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EDITORIAL: New York needs to go on a fiscal diet

Anyone who's dieted knows that the prospect of a fitter future depends on making lean choices today. By the looks of the budgets issued by the Senate and Assembly last week, the New York State Legislature needs to be reminded of this basic, healthy principle to thrive.

The Democratic majorities in both houses are trying to slide through budgets that depend heavily on borrowing today - gorging themselves - to push problems off into the future. Borrowing to pay current expenses is what nearly bankrupted New York City in the mid-1970s and Nassau County in the last decade. New York State already has a higher debt burden than all but three states - New Jersey being one of them. There, elected officials, with angry voters urging them on, have become alarmed enough to confront difficult public policy decisions and put the state on a healthier long-term path.

Meanwhile in New York, lawmakers want to spend even more than last year. The Assembly is particularly out of touch, with a budget proposal that assumes $2 billion in borrowing and $200 million in new taxes. The Senate wants to raise $700 million by refinancing short-term bonds issued to dig New York out of a 2003-04 budget hole.

The desire to kick the can down the road never ends. New York starts each year now about $13 billion in deficit - the current difference between what state government spends and what it takes in. So, the pressure to borrow or patch this structural deficit with one-shot revenues never lets up. Municipal finance experts from Wall Street roam the halls of Albany at budget time each year, pitching their latest borrowing schemes.

Kudos to the Assembly Nine - eight Democrats and one Independent - who joined Republicans in refusing to vote for the bad budget issued by their house on Wednesday. Among them are Long Islanders Assemb. Ginny Fields (D-Oakdale) and Assemb. Fred Thiele (I-Sag Harbor). If Assembly Speaker Sheldon Silver actually listens to his conference, as he claims to, perhaps he should spend some time in a room with these nine.

Lt. Gov. Richard Ravitch has proposed a compromise that he believes will be politically palatable: Create a Financial Review Board to oversee the closure of the $13-billion structural deficit in five years. In exchange, budget-makers could borrow up to $2 billion a year for the first three years. Ravitch insists that the package can't work if taken piecemeal. But the Assembly last week jettisoned the fiscal vegetables and kept the borrowing dessert.

Ravitch was an architect of the 1970s rescue of New York City, and his plan for the state echoes that solution, down to the creation of the city's Financial Control Board. But the city - particularly its public employees - endured enormous pain to hoist itself out of near collapse. Employment fell by 20 percent, work rules were loosened, wages were reduced, and the eventual raises were held below inflation.


New York State has undertaken no such measures. In fact, Gov. David A. Paterson promised state workers no layoffs through the end of this year, in exchange for trimming pensions for new hires. State workers are poised to receive 4 percent raises on April 1. A proposal to freeze those wages is gaining traction.

Public employees' compensation is too rich. According to the U.S. Bureau of Labor Statistics, it grew by 28.6 percent nationally from 1998 to 2008, compared with 19.3 percent for private-sector workers. Much of the difference is in overly generous public benefits packages and pensions. New York should be working toward more realistic labor agreements.

In the Assembly, four members, including Fields, are calling on school districts to freeze teachers' salaries. The conservative Empire Center for New York State Policy estimates that this measure could save $1.2 billion next year, roughly equivalent to the $1.4-billion reduction the governor wants to make to education in his budget. Two Long Island school districts, Roslyn and Port Washington, are planning temporary freezes to avoid layoffs. Teachers in those districts are making a realistic and commendable sacrifice.

More fundamental change is needed, though. Education and health care spending together make up half the budget - but ideas to restructure schools and the health care system are routinely ignored. In 2006, a commission led by Stephen Berger suggested several hospital closures, mergers and downsizing to rid New York of an overbuilt system. Four years later, only about 60 percent of the recommendations have been enacted. There is no political will to push this forward.

The same is true of school consolidation, property tax caps and other ideas intended to pull New York back from its spending binge. New York spends $15,536 per pupil, well more than double the national average. Are kids here really getting twice the education?

Paterson should not agree to a budget until the state goes on a diet. The governor, whose tenure is clouded by ongoing investigations, still has a good number of tools at his disposal to force change - and having given up on another term, he has little to lose. He should stand firm. hN