March 17, 2014
By Marc Bussanich
New York, NY—With an April 1 deadline looming for New York State to pass a $142 billion budget, Governor Andrew Cuomo discussed the steps the state has taken and will continue to take to cut taxes and limit government spending. Video
Speaking to an audience composed mostly of city business leaders at an Association for a Better New York luncheon, the governor emphasized how the New York of today is very different from the New York of yesterday, in terms of taxes and spending.
He noted this year’s budget is perhaps the most complex he’s done over the last three years, but just as the governor’s previous budgets, he said the 2014-2015 budget would entail tax and spending cuts.
“Spending in New York had been out of control for the past 50 years,” said Cuomo. “If you spend a lot and tax and a lot and we did tax a lot. When you are the highest tax state in the nation, people will leave. That is the simple and inexcusable logic.”
He then pointed to the actions his administration has taken since he first took office to reduce taxes and cut spending.
“Job one for us was to control spending. Over the past 50 years New York State spent literally more than New Yorkers were making,”
According to Cuomo, his administration’s spending is less than previous governorships, as state spending under Nelson Rockefeller was about 11 percent, about 7 percent under his father’s administration, Mario Cuomo, and 5.2 percent under George Pataki.
“Our spending has literally been below a percent a year over the first three years, and this budget also will hold at less than one point a year,” the governor said.
The way the state was able to do that was, according to the governor, by reducing the size of government, renegotiating labor contracts, state unions agreeing to contribute to their healthcare coverage and pension reform.
On pensions, Cuomo issued a warning:
“The pension system is the greatest structural cost, which if we don’t do something about long-term pensions, it could bankrupt governments all across this country.”
The governor credited the combination of slowing state spending and cutting taxes contributing to the lowest tax rate for New Yorkers earning up to $300,000 in 60 years, lower unemployment and employment gains.
But while the governor is hailing the new budget as an example of good governance, economists with the Fiscal Policy Institute are calling the governor’s budget an 'austerity budget' because the governor is also calling for significant cuts in the coming years.
Fred Floss, FPI’s executive director, said at a recent press conference the budget proposal calls for further cuts of $4.4 billion in 2015-16, $5.6 billion in 2016-17 and $7.1 billion in 2017-18.
“Coming on the heels of six years of austerity budgets beginning in 2008, this will give New York an “austerity decade,” despite moderate actual or projected state personal income growth over most of the years in that period.”
The governor believes that tax and spending cuts will ultimately improve economic activity. After his talk, he was asked whether New York would have a difficult time funding big-ticket items like infrastructure and social services in the years ahead.
“Cutting taxes does two things. It gives homeowners a break. People have been under a lot pressure for a long time. It says to people stay with New York. And number two it says to business come here, locate here, grow here, which actually helps us generate more revenue,” said Cuomo.
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