New York back on the right track

Peter Goldmark, a former budget director of New York State and former publisher of the International Herald Tribune, headed the climate program at the Environmental Defense Fund.

The dust has cleared, and it is now evident that the New York State budget agreed on by Gov. Andrew M. Cuomo and the legislature late last month represents a significant breakthrough for all of us who live and work in this state.

It's been many years since that could be said about a state budget.

Let's remember where we were as 2011 opened. The state faced a $10-billion gap for the present fiscal year, with built-in commitments and formulas that would have doubled that gap in only three years.

Not a good road to be staring down.

Cuomo set the stage by cutting his own salary -- a symbolic but high-visibility personal move -- and deciding that state agencies under his control would take a 10 percent cut. He was then in a position to put a tough budget before the legislature and tell it: "Put up or shut down." In other words: Either pass a budget that contains cuts that will balance it honestly, or take responsibility for shutting down the state government.

The legislature blinked and let him have his way in most respects.

The $132.5 billion budget is not perfect. As a former state budget director, I will let you in on a little secret: There is no such thing as a "perfect budget." This one contains cuts in most state services, and some of those cuts will prove too disruptive and will need to be corrected as the year goes on.

But overall this budget does what had to be done: It puts a stop to the annual spending spiral wrapped up in revenue gimmicks and one-shots, which produced budgets that were not really balanced. And it provides a sound basis for living within our means.

Most of the hard cuts were taken in education and health -- as they had to be. That's where the big money is. In both those areas, most spending ratios in New York State are a lot higher than in other states, even after you allow for our higher cost of living. In Medicaid, for example, per capita spending in New York State is about twice the national average.

But that doesn't mean cutting back will be without pain. There will be plenty -- in the classroom, in the hospital, in the nursing home. Some of the archaic formulas were engraved in law (nursing home reimbursement rate calculations, for example) and the service systems they support cannot be reconfigured either painlessly or overnight.

With this first big step taken, two other challenges lie before us.

The first is the need for a large and carefully designed capital investment program for the state -- transportation, energy efficiency and economic development. This budget gets us on a sound fiscal path, but we need also to build for the future. Cutting is not enough.

The second big issue ahead is retirement and health benefits for public employees. People can argue -- and they will -- over whether retirement and health benefits for public employees are too generous. But what is not in dispute is whether the state and its local governments can afford to pay for them as these costs balloon in the years ahead. They can't.

We can't avoid the issue, so we will do ourselves a big favor if we approach it soberly and respectfully, and not sink to the kind of mudslinging we saw in Wisconsin. To tell someone who has been promised a specific benefit that we may have to modify it -- in effect go back on it -- is not something to be done lightly or with evangelical self-righteousness. We all got here together -- and we will have to find our way out of the public employee retirement fringe benefit quagmire together as well.