more transparency on income earned when the legislature is not in session. In addition, he has proposed a wage freeze for all state employees, something that has not yet been agreed to by the state’s unions. Cuomo has already said he would take a 5 percent cut in his own salary and has reduced funding for the Executive Chamber by the same amount.
During his campaign against Republican Carl Paladino, a Buffalo businessman, Cuomo proposed a 2 percent cap on property taxes. To emphasize the pain property taxes are causing homeowners, Cuomo introduced Wednesday's audience to an 81 year-old woman who had to go back to work to pay her taxes. However, the proposal is likely to face stiff lobbying from local municipalities which have been raising property taxes to make up for less funding from the state.
Cuomo will need his sense of humor once he starts to pressure the legislators to enact his plan. State spending on Medicaid, the state-federal health care program, has been rising at 5 percent per year. Spending on education has been growing at 6 percent per year.
"We can’t afford those rates,” said Cuomo, pointing out that state spending outpaced residents’ personal income growth. However, there are already new proposals before the legislature to expand Medicaid coverage.