Press the Panic Button

Make no mistake about it: New York State is on the verge of a fiscal calamity. A recent report in The New York Times noted that the state will have only $36 million in its treasury by year’s end. Thirty-six million dollars. That’s chump change.

It would be tempting to add that we should expect nothing less, considering that state legislators have been acting like chumps all year. But the time for name-calling, finger-pointing and political posturing is over. New York is going broke. The bond rating agencies are getting ready to lower the state’s credit rating, which would only add to the state’s crushing fiscal problems. Municipalities are preparing for a worst-case scenario if the state decides to withhold financial assistance for basic services.

Could this nightmarish scenario have been avoided? Yes, if the Legislature—especially the State Senate—took its responsibilities seriously. But even as the state drifted toward disaster earlier this year, lawmakers seemed more concerned about the perks of office than with falling revenues and declining services. The State Senate basically shut down for a month earlier this year while legislators tried to figure out who was in charge. That episode spoke volumes about Albany’s priorities in the midst of a terrible recession.

But this is not the time for recriminations. This has to be a time for action, for sacrifice and for creativity. A generation ago, New York City avoided bankruptcy when politicians, business leaders, labor activists and good-government groups came together to think their way through a terrible crisis. Partisan differences were put aside to achieve a greater public good. The city’s ongoing prosperity owes much to the decisions made during the emergency of the 1970s.

Today it is the state, not the city, that is staring into the abyss. Governor Paterson, who has been reinvigorated by the crisis, should take a page from the city’s financial crisis by bringing together labor and management, public and private interests, Republicans and Democrats, in the fiscal equivalent of a war cabinet. Hard, painful decisions must be made sooner rather than later. But if those decisions are to be made collectively and cooperatively, legislators, public employee unions and other interests have to stop denying the obvious.

New York is going broke.  Press the Panic Button