Thanks to the large looming budget deficit and the negative impact of the recently passed Federal tax plan, New Yorkers have had a run of bad financial luck over the last few months.
With the 2018 New York State budget due April 1, the most pressing problem is the state’s $4.4 billion projected deficit for the coming year.
To make matters worse, the deficit is expected to grow if certain federal spending cuts become a reality.
Raising taxes is political suicide for any elected official. That’s why in 2012, Kansas Gov. Sam Brownback tried a trickle down experiment, similar to the recently enacted federal tax plan, with steep tax cuts to stimulate the economy, which should have raised revenue. However, it was an abysmal failure, and resulted in monster deficits.
So what’s our state to do?
Anyone who runs a business knows the answer: when you can’t raise revenue, focus on expenses.
A dollar cut in operating expenses flows to the bottom line, in the same manner as a dollar of increased revenue. There has been lots of chatter about taxes in New York, but little or none on government efficiency.
New York should quickly commission a task force to find ways to find savings and efficiencies in government.
The model to use should be similar to the Grant Thorton Fiscal Sustainability Initiative, commissioned by Nassau County and presented Sept. 9, 2011.
It’s perplexing that Nassau never used a single recommendation from the report, but, for efficiency junkies like me, it was compelling reading.
The report presented a multitude of ways to save taxpayer dollars through cost savings and operational efficiencies that had nothing to do with firing government employees or raising taxes.
Some excellent suggestions from the report include: have all employees paid by direct deposit, eliminate duplicate software services, and contract with an energy service company to run the county more energy efficiently.
Those three alone would have saved the county almost $1.4 million. The report details many other of ways to create savings which total roughly $300 million. Here is a link to the Grant Thorton report for your enjoyment: https://www.nifa.state.ny.us/docs/GrantThorntonReport.pdf
In a projected New York State budget that will be well north of $150 billion, there will be numerous ways to operate more efficiently.
Getting state government employees involved through a suggestion box that rewards them for creative ideas on efficiencies is a good way to start (many government entities already do this).
Who knows better to fix problems than the people who have to deal with them on a daily basis?
The second big issue is President Trump’s recently passed federal tax plan, which eliminates the federal tax deduction of state and local income taxes, and caps the deduction for property taxes at $10,000.
The Republican controlled Congress will quickly reject any possible work around through legislation. The Republican appointed majority in the Supreme Court wouldn’t rule favorably on any liberal tax avoidance schemes if they make their way to the highest court. Increasing taxes on the wealthy to raise revenue will just drive them out of our state and decrease future tax revenue.
The answer is to make New York a beacon of efficiency and good government.
If we show national and international companies that state government is efficient and business friendly, they will invest.
Also, the petty squabbles between the governor and New York City Mayor Bill de Blasio need to stop. And, we need to pass real ethics reforms to deter future political indictments, like the ones against former state Assembly Speaker Sheldon Silver, former state Senate majority leader Dean Skelos and former Nassau County Executive Ed Mangano.
Why would businesses want to invest in New York if its leadership squabbles and has a poor history of integrity? Under the current political environment do you really think Amazon has New York on its short list for a new headquarters?
The financial fate of our community hangs in the balance, and how Gov. Cuomo steers New York through this budget crisis and new Federal tax plan will determine our state’s future for decades to come.
