Sunday, December 13, 2009

NYS Politicians Need Crash Course In Basic Math

The NY Post reports that New York Governor David Paterson is going to withhold $1 billion in payments because the state is out of money.
New York Gov. David Paterson today ordered that 10 percent of state aid payments to schools and local governments be delayed, accusing legislators of being irresponsible and asleep on the job.

The Democrat blamed the need to delay payments on the Legislature's failure to cut spending to schools and health care, which are protected by Albany's most powerful special interests. As a result, he said the state is projected to fall $1 billion short of the sum needed to pay bills due Tuesday.

For New Yorkers, the delays could mean restrictions on social services for the poor and working poor provided through counties and cities, reduced programs at schools, threats of layoffs at schools, and potentially higher local property taxes if schools and municipalities have to borrow to cover the shortfall.

Governor David Paterson is holding back 10 percent of school aid because the state is short by about $1 billion on bills it has to pay Tuesday.

Paterson told reporters Sunday from Manhattan that "many legislators, not all of them" made an irresponsible choice by failing to address the full deficit earlier this month. "The question is, who is going to wake up and face reality and who is going to continue sleeping on the job?" Paterson said.

"I can't say this enough: The state has run out of money. We are $1 billion short," he said.
New York City will apparently lose $85 million in the process, if the legislature and municipalities don't sue to block Paterson's actions.
Legislators accused the governor of overstepping his boundaries.

"Case law says the Legislature is the branch of government with the power to enact and amend the budget," said Sen. Eric Schneiderman (D-Manhattan). "He may have difficulty working with the Legislature, but it is his constitutional obligation to do so."

Added Senate Democratic majority spokesman Austin Shafran: "New Yorkers don't want political rancor or self indulgent theatrics. They want their leaders to work together to get things done."

Education groups have said they have already prepared lawsuits to file should their funding be withheld.
Well, here's where the remedial math comes into play. Paterson said that the state was facing a $3.2 billion deficit. The legislature claimed to close $2.7 billion in a budget hole. That left $500 million, not $1 billion in debt to close.

In other words, either the deficit is $500 million more than Paterson was warning about just days ago and New York's fiscal situation is even worse than he was claiming or he's exaggerating the fiscal situation in yet another ploy to get the legislature to cut spending by some amount between $500 million and $1 billion.

The state's elected officials can't even figure out what the fiscal situation is, let alone how to close the budget gap. Paterson is right that spending has to be cut in a big way, but this is something that should have been addressed when putting together the FY 2009-2010 budget, not now. Paterson and the rest of the Albany Democrats knew, or should have known, that the state was facing a fiscal disaster because of declining revenues, yet they grew the budget by 5% - increasing taxes and fees by billions to make it happen no less.

Now, tax revenues are down, including the recently enacted payroll tax (which means the MTA will have to cut service and raise fares). And lawsuits are the likely outcome of all this. Yet, every day brings the state closer to fiscal ruin because of overspending. That's the fault of everyone involved in the budget process; primarily the Democrats running the show in the Assembly (say hello Shelly Silver) and in the Senate (say hello Malcolm Smith).  This disaster is on their heads - along with Paterson.

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