State government spending has grown substantially in recent years - especially in good economic times. Such growth has forced the State to take drastic actions to stabilize its finances when revenues decline dramatically during periods of economic difficulty. For example, from 2002-03 to 2007-08, State Operating Funds spending grew from $52.8 billion to $77.0 billion - an average annual rate of 7.86 percent. In great part due to this dramatic expansion in spending, the State needed to address a nearly $20.1 billion deficit during last year's budget process. To end this pattern of boom and bust cycle budgeting, and impose greater fiscal discipline on state government, this legislation would enact a strict cap limiting the growth of State Operating Funds spending. It also significantly increases the maximum capacity of the State's rainy day reserve so that surplus that accrue as a result of this cap can be used to help address revenue declines during times of economic difficulty.
STATE SPENDING CAP WILL PROTECT TAXPAYERS
By New York State Assembly Minority Leader Brian M. Kolb (R,I,C-Canandaigua)
Last week, Governor Cuomo’s Budget Director announced that State Agencies would be required to reduce their spending by 2.5 percent for the coming fiscal year. While a 2.5 percent cut might seem like a lot in Albany, out in the real world, middle class families and job creators struggling in a tough economy have already tightened their belts and cut spending by far more than 2.5 percent.
FAMILIES AND JOB CREATORS HAVE CUT SPENDING – WHY CAN’T ALBANY?
In fact, many families have put off purchasing a new car or taking a vacation, while businesses have avoided making major purchases, capital investments or hiring new workers. The reason? A bad economy coupled with continued economic uncertainty, over-taxing and spending policies in Albany and Washington, D.C. Simply stated, taxpayers and job creators are worried (rightly so) about possible tax hikes and spending increases that may be coming down the pike.
ALBANY NEEDS TO DO MORE – MUCH MORE – TO CUT SPENDING
The truth is that Albany needs to do more, much more, to shrink the size and cost of government so we can grow the private sector, create more jobs and get folks back to work. A 2.5 percent decrease in State Agency spending amounts to a very small drop in a very large bucket. When you realize the 2011-12 enacted State Budget was $132 billion – the second highest in the nation (behind only California) and roughly the gross domestic product of a small country – it is clear there is PLENTY of room to cut spending without affecting essential services.
STATE SPENDING GREW BY NEARLY 70 PERCENT OVER THE LAST DECADE
The following is a statistic that every taxpayer should know: Over the last 10 years (from 2000 to 2010), state government spending grew by an incredible 70 percent. That is almost $32 billion over the rate of inflation! Did the personal income of taxpayers or the business income of job creators increase by a similar amount? It did not, but to Albany that made little difference. State government kept spending your hard-earned money like there was no tomorrow, resulting in a decade’s worth of fiscal irresponsibility. Folks, we are still paying for those bad decisions. State government’s spending problem really boils down to a question of political will: Is Albany prepared to make the tough choices and cut spending? If the recent Legislative Session was any evidence, the answer to that question is a resounding “NO!”
MEMO TO CHICKEN LITTLE: THE SKY IS NOT FALLING!
In case you forgot, last session saw some politicians running around the State Capitol much like proverbial Chicken Littles, crying the “sky was falling” because the budget simply reduced the rate of growth of some programs and made small reductions in others, decreases that were nowhere near close to being “Draconian.” Of course, these facts fell on the deaf ears of countless interest groups that descended on Albany to protect their favored programs and gobble up more taxpayer dollars (i.e., your hard-earned money). To these groups, ANY reduction in spending – no matter how small or justified – is simply unacceptable. Unfortunately, some politicians are afraid of these pressure groups and more often than not, simply cave in to their demands. This is precisely why New York State needs a spending cap! A state spending cap would force much-needed fiscal discipline on Albany and protect your hard-earned taxpayer dollars.
STATE SPENDING CAP WOULD PROTECT TAXPAYERS FROM ALBANY’S FISCAL IRRESPONSIBILITY
To protect taxpayers, I introduced legislation – Assembly Bill A.5370 – that would enact a state spending cap based on changes in the Consumer Price Index, or CPI (an index measuring changes in the price level of consumer goods and services purchased by households) and make sure that the cap was actually followed. My bill would cap the growth of state operating funds spending to no more than the average rate of inflation of the three previous calendar years. This would put the brakes on Albany’s spending binges, force the state Legislature to set priorities and require state government to start living within its means. All are good ideas!
IF A STATE SPENDING CAP HAD BEEN IN PLACE, IT WOULD HAVE SAVED TAXPAYERS $30 BILLION!
Enacting a state spending cap would provide a significant cost savings to New York’s overburdened taxpayers. In fact, if a state spending cap had been in place over the past 10 years, spending would have been $30 billion less this year. If the cap was enacted this year, next year’s All Funds budget could not grow by more than an estimated $1.3 billion, bringing spending to $133 billion next year, which is less than what the state spent in 2010-11. That is real savings! My spending cap bill also requires the Governor to certify that the Executive Budget is under the cap and require the State Comptroller to provide a determination as to whether the State Budget exceeds the cap. If the Comptroller finds the State Budget exceeded the cap, the Governor would be required to take corrective action, such issuing a veto or further reducing State Agency spending. The spending cap I introduced forces the Governor and the state Legislature to get serious about reducing spending.
23 OTHER STATES ALREADY HAVE SPENDING CAPS IN PLACE – NEW YORK SHOULD JOIN THEM
Naturally, many special interest groups will strongly oppose any spending cap, mine included. They will fight tooth-and-nail to keep Albany’s spending spigot wide open because the last thing pressure groups want is a mechanism enforcing fiscal responsibility. Despite any argument to the contrary, spending caps are not new or untested ideas – 23 other states such as Maine, Ohio and Colorado already have some form of a spending cap in place and they are working. It is time New York joined them. Enacting a state spending cap would show that New York is finally serious about cutting spending, shrinking the size and cost of government and, most importantly, protecting our taxpayers. A spending cap is an idea whose time has come!