Extraordinary times require extraordinary measures. Declaring a fiscal emergency - akin to what the state did to New York City when it was on the brink of bankruptcy in the 1970s - is what is needed for New York State today.
The fiscal emergency declaration would permit the state government to control wage and benefit growth, and implement other measures that would not be possible without such a declaration. This is the same tough medicine that was employed when the state created financial review boards for faltering counties, including Erie and Nassau. The state needs its own type of review board that can force the tough decisions to be made by a government that has been resistant to do so over the last several years.
A legislature that has politically been unable and unwilling to make the tough choices can create a commission, similar to the federal government’s Base Closure and Realignment Commission (BRAC), which was developed to achieve the government's goal of closing and restructuring military bases despite the political gridlock that arises when bases face reduction or elimination.
Under this model, the commission would provide objective, non-partisan recommendations that are automatically implemented, unless both houses of the Legislature separately reject the plan in its entirety. In 2005, the state formed a similar commission to reduce the excess capacity that plagues our hospital and nursing home systems.
While you can argue that the cuts that were ultimately implemented were not perfect, it proves that a BRAC-type commission can help force needed change through our dysfunctional legislative process.
2. Impound Funds
Emergency declarations can be used to confirm that the governor has the ability to impound funds to deal with a deficit.
It was County Executive Steve Levy’s ability to impose a 10% across-the-board impounding of funds in Suffolk County that helped him to deal with the loss of $100 million in sales tax and by year’s end submit a balanced budget and a tax freeze for 2010. The governor’s attempt late last year to embargo funds had no teeth and was solely for cash flow purposes.
The right to impound a portion of the budget by the state executive should be available to ensure the budget is balanced, regardless of cash flow.
3. Cap on State Spending
Spending caps work. Steve Levy knows. He has been employing one successfully in Suffolk County for years. Back when he first became a County Legislator, he sued the county to enforce its own cap laws and won, returning $32 million to the public.
Despite the big spending naysayers’ claim that a cap was going to decimate public services, it did not. Instead, it forced prioritization.
A tax cap comports with Steve Levy’s philosophy on government spending, which is: We must have the courage to say no to the things we want so that we have the capacity to say yes to the things we need.
4. Local School Property Tax Cap
As the state gets its own fiscal house in order by imposing a spending cap on state spending, it must help limit the growth of property taxes on the local level by placing a cap on school taxes. That, however, should be accompanied by comprehensive mandate relief for the local districts.
Providing greater flexibility for the schools in carrying out their daily operations would enable districts to meet the requirements of the new cap to its fullest. As we saw with the caps supported by Steve Levy in Suffolk County, there is no evidence to suggest caps will diminish the delivery of services or quality of education. Forced prioritization will help weed out waste and redundancy.
While the state flirted with the concept of the local cap in 2009, any reference to the cap was omitted from the 2010 budget. Steve Levy would lead the fight for the local cap.
5. Establish Hard April 1st Deadline
There is no reason why New York State should have a budget that is five months late, as has often been the case. While budgets have recently been closer to the April deadline, there is nothing to prevent the excessive delays of the past repeating themselves.
The state should mirror the system that exists in Suffolk, and other local governments around the state, whereby the executive’s budget is deemed approved by a date certain (in this case April 1st) if the legislature fails to act to modify it by that time. Steve Levy will make this important change part of his agenda.
6. Placing Taxpayers at the Bargaining Table
A. Eliminate the Triborough Amendment
The Triborough Amendment to the Taylor Law prohibits a public employer from altering any provision in an expired labor agreement until a new agreement is reached. Most public employees receive step pay increases based on seniority, along with cost-of-living adjustments and, because of the Triborough Amendment, a public employer's salary costs continue to rise even when labor negotiations have reached an impasse. With this process, there is little pressure for the union to provide any types of concessions, thus putting taxpayers at an extreme disadvantage.
The Triborough Amendment should be repealed to encourage public employees to work with public employers to achieve labor contracts that are both fair and affordable to the taxpayer.
Freezing salary and benefit levels to the last in-contract year for public employees, would hold taxpayers harmless from cost increases outside of newly negotiated contracts, while maintaining benefits in the original spirit of the Triborough Amendment. Employees will receive their hard-won new terms once the contract is finalized.
B. Pension Reform
Skyrocketing pension costs have been and will continue to be a major factor driving fiscal stress at the state and local level with employer contributions expected to more than double, to almost 25% of payroll, over the next year. The recent pension reforms, rushed through by the Legislature, for new state, local, and school district employees, do not go far enough and exempt two-thirds of NYC employees.
These so-called reforms only take a small step forward by putting the public-employee pension systems back to pre-2000 benefit levels. We need real pension reform that aligns pension benefits for new employees with those available in the private sector.
Additionally, incoming public sector employees should have a pension system more similar to that in the private sector. The public system provides a guaranteed rate of return, with the taxpayer picking up the tab if the fund does not meet that goal. The private sector has the employer match a contribution made by the employee, with the ultimate pension being based on the growth of the fund. Exposure to the taxpayer must have a limit.
C. End Mandatory Arbitration
Mandatory arbitration is a process by which some law enforcement unions obtain an independent arbitrator to give a final and binding decision where an impasse on negotiation exists.
