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Conservative's release five point plan to halt the demise of New York State.
For Immediate Release Contact: Shaun Marie
March 8, 2010 518-356-7882 www.cpnys.org
Conservative Party’s Plan to Halt New York’s Demise
Ft. Hamilton Station, NY -- Michael R. Long, Conservative Party State Chairman, stated today that New York could survive financially by adopting the Conservative Party’s plan to halt the demise of New York. The following plan has been sent to every Member of the Legislature and is available to the public on the Party’s website. By following the five steps, New York will be able to halt the fiscal demise of this great state.
Five Steps to Halt New York’s Demise
The New York State economy is in a crisis. Because of Albany’s reckless spending and high taxes, jobs and people have fled the State at an unprecedented rate.
Over the past decade, New York has lost approximately 500,000 private sector jobs; indeed, the only area in which Albany has created jobs is in the public sector with the inevitable outcome of having to increase taxes and fees to pay for the high paying salaries and pensions for this burgeoning public work force.
Taxpayers are leaving New York at a pace never before seen in our history; between 2000 and 2008, over 1.5 million people left the State. The Conservative Party believes that our elected officials must take immediate action to encourage the private sector to create jobs and to halt the wasteful government spending which has put us in fiscal jeopardy.
Following are the proposals that will enable the Empire State to restore itself to economic health:
I. Albany Must Immediately Cut State Spending
Simply stated, the Governor and the Legislature are spending way beyond our means.
In the last decade, State spending has increased by over 70%, while total inflation over the same time frame was just under 28% (this fiscal year State spending grew by over 8% when the inflation rate was zero). The budget gap in the State’s current fiscal year stands at a whopping $9 billion and continues to grow; we are spending money we don’t have, and unlike the federal government which has its own printing press and simply prints the dollars it needs, New York’s only recourse is to tax, which kills jobs and forces companies and people to leave.
To help close the gap, the Governor is actually planning to delay income tax refund checks, which is money that belongs in people’s pockets that could be spent to stimulate the economy, not pay for a bloated bureaucracy. In 2008, State spending per capita was $6,579; the average in the other forty-nine states was only $4900 per capita. New York received $10 billion in federal stimulus funds, but instead of using even a part of that money to reduce debt or lower taxes, our New York politicians, true to their behavior, spent it all to prop up higher education and health care spending.
Finally, over the next three fiscal years, the State Budget office projects that State receipts will essentially remain flat (between 2012 and 2013 receipts are actually projected to decrease) while State spending will increase by $15 billion, and this is before the legislature caters to all the interest groups which will demand even higher spending levels; it’s more than obvious that we can’t continue down this path.
The Conservative Party believes the Governor and legislature must enact the following programs: 1) Hold the growth in State spending to no higher than the inflation rate; 2) Cap the growth in both real estate and property taxes; 3) Reduce the personal income tax for all New Yorkers; and 4) Require a two-thirds majority vote for any new tax increases.
II. New York Medicaid Reimbursements Must Be Reduced
New York spends more on Medicaid than Florida, Texas and North Carolina combined, even though they have more Medicaid recipients. New York spends $7900 per enrollee; the average for all the other states is $4500. There are approximately 4 million New Yorkers registered for Medicaid and by the year 2013, it is estimated that one out of every four residents will be in the program.
The fraud and abuse in the system is conservatively estimated to be $5 billion annually, yet Governor Patterson has taken overt steps to increase the Medicaid rolls by no longer checking on an applicant’s assets, eliminating fingerprinting, and eliminating the requirement for face-to-face interviews.
To pay for the ever increasing number of recipients, the Governor has increased taxes on employer sponsored health insurance policies by over $850 million, which has had the ancillary effect of practically destroying the State’s individual health insurance market. Still, in the face of a severe recession and in light of all the waste in the system, Governor Patterson has called for a $2.2 billion increase in Medicaid spending in this year’s budget an alarming $5 billion increase for the 2011 budget.
In a recently released report, E.J. McMahon of the Manhattan Institute, offered concrete proposals, which could save approximately $8 billion in Medicaid costs, among them, were the following measures:
Ø Motivate recipients to get preventive and primary care. Allow recipients to choose the HMO, which is best suited to their needs, and adopt a benefit rewards program, which incentivizes enrollees to participate in preventive care programs.
Ø New York’s personal care for in-home Medicaid recipients is lavish beyond belief. The New York cost for these services is 230% above the national average and amounts to almost $25,000 per recipient. If New York were to limit the costs to just 150% of the national average the State would save $450 million on this measure alone.
Ø Limit the number of optional services Medicaid provides. New York offers the most generous Medicaid package in the country including an array of services that exceed those provided in employer sponsored health insurance such as non-emergency transportation for practically any reason the individual desires.
Ø Tighten eligibility screening. As previously mentioned, the Governor has put measures in place, which have dramatically increased Medicaid rolls. No doubt, the poor need the program, that is whom the federal government created the system for, but it is not unreasonable to ensure that those receiving the aid deserve to be there. The screening process, which the Governor removed, must be reinstituted.
