Analysis: Proposal one would lead to higher spending and higher taxes

The proposed constitutional amendment that would radically alter New York's budget process will lead to “less fiscal discipline, higher spending and higher taxes,” according to a new analysis by the Empire Center for New York State Policy.

The analysis, by the director of the Manhattan Institute’s Empire Center E.J. McMahon, explains that Proposal One, the constitutional amendment, guarantees a late budget because of the contingency budget the amendment would put in place.

“Proponents of this change argue that the contingency budget represents an unpleasant option that no governor or legislator would want to live with for very long,” the analysis says. “But in the proposed constitutional amendment, the Legislature gave itself a huge escape clause: the power to amend the contingency budget twice, with a single “multiple appropriation bill” and a supplemental appropriation bill- neither of which would originate with the governor.”

The amendment would also kill the governor’s budget once the deadline is passed because it stipulates that the contingency budget “shall constitute. . .final action” on the governor’s bills, the analysis says. “Indeed, it flatly prohibits the Legislature from acting on the governor’s bills after a new fiscal year begins.”

By waiting until the deadline is passed the leaders in both houses of the Legislature put themselves in a position to design a budget with their own spending items, the analysis says. “For all intents and purposes, the Governor would then be on the outside of the budget process looking in.”

The analysis also points out that the “final action” provision of the amendment would grant legislators another favor “it effectively repeals the law withholding legislators’ pay in the absence of a new adopted budget.”

“The ability to kill all of a governor’s proposals merely through inaction—and to get paid for it nonetheless—is an enormous new incentive for legislators to delay action on the final budget,” the analysis says. And late budgets are the problem the amendment is designed to halt.

Proponents of the amendment point to the two-year school aid appropriations as an important, and necessary, feature of budget reform, the analysis says. “However, appropriating school aid two years at a time will deprive the Governor of significant negotiating leverage and is likely to result in significantly higher school aid spending.”

The analysis says that the amendment is so “sloppily drafted” that it is unclear whether the two-year appropriation would actually be constitutional in the state even if the amendment is passed “since the change is not actually authorized under the constitutional amendment that comprises Proposal One.”

The analysis also says that Medicaid costs could escalate even further if the amendment were passed.
“Proposal One would make it possible for either house of the Legislature to single-handedly kill Medicaid reforms sought by a governor,” the analysis says. “Moreover, the broad federal spending exception to the contingency budget limitations arguably could put all or most state Medicaid spending on permanent autopilot, beyond the reach of the governor’s vetoes.”

“Given the Legislature’s spending proclivities and aversion to any form of sunshine, Proposal One is a prescription for even looser fiscal practices in state government—the last thing New York needs.”

The analysis said that real budget reform would include a requirement for a balanced budget, among other items.

“Most discussion of state budget reform has focused on the budget process without much consideration of improving results,” the analysis said. To improve results the state’s constitution should be amended to cap the annual growth in state funds spending at the rate of inflation plus population growth and put new limits on state debt and restrict issuance of bonds while outlawing the use of public authorities as borrowing vehicles.

The entire analysis is available at www.empirecenter.org/pb/2005/10/breaking_the_bu.php.

More spending, and higher taxes!
Is that what New York needs? You know the answer!

Vote ‘NO’ on November 8.