A Bad News Budget

Faced with an historic fiscal dilemma—one that would lead to the brink of bankruptcy—Governor Hugh Carey announced in 1975 that “the times of plenty, the days of wine and roses, are over.”

More than 30 years later, Governor David Paterson finds himself, and the state he leads, in a similarly dire situation. Mr. Carey mobilized public opinion and a historic public-private partnership to rescue not only the city, but the state as well. Now Mr. Paterson must do the same. The problem is that the private sector is crippled and civic leadership simply isn’t what it was in the mid-1970s, when the city’s elites came together to help their stricken city.

Mr. Paterson released his proposed budget on Dec. 16, a month ahead of schedule. It contains the most drastic spending cuts since the 1970s, and with good reason. Even during the recession of the early 1980s, even after the Wall Street collapse of 1987, and even after the dot-com bubble burst just before 9/11, the state was better off than it seems to be today.

Mr. Paterson and the State Legislature need to close a $15 billion deficit. The governor proposes to do so without raising the state income tax, relying instead on $4 billion in new or increased fees. Students at City University and in the state university system are going to pay more in tuition, according to the plan. Motor vehicle owners will see an increase in registration fees.

But extra revenues aren’t the half of it—literally. Mr. Paterson proposes to cut spending by $9 billion, an extraordinary sum. State workers will feel the pain, as the governor is proposing cuts in benefit packages for public employees. But everyday citizens will also be affected by the sheer vastness of the proposed cutbacks, which include reduced spending for Medicaid and education.

This is not going to be pretty. This is going to require extraordinary statesmanship and cooperation, virtues that have not always been associated with state politics. Perhaps that will change, given the enormity of the emergency. Union leaders, community organizers and other players in Albany’s annual budget drama have been responsible in their reaction to Mr. Paterson’s plan. Randi Weingarten, president of the United Federation of Teachers, set the tone with her acknowledgment that spending cuts are inevitable. The debate will be over how much will be cut in the end, and where those cuts will be.

Mr. Paterson has given the State Legislature an extra month to review his proposals, hold hearings and provide alternatives. The budget deadline is April 1. Albany has a history of missing that deadline, sometimes by months. That won’t do this year. The Legislature must reflect the governor’s sense of urgency. That doesn’t mean passing his budget with no changes. But it does mean active, full-time engagement over the next three and a half months.

Critics have to provide alternatives, and those alternatives have to be responsible. Those who argue that the state ought to soak the rich, such as by levying the so-called “millionaire’s tax,”  clearly need to consult their history books. New York did just that in the 1960s. Where did it lead? To Mr. Carey’s speech in 1975.

A Bad News Budget