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NYS Budget: A Homespun Economic Lesson
By MICHAEL SCHENKLER
I am not an economist.
Although I took my share of college course work in the area, big, broad, government economic analysis has never come easy to me. Alan Greenspan used voodoo, while trickle-down, supply side and other good catch phrases work in sound bites; they are not reliable predictors or indicators.
If you ask me, guessing has a lot to do with governmental economic planning and forecasting. But remember, it ain’t my field.
Besides some college courses and NY Times reading, my parents provided me with much of my attitude and training about money, budgeting and economic trends.
The folks were bright, well- educated thinkers. Dad leaned far to the left and placed education above all else – except health. He would likely applaud the work of the NYS Legislature in providing the borrowing mechanism for New York City to build its much needed schools. He’d ignore the costs of the gimmicks or the financial impact on the future. He would gripe that the CFB still demands that the City receive additional school operational funding, but to him what would have mattered is that the children will all get seats. This budget was a step in the right direction.
Dad, you haven’t been with us for some eight years; I hope I fairly presented your views.
Mom, on the other hand, often used good old reliable adages she was able to weave into the conversation. Today, at the age of 90, you can still count on a dose of Pearl Schenkler wisdom being dispensed by borrowing – without crediting – from those who packaged their words and ideas well.
So when I watch New York State pass its second on-time budget after a two-decade failure, I share mom-style wisdom as part of my reaction. (And yes, she can still be heard uttering each and every one of these – and more.)
There was Shakespeare’s “Neither a borrower nor a lender be.” (Mom wouldn’t have credited the author.) To this day, I don’t borrow and try not to lend. The folks believed in pay as you go; save before spending -- and it rubbed off.
Yes, Ben Franklin also knew economics: “A penny saved is a penny earned.”
And no, legislating new fangled plans to build required schools by mortgaging our future while cutting taxes and increasing spending elsewhere fails mom’s test of economic catch phrases miserably.
Dad would raise the taxes on the wealthy to foot the bill.
I guess I share this all with you to illustrate that I believe there is no simple single solution to the State budget problem. Under court-ordered mandate to provide additional funds to New York City schools, New York resorts to quasi public authorities to increase State debt to unimaginable levels.
Joe Bruno, who turns 77 this week, and Shelly Silver, 62, with more than 30 years in the Assembly are going to solve the education funding dilemma by arranging to borrow more than an additional $11 billion and allow governments after they’re gone to cope with debt service and repayment. They will be momentary heroes, get their members reelected, and shine today.
Yes the budget is on-time – the pressure from us folks achieved that.
Yes a portion of the inequity of funding New York City schools is addressed – the pressure from the courts achieved that.
But no, fiscal responsibility has not been addressed. You can thank election-year politics for that.
Billions upon billions of debt are being added to the house-of-cards budget of New York State.
Yes we want to see the City schools funded appropriately. But no, we don’t want to see the kids, now in school, being taxed for the rest of their lives because a group of Albany lawmakers couldn’t make the tough decisions.
When budgets don’t balance, my economics say you cut expenses, not create tax credits. When money is neeeded for our children, sacrifices must be made. Cut member items, pork barrel legislation and more before we mortgage our future.
Save our schools but don’t sell our future.
It’s a good thing that mom now lives in Florida where she indeed did “Remember to save for a rainy day.”
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Agreed: $11 Billion to Build Schools, New Borrowing
By
HENRY J. STERN
The Senate and Assembly have agreed on the state budget. For 19 of the past 20 years (except 2005), the budget was not adopted until late in the year, but that goes into the category of unenforced laws. The governor is likely to veto the pumped-up 2006 budget, and the legislature may then negotiate or override.
Today’s arrangement provides increased spending, reduced taxes, and more borrowing, further increasing the record state debt by using Enronian off-budget entities.
Republican concern over retaining their Senate majority has resulted in a more expensive election-year package. The mayor considers the new budget a triumph because it contains the school construction funds he sought so intensely from Speaker Silver and Majority Leader Bruno.
It is a political victory for him, and by extension, for the city because he will receive money he may not have to pay back. But the state’s weak financial condition and its continued addiction to balancing budgets by borrowing billions do not bode well for economic recovery, business retention, or fiscal responsibility.
We admire prudence in public expenditures, but when it comes to action, both congressional and Albany Republicans support new spending programs in areas they fancy. This indulgence of massive deficit spending is attributable to the combined pressure of constituents and lobbyists. The opposition, the misers, the perennially beleaguered cost-cutters, usually lose out, except where municipal insolvency appears imminent.
Our irresponsible indulgence is the fault of no one individual. The outgoing governor has lost considerable influence; his days are numbered. Today is Day 269 of the countdown to his successor’s inauguration. The mayor, invigorated by re-election, prioritizes school construction. The Senate majority leader understandably seeks to preserve his majority. The education lobby vigorously defends incumbents of either party. The Assembly speaker is secure, but he is no foe of increased expenditures.
Skeptics unconvinced that construction dollars necessarily morph into high reading and math scores are bewildered.
Will these billions be cost-effective? Will contractors and unions be the primary beneficiaries of new construction? With school populations relatively constant, why is the edifice complex so insistent?
The fiscal plan provides for the borrowing of $2.6 billion by the State Dormitory Authority through the issuance of bonds. New York City would receive $1.8 billion of this largesse, which would build 21 new schools.
The city will also gain permission to borrow $9.4 billion from the NYC Transitional Finance Authority, a state agency created in 1997 to help the city fund its capital plan. The state undertakes to help service the bonds if the city requires assistance. The result is extensive borrowing, increased public debt, and rising interest costs.
With singular insight, a Times editorial captures the issue in a sentence: “It’s ridiculous that the legislators, who are almost all from districts gerrymandered into impregnability, and a governor whose presidential hopes are still a mirage can be doing so much damage with an eye toward pleasing the voters.”
Sadly, the legislature responds to demands from the education lobby, and intimations of retaliation against those who refuse to submit. Threats aren’t all bad; fear also stimulates good deeds. We appreciate the energy of the mayor’s initiative.
We are just not certain that throwing bricks and mortar at schools will solve learning problems. The mayor’s apparent victory over lame-duck Pataki and endangered Bruno will provide more money for our schools, but it will not satisfy the educrats and their allies, for whom any failure to learn is the result of inadequate public funding.
The legislature may intend to respond to the CFE lawsuit by demonstrating generosity, but one doesn’t throw money at plaintiffs before settlement negotiations begin. We think the state undermines its own position by offering borrowing as a cure-all for spending decrees.
It was sad to read yesterday of the closing of 11 parochial schools in NYC, which are generally regarded as educationally successful institutions. The state cannot and should not subsidize religious education, but we wonder what educational benefits will accrue from spending billions on new schools while small existing schools close for lack of resources.
Many non-Catholic parents send their children to Catholic schools, paying tuition, because they believe their children will learn more. It is unfortunate that the legislature, in thrall to the United Federation of Teachers and its upstate appendages, resists charter schools, vouchers for parents, or other efforts to modify their educational monopoly, while demanding greater public expenditures without demonstrating superior results.
This is not meant to disparage public education, which I enjoyed for 14 years. But the education network is New York’s version of the military-industrial complex, which President Eisenhower warned about before leaving office in 1961. Union and management, often at odds, agree on one issue: More spending.
StarQuest@NYCivic.org |
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Not4Publication.com by Dom Nunziato |
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