Congratulations to Governor Andrew Cuomo and his legislative colleagues for completing a session marked by significant fiscal accomplishments. Like a troubled student who has gone from repeated failure to a semester of commendable grades, New York State and its top elected officials should be praised for the change in direction and the progress that has been achieved. But all those concerned with the student's future must also recognize that New York is still a long way from graduating with honors. More hard work lies ahead.
First, the good marks on the report card:
1. The budget was adopted on time, with limited gimmickry and no major tax increases.
2. A preliminary agreement with the State's largest public employee union will, if approved by the members and adopted by other unions, slow the growth of payroll costs and shift more responsibility for sharing the cost of their health insurance to state employees while avoiding layoffs.
3. New York's public universities, SUNY and CUNY, were authorized to create five-year plans for regular, reasonable, tuition increases that will help them improve their stature and develop designated campuses as flagship research centers.
4. Local governments and school districts will be required to limit their property tax growth to two percent per year, unless a higher rate is approved by a super-majority of voters.
But it takes nothing away from the pride in these achievements (and others in the non-fiscal realm, such as marriage equality and ethics reform) to acknowledge that the record on some issues is mixed and, in some cases, negative.
Rent regulation was extended only four years, promising another contentious debate all too soon. Increasing the vacancy destabilization rent threshold to $2,500 monthly and the luxury destabilization annual income to $200,000 slows the pace of decontrol and does little to increase the supply of housing affordable to low- and middle-income families.
The local property tax cap was adopted without addressing the inequities it may exacerbate between high-wealth school districts and those that need more state aid to fund their schools at minimally sound levels. And, in what is arguably the worst fiscal action of the session, the Assembly and Senate approved a bill giving school districts the right to borrow to fund pension payments, with no limit on the amounts or the interest expenses -- a dangerous practice that undermines the property tax cap they enacted. This bill should be destined for a prompt veto.
Most local officials sought mandate relief to help cope with the property tax cap, and the governor and the legislature agreed to streamline reporting, allow for group procurement, and eliminate some school transportation requirements. But these measures will save local governments only small amounts. A newly created Mandate Relief Council is to review statutory and regulatory burdens on localities, but whether this will result in significant changes remains to be seen.
The largest unfunded mandate is the inexorably rising cost of public employee pensions. The governor proposed a reasonable new pension tier for new employees, but no action was taken by the legislature. One reason for optimism, however, is that this is the first legislative session in memory in which no "pension sweetener" legislation was adopted. Bills giving particular categories of retirees additional benefits at taxpayer expense have been routinely approved in the past; their absence this year is an encouraging sign that legislators are beginning to understand the importance of getting public-sector pension costs under control. Nonetheless, sensible changes that give localities, including New York City, some relief on this front fell through the cracks this session.
Much more remains to be done this year. First, the more than $1 billion in unspecified savings in the adopted budget -- including those from the Medicaid spending cap, prison closings and labor savings from all unions -- need to be achieved, or we will be faced with a serious mid-year budget deficit. Second, serious pension reform, important to the fiscal stability of New York City as well as the state, should become a top priority. Finally, it is time to figure out how to fund the pressing capital needs of the MTA and the rest of the State's transportation infrastructure. These needs are unfunded beginning in January 2012, yet the governor and legislature did not address this difficult topic over the past six months. This is a subject that must be addressed for New York to graduate with the honors that taxpayers have a right to expect.
The author is President of the Citizens Budget Commission (www.cbcny.org), the nonpartisan, nonprofit civic organization devoted to influencing constructive change in the finances and services of New York State and New York City governments.