The United States economy is booming, unemployment is at its lowest level in over half a century, and the stock market in 2019 had its strongest gains in a decade.
Yet, despite all this good economic news, which has translated into more tax revenue in New York State’s coffers, Gov. Cuomo’s budget for fiscal year 2020-2021 that begins on April 1, is projected to have a $6 billion deficit, about 6% of the $102 billion operating budget.
What’s the cause of this huge unbalance?
According to David Friedel of the Citizens Budget Commission, it’s “really a spending issue.” Revenues, he noted, “are coming in pretty much as expected.
Running up deficits appears to run in the Cuomo family. During Governor Mario Cuomo’s first 10 years in office (1982-1991), his budgets, which grew above the inflation rate from $20 billion to $36 billion, incurred deficits in nine of those years. The state’s accumulated deficit during that period grew from $2.9 billion to $6.2 billion.
To give the appearance of balancing recent budgets, Andrew Cuomo has been employing the same fiscal gimmicks his father did including raiding surpluses from various government funds and pushing shortfalls into future budgets.
For example, Cuomo, in March 2019, quietly postponed a month’s worth of Medicaid payments by shifting $1.7 billion in spending into the next fiscal year. He also raided the state’s mortgage insurance fund and delayed repayments to the New York Power Authority and shifted other expenses off-budget. One year earlier, he shifted $435 million of 2018 expenses into 2019’s budget.
This is Mario Cuomo redux.
Sadly, the present Cuomo administration is publicly defending their fiscal “blue smoke and mirror” antics.
On Saturday, Dec. 21, 2019, The New York Times reported, “State budget officials said delaying payments was a common book-balancing practice. In fact, they plan to do it again to offset next year’s shortfall….”
Delaying payments is not “a common practice,” it’s accounting chicanery.
It was this kind of deceptive bookkeeping that brought New York City to the edge of bankruptcy in 1975 and Nassau County in 1999.
What’s driving the state’s deficit? Medicaid.
Not only is Medicaid’s cost per recipient 50% higher than the average of the nation’s fifty states, Newsday reported that experts say “its oversight and financial control … are among the worst.” A U.S. Health and Human Services Department analysis concluded that as many as 15% of Medicaid recipients are not properly enrolled.
As a result, the Cuomo administration admitted in December 2019 that the Medicaid program “is running over budget by an astonishing 16 percent, or $4 billion, even though enrollment is flat and medical inflation is at historic lows.”
Other reasons for cost overruns: When fighting off a primary challenge in 2018, Cuomo promised Medicaid providers they would be reimbursed for increased costs due to the minimum wage hike.
The Empire Center for Public Policy has reported that the cost of Cuomo’s campaign promise is projected to be $3 billion.
Also, Cuomo helped two of the top donors to his campaign treasure chest, the Greater New York Hospital Association and Local 1199, by ordering several hundreds of million dollars in additional funding for hospitals and nursing homes.
And what is the reaction of Albany’s power brokers to the Medicaid crisis?
Gov. Cuomo dismissed it. “It’s nothing we haven’t addressed before,” he said.
And then he went on to blame (as he does most of his fiscal woes) the Trump administration for allegedly reducing Medicaid payments.
However, Moody’s, the credit rating agency, disagreed. It “blamed the rising deficit on actions by the Cuomo administration and the Legislature.”
As for the state Legislature, Assembly Speaker Carl Heastie announced that his Democratic conference would consider raising taxes to resolve the crisis. “For us in the Assembly,” he said, “we always believe in raising revenues.”
Yup; raising taxes ad infinitum on people who already shoulder the highest tax burden in the nation, is the progressive answer to all the fiscal problems of state and local governments.
This tax and spend mentality help explain why 1.4 million people have fled the Empire State since 2010.
In 2020, don’t be surprised if the Democrats, who have ironclad control of Albany, continue their fiscal conjuring to mask the real costs of their radical ideological agenda.