In March, Gov. Andrew Cuomo ordered an economic shutdown and confined most New Yorkers to their homes.
After consulting a constitutional lawyer, I’m not sure the governor actually possesses the authority to direct businesses to close. He appears to have the power to order curfews, but that’s different from shuttering businesses.
However, since no one has challenged him in court, we must deal with the present reality—1.4 million New Yorkers out of work.
Many small companies will never open their doors again due to the governor’s actions.
A recently released U.S. Chamber of Commerce poll indicates “40 percent of the nation’s 30 million small businesses could close permanently in the next six months because of the coronavirus pandemic.”
New York’s contracting economy also means tens of thousands of the state’s most economically vulnerable may find it difficult, if not impossible, to find a new job.
In addition to the financial and mental suffering the unemployed must endure, there is a corresponding impact on the state and its local governments. Income tax and sales tax revenues are dropping like a rock.
“The economic crisis,” state Comptroller Tom DiNapoli reported in late April, “will take a multi-year toll on New York’s finances.” He added, “Tax revenues will be substantially lower in the near term because of the pandemic and likely well beyond.”
Thanks to the economic shutdown, the state budget could run up a deficit that exceeds $12 billion.
So, what could be done?
One thing the state could not do—file for bankruptcy.
Sovereign states, by their very nature, cannot go bankrupt. The United States, a sovereign nation, can become insolvent—that is, run out of money to meet its financial obligation. Similarly, the sovereign State of New York can declare insolvency if its treasury runs dry.
There is, however, one significant difference between the sovereigns. The U.S. government can print money to pay bills. New York can’t. It would have to stop paying bills.
Cuomo could burden present-day, struggling taxpayers and future generations with more debt to avoid insolvency. But while running for governor in 2010, he wrote in The New NY Agenda, that he would “not support borrowing to fund operating expenses.” He opposed “pushing today’s problems down the road and making future taxpayers pay for today’s mistakes.”
A better option: Cuomo could require “shared sacrifices.”
In a 2010 Labor Day Weekend op-ed in the Daily News titled “Labor, be part of the solution: Public employees unions must make sacrifices for the sake of the state,” Cuomo pointed out that union sacrifices helped save New York City from bankruptcy in 1975, and argued, “that today is another moment in time where the public sector (along with everyone else) must make sacrifices for the common good.”
Well, New York is in a lot worse financial shape today then it was in 2010, and while “everyone else” has endured pain and made sacrifices, the state’s public employees have not.
The governor has stopped a 2 percent 2020 pay increases for unionized state workers. It’s only temporary, however. To make it permanent, the Legislature would have to approve a broad-based pay freeze. Such a move, E.J. McMahon of the Empire Center for Public Policy estimates, could save “nearly $2 billion in public money.”
But as this is being written, not one state employee has been furloughed or laid-off and the governor has not declared a hiring freeze.
Are we to believe that every state worker is essential?
Let’s start with Cuomo’s office. His staff, according to the 2019 edition of The New York Red Book, includes 12 “Assistant Counsels to the Governor.” In 1985, Gov. Mario Cuomo had only a “Counsel to the Governor” and one “First Assistant Counsel.”
Reporting to Cuomo’s “Secretary to the Governor” are 14 deputy secretaries and 11 assistant secretaries. His father had only four deputy and two assistant secretaries.
The governor could begin a program of “shared sacrifices” by pairing back his bloated staff to his father’s levels, and then demand that all state departments and agencies as well as legislative offices follow his lead.
Gov. Andrew Cuomo has imposed tremendous financial and social hardships on New York civilians. It seems only fair that he insists that government employees, as he wrote in 2010, “make sacrifices for the common good.”
