Business as Usual

Let's run the numbers for New York's latest budget (and it was indeed late - more than four months late). It calls for $136.5 billion in spending for the fiscal year that began April 1, 2010 through March 31, 2011.

That's 2.6% more than the prior year budget (about $3.2 billion).

State legislators are crowing that they found a way to plug the $10 billion deficit, but I'm not buying it. Nor am I buying the fact that this was a fiscally prudent budget.

The state increased taxes and fees by more than $1 billion. That includes a "temporary" elimination of the sales tax exemption on clothing sales under $110. It also includes imposing tax on Internet sales of hotel rooms in New York. Remember that 2.6% spending increase? The $1 billion is about 30% of the increase - and the state is betting that revenues will pick up. If they don't, and that's a distinct possibility with the economy continuing to operate in the doldrums, the state will be saddled with yet another structural deficit problem from which the only escape is truly reducing spending and not increasing taxes around the fringes in the hopes that no one will notice.

Gov. Paterson says that he had to impose the tax hikes. That's nonsense. He could have demanded that the state simply spend less - to reduce the increase in the budget size.

He - and the state Legislature did not. They failed miserably to get an on-time budget, which leads to higher borrowing costs. They failed miserably to act fiscally responsible by promoting a bloated budget that increases spending through tax hikes.

Eliminate the tax hikes and you eliminate the additional spending - and the state would be in better shape. Instead, New Yorkers get higher taxes with nothing to show for it. Should the state be thankful that many other tax and spend proposals didn't make their way into the budget? Hardly. They're not off the table and some may get included in next year's budget.