Federal Money Dries Up and NYS Holds Its Breath
by Alithia Rodriguez-Rolon
At the end of the 2011 NYS legislative session, both the Senate and Assembly passed controversial bills regarding samesex marriage and a property tax cap. At one time, it would have been unfathomable for these houses to pass these bills. What
were the odds of both bills becoming law in the same month?
We’ll leave that calculation to Las Vegas bookmakers. Suffice it to say that political wonks eagerly look forward to Gov. Cuomo’s second year in office when the honeymoon may end if the state doesn’t see job growth.
While signs of a slow economic turnaround are evident, pundits remain mixed about the extent of the recovery. NYS Comptroller Thomas DiNapoli issued his June cash report and reported higher than expected tax revenue collection for the first quarter of fiscal year 2011-12. But he says, “Our fiscal health remains tenuous.” (The state’s fiscal year begins April 1.) Mr. DiNapoli also stated, “[We] need to focus on diversifying our economic base, creating jobs, and rebuilding reserves to prepare the state for any fiscal difficulties ahead."
New York also received the last of the federal stimulus funds provided through the American Recovery and Reinvestment Act. Combine that with uncertainty over the federal debt ceiling, and the state’s education and health care professionals remain queasy about the future of schools and patient services. (Editor’s Note: This article was written prior to an agreement in Washington.) New York will have a difficult decision: increase funding to programs to make up for the loss of federal funds – i.e. raise taxes – or reduce services. And as the state continues to grapple with balancing revenue and spending, job creation (and pension reform) will continue to be in the forefront.
As far as jobs are concerned, Mr. Cuomo recently announced his Phase II plan with the goal of rebuilding the economy. Phase II, also called “NY Works”, will include a $10 million advertising campaign to lure companies worldwide to open up shop here.
Despite this shift in focus to creating jobs, attacks on public pensions continue. In June, Mr. Cuomo proposed a bill to reform the state’s pension system. This proposal would raise the retirement age from 62 to 65, increase employee contributions and eliminate early retirement options. Neither the Senate nor Assembly has introduced Mr. Cuomo’s legislation to date. Mr. Cuomo has cited a savings of $93 billion over 30 years if this bill is enacted. In addition, Mayor Bloomberg says this bill would save the city an additional $30 billion. Due to the large fiscal savings quoted and the fiscal uncertainty of the state, you can be certain that changes to pension systems will continue to be advanced.
