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The dark knight

April 14, 2011 - John Stack
Governor Cuomo should be lauded for bringing at least some fiscal sanity to the New York State budget. But he has also seem to have fallen under the Tea Party Fiscal Affliction (TPFA). This affliction has elevated prior minor players such as Chris Christie and Scott Walker into national prominence. This affliction manifests itself as a gain in popularity by making any spending cut whatsoever.

How about food safety? No match for cutting the FDA budget so there are fewer inspectors and inspections. Pol gets boost of 5% points in poll. This has a little extra in it. By cutting a tiny amount, they put the whole US food supply at risk. More people get sick. More people get sick . More doctor visits. More prescriptions. More lab tests. Higher insurance rates. The big businesses behind the conservatives make billion. Cut a few million here, make Insurance industry billions. Nice return.

But won’t this cause more people to lose jobs as employers won’t be able to afford insurance for their employees, therefore sending more people to our social net? Well yeah. But a politician afflicted with TPFA has a solution! Reduce all social programs! Lower Medicaid reimbursements! Cut payments to states to fund health care for the poor! Problem solved! Politician poll numbers swell…

Towns/counties/schools are in trouble trying to solve their budget woes. Fuel prices are rising way beyond inflation. Health costs are rising dramatically. Unfunded mandates tie municipalities ability to cut. What does a politician afflicted with TPFA such as Gov Cuomo do? He proposes we cap the amount that can be raised by the property tax! At the same time, the person (this time Cuomo again) cuts a huge portion of the aid that the taxing jurisdiction uses in place of raising taxes. So, in one fell swoop, the person afflicted with TPFA capped how much they could raise with one hand, and removed a revenue stream with the other…

I’m still trying to figure out why any cap is being tied to the tax levy and not the budget. If there is some increased revenue source, such as more state aid for some reason, the amount to be raised by a levy would decrease, and a district could actually increase their spending well over 2%. In fact, if there was ever an increase in state aid, all other things being equal, a school going to the 2% cap limit would also be increasing their budgets by a greater amount. Again, Cuomo and the rest of the people afflicted with TPFA close their eyes to logic.

One of Cuomo’s TPFA favorites is the emergency reserve funds. The Dark Knight says that many schools can cover his school aid cuts by digging into their emergency reserve funds. Maybe MrCuomo needs a refresher on what the word ‘emergency’ means. The funds are for unexpected expenditures and true emergencies. Yes, the budget crisis is an emergency. But, there is no real end to the emergency. There is no promise or even expectation that any of the aid would be restored – ever- in the future. So, if a district os facing a 10% increase to the levy (even with a cut in the overall budget because of less state aid) the school dips into their emergency fund and lowers the increase to 2%. Budget is 10 million and now the levy is 7 million, rather than 8 million, but now the emergency fund is cut in half. The next year there is no new aid, insurance, oil, everything is going up (except state aid). Again, the school dips into their emergency fund depleting it to zero. Again, budget stays at 10 million and levy is 7 million. The next year, no increase in state aid, there is a 2% cap, and now the school literally has no choice but to cut a million dollars – or more- from the levy. Rthey bite the bullet, lay off lots of teachers, take away classes, gain concessions from unions. Half way thru the school year some emergency happens. A lawsuit. Boiler breaks down. Super cold snap along with much higher oil prices. There is no emergency funds. Mid year – programs have to be halted. Teachers laid off mid year.

A significantly smarter cap would be to implement a cap on the budget, not the levy. The levy is manipulated as much as anything by what revenue the State decides to give in a year. Either the state cuts aid across the board, or some tweak to the funding formula, and a top school who has been doing everything right, conserving, consolidating, fair contracts – now is stuck with a huge deficit which is none of their fault. But, if the budget number is used, everyone knows if the school is spending more than the prior year, the real metric on school spending. The budget isn’t directly affected by the state, as its how much the school district will spend, not how much they have to tax. So, if a school district tries to hide an increase in the budget by using emergency unreserved funds they will be seen in clear day. Currently, there are, and have been, lots of towns, schools and counties that claim they are keeping the ‘levy’ down, while they are out spending any new revenue as fast as it comes in. Then, when that revenue dries up, they are stuck with the program and cry poverty and mandates and such.

I think its time for real tax reform. I really haven’t seen any. All the ideas so far have fatal flaws. Tax caps. Circuit breakers. More emergency funds needed. Mandate relief (what a joke that commission was). Lets get down to reality and not play our budgets to the crowd and find a cure for the TPFA.

 
 

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