A viable Medicaid program is essential to enable those in need to receive needed health care. The program in New York, however, has expanded beyond the capacity of New Yorkers to pay for it and by just placing reasonable limits on the services provided and reducing fraud and abuse, we would be able to maintain the basic services, which our citizens deserve, and Albany wouldn’t be wasting taxpayers’ hard-earned incomes.
III. Limits Must Be Placed on Public Employees’ Salaries and Pensions
Wages and pensions paid to public employees in New York are a primary reason the State is going bankrupt.
In 2009 public employees saw their compensation grow by 2.4% while pay in the private sector actually declined, in 2010 State employees will see their compensation rise by another 4%; and, adding the proverbial insult to injury, New York public employees are required to put in only a 37.5 hour work week. While the New York private sector unemployment rate is stuck at 10%, the public employee wage rolls continue to swell.
Compounding the problem is the generous pension and health benefits these employees receive. In the past ten years the pension costs for all New York government employees has risen from $1 billion to $10 billion. A report issued in 2009 by the Center for Government Research outlined the negative impact that public employee salary and benefits were having on upstate Monroe County; the benefits for County employees were way above the national average and if they were only brought in line with the private sector the County would save $40 million.
In New York City, the pension shortfall has required taxpayers to contribute more than $3 billion over the past five years and will most likely increase by an additional $1 billion over the next three years.
Unfortunately, the news gets even worse, granted market conditions were weak but primarily due to his poor management of the State’s pension, Comptroller DiNapoli has announced that the fund has lost over $45 billion which means that over the next several years New Yorkers will have to contribute an additional $5 billion per annum to make up the deficiency. As one would assume, New York’s per capita costs for its public employees’ pensions are the highest in the nation.
Based on this evidence, it is obvious that New York cannot afford the compensation package paid to public employees. The following two measures should be undertaken by the Governor and the legislature:
IV. Reduce New York’s Burdensome Tax Rates
New Yorkers are the highest taxed citizens in the country. State and local taxes as a share of income are 60% above the national average.
Last year, New York’s residents were clobbered with the highest single annual tax increase in history, totaling over $8 billion. According to the National Federation of Independent Business, New York’s business tax climate ranks 49th and the cost of doing business is the second highest in the nation (only Hawaii is a more expensive State in which to do business).
There are two inevitable results of this tax burden, people move to friendlier tax environs and businesses that stay cannot create the needed jobs. There is just no future here for our children if in fifteen years they have to move to states like Arizona or Florida to earn a living. The following changes should be made to bring New York closer in line with the rest of the country:
1.) Cap the growth of school and real property taxes
2.) Impose a flat tax of 6% on all income and eliminate all tax credits and preferences
3.) End ‘bracket creep’ and index tax rates for inflation
4.) Eliminate the State tax on dividends and interest earnings. Without such meaningful reform, our tax base will continue to decline and jobs will continue to leave.
V. Reducing Debt, Selling Assets and Other Miscellaneous Measures
There are other steps, which the Governor and legislature could take which would lower state spending and reduce the extent of further tax increases.
As with taxes and spending, New York’s debt burden is among the highest in the country. Over the past five years, New York’s total debt burden has ballooned from $40 billion to $53 billion. Only 3% of this debt is voter approved general obligation borrowings, the rest is back-door debt incurred by the state authorities.
In the next two years, the State is expected to exceed the debt limits that were enacted in the Debt Reform Act of 2000 by over $300 million if it continues with the prescribed bond sales. Any debt, not approved by the voters, must be immediately stopped. So called “appropriation” back door debt, which makes up the largest percentage of the State’s outstanding bonds, is simply a mechanism employed by politicians to avoid having to come to the voters and the sale of bonds of this category must come to an end.
The rating agencies have taken notice of the State’s poor job and fiscal situation. In its most recent credit report, Moody’s rating agency made the following observation about New York “Cumulative income and job growth have lagged the Nation over the past 15 years...Revenue declines were sharp in fiscal year 2009. This is likely due to tax increases implemented by the state in 2008”. The rating agencies determine what the interest costs will be for state debt and therefore how much citizens will be taxed to pay for it, now they are sending a clear signal that Albany must get its fiscal house in order, stop the wasteful spending, and implement policies to create jobs.
There are numerous State assets, which could be sold that, would bring in revenues and save the State operating and personnel costs. These properties include buildings, ski resorts, airports, and bridges. The Governor should seek bids from the private sector to transfer ownership of assets, which do not provide ordinary government services.
One of the easiest means to reduce State spending would be for the legislature to control its own budget. Our legislators are paid too much, for what is essentially a part time job and their staffs are bloated. If they simply brought their costs in line with those of other state legislatures, they could easily save $100 million per year. Furthermore, legislators spend over $120 million in earmarks, which are pork barrel projects for their districts that are used to get themselves re-elected, another area where waste could be eliminated.
New York has arrived at a crossroads, not unlike the fiscal crisis New York City faced in 1975. Back then, the State imposed harsh measures on the City to bring its fiscal house in order and enable it to pay its bills and finance necessary capital projects. Now, the State needs to employ its own financial measures to reduce obvious wasteful spending and lower taxes to enable its citizens to prosper.
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