Richard Ravitch: State fiscal crises aren't over

Former New York Lt. Gov. Richard Ravitch and Former New York Lt. Gov. Richard Ravitch and his new book.

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ALBANY -- Former Lt. Gov. Richard Ravitch, who helped New York City escape bankruptcy 40 years ago, warned Wednesday that the fiscal crisis isn't over in New York and other states, despite election year plans to cut taxes and spend more.

Ravitch said the crises for states and local governments are building as health care costs rise and public pensions become unaffordable for taxpayers.

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He blamed Congress, and state and local officials for not working together toward the same goal and lacking the political will to plan beyond their next election.

Ravitch said politicians are encouraged by Wall Street banks to pay pensions and even operating expenses by borrowing against future revenue.

States often pay that debt by borrowing more, plus a little more to avoid tax increases and layoffs opposed by politically powerful unions, he said.

"The budget does not reflect the real world. It kicks the can down the road," Ravitch, 80, told reporters before a presentation on his new book, "So Much to Do: A Full Life of Business, Politics, and Confronting Fiscal Crises."

Ravitch, who helped Gov. Hugh Carey bail out New York City from its crushing debt in the 1970s, said election year budgets in states this year that include tax cuts, higher spending and borrowing are masking fiscal problems.

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The National Association of State Budget Officers said fiscal conditions in the states are much better than during the recession, but tax revenues have been slow to rebound. A summary of 2015 fiscal year proposals by governors shows that most states project another year of modest revenue increases, although several propose tax cuts.

In New York, Gov. Andrew M. Cuomo and the State Legislature adopted the fourth straight budget that keeps spending under 2 percent and contains tax breaks for companies and homeowners.

Many of Cuomo's tax breaks, however, are spread over several years. The tax cuts depend on future legislatures agreeing to current spending restraints and the economy rebounding.

This use of projected revenues and additional borrowing in the current $137.9 billion budget have sparked criticism by the independent Citizens Budget Commission and the Empire Center for New York State Policy, a think tank that espouses free market principles. State Comptroller Thomas DiNapoli said the state budget includes authorization for $5 billion more in borrowing and he questions the governor's estimates of future tax growth.

But Cuomo is confident he can count on the legislature to keep spending under 2 percent a year to cover the lost revenue from his tax cuts. In addition, the Cuomo administration said it has reduced overall state debt for two years, even with this year's added borrowing.

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