The problem is that the arbitrators tend to side almost entirely with the unions. It has resulted, for instance, in Long Island police departments having some law enforcement salaries exceeding $200,000 a year, with many salaries well over $150,000 a year.
Ending mandatory arbitration creates incentive for serious negotiation and potential givebacks to the management side that would benefit the taxpayer.
D. Eliminate Overly Generous Municipal Disability Provisions
New York State Law allows for some law enforcement personnel to receive full pay, tax free, for injuries that are incurred in the workplace, even if not in the line of duty. The line of duty injury involves a police officer chasing down a criminal and becoming seriously injured in a gun fight or physical altercation. On the other hand, an employee could slip on water in the hallway and be entitled to similar benefits as the person in the altercation.
Under existing disability provisions an individual would actually earn more money being disabled at home than showing up to work. This concept is both illogical and extremely costly to New York State taxpayers.
7. Control the Growth of Medicaid
Medicaid spending in New York State is out of control and consuming a disproportionate share of our state budget. New York spends more on Medicaid than the states of Texas, Florida, and North Carolina combined and, only through strong reforms that reduce payment rates and manage utilization, will we get this program under control.
An analysis of the Medicaid system reveals that children and low income adults account for approximately three-quarters of all Medicaid recipients, yet account for only one-quarter of total expenditures. The elderly and the disabled account for one-quarter of the recipients, yet account for approximately two-thirds of all expenditures.
Steve Levy’s plan calls for User Program Review to identify individuals with high chronic illness so that preventative treatment and management can be provided to mitigate repeated and unnecessary hospitalizations.
By understanding how dollars are spent and developing targeted strategies to avoid overutilization, we can begin to improve services while significantly reducing costs.
8. Restructure Education Aid
The state aid formula for education over the last several decades has been ineffective. There is simply no correlation between the amount of money dispensed from the state to a local district and the performance of that particular school. State aid is distributed more because of power politics than reason.
Aid should be tied to how a local district is performing, both in relation to the students’ achievements and cost controls. State aid should provide incentives for consolidation. There has been a great deal of talk about consolidating the superfluous number of school districts in various regions of the state. Despite much talk, there has been little consolidation due to parochial interests.
A surefire way to promote more consolidation is to provide monetary incentives to districts that are willing to take the plunge. When a school board knows that there will be more money awaiting them if they make the move, it will be far more likely to consolidate.
9. Make it Easier to Amend the Constitution for Spending Reforms
Many good ideas have never come to fruition because it is so difficult to amend the New York State Constitution. The present law requires the passage of a modification in two consecutive legislative sessions. If the will exists to make a change, the law should permit it to be effectuated in the year that that need exists.
10. Spur Economic Growth
Private sector leaders find a dramatic difference in business conditions among the 50 states. New York never ranks high on the list because of high state and local tax rates and our burdensome regulatory environment. Steve Levy has many proposals to empower business leaders in the Empire State:
A. Capital Gains Cuts
Some tax cuts can be used as a viable method to instill economic development within our state. Sales tax waivers are provided through the Empire Zone concept, which should not be eliminated as the governor has proposed.
Instead, we should be going even further by waiving capital gains taxes for those who invest in certain New York State businesses, primarily those looking to expand in vital industries such as alternative energies or in depressed economic areas, particularly Upstate New York.
B. Promote Math and Sciences Through Our Universities
Steve Levy understands that we are in a very competitive world. Nations that have concentrated on math and the sciences are poised to dominate the next century economically.
Steve Levy proposes that tuition at our state universities be adjusted to incentivize individuals to concentrate in a math or science curriculum. Tuition breaks should then be tied to a commitment by the recipient to work in the state in these fields after graduation for a certain number of years.
C. Promote Green Economics
Suffolk County led the way in contracting with the private sector to install 60,000 solar panels to harness the sun in our parking lots throughout the county. The capital investment is borne solely by the private sector. The company takes the energy produced and sells it to the local lighting company for a profit. The county receives millions in payment for the leasing of its property, and the environment is further protected. Other governments should follow this model.
All state buildings should be retrofitted with energy conservation material. A private company can invest the money in the weatherproofing and recoup its investment from a portion of the energy costs saved by the state government.
The state should create a revolving fund for private residence alternative energy installation. The state can provided a tax credit to individuals who install solar panels, weatherproofing, or other conservation materials. We will then use a portion of the savings to go back into a revolving fund to provide incentives for the next resident.
An executive order should be ordered by the governor, as was done by County Executive Steve Levy in Suffolk County, mandating that any new building over 10,000 square feet has solar panels installed to help generate electricity for the building.
D. Public/Private Partnerships to Rebuild Our Infrastructure
Because of the state’s high level of indebtedness, we should be looking to the private sector to assist in some of the major rebuilding of our infrastructure. New bridges and tunnels that would otherwise not be built could be constructed where entrepreneurs are given incentives to make these major investments. These private investors would recoup their money through tolls on these new bridges and tunnels. The private sector proposal for a tunnel from Nassau County to Westchester is a perfect example of such a public/private partnership that can help expand our corroding infrastructures here in the state.