April 11, 2003

THE YEAR OF CYA

By James Eugene*

This is the start of the budget season in New York. It actually should have started a few months back, but the State has decided that its April 1st start of the fiscal year is essentially meaningless, so now that the deadline has been missed, we know everything is normal. And what is the reason the budget did not pass on time? It is the year of "cya".

The striking thing about this fiscal year is how much no one seems to get it. More than ever at all levels of government, this fiscal year seems more about passing the buck and "covering your ass" than about getting the job done. As I said, it is the year of "cya".

Let's look at the relationship between the City and the State. The City has a budget deficit of between $3 billion and $4 billion. At first, it planned to receive some financial assistance from Albany. But then Albany had its own deficit of between $10 billion and $12 billion. And guess what, Albany has told us that we should not count on it to assist New York City. In fact, if anything, the Governor's proposed budget adds to the City's deficit. (Frankly, New York City is not the only municipality in this situation as Governor Patacuomo attempts to shift fiscal blame to the localities by cutting state aid to them, resulting in either service cuts or higher taxes for localities... and of course, the local politicians get the blame for either the cuts or the higher taxes, not the Governor. It is, afterall, the year of "cya".)

So the City asks for a commuter tax since Albany is not going to be any help. But Mayor Billionaire is a shrewd one. He asks for a whopping commuter tax, much bigger than the prior one, which had a measly rate of .45% of income. He then couples this commuter tax with a decrease in the City income tax and an 18% increase in the real property tax. What is Mayor Billionaire doing? He is seeking to restructure New York City's revenue streams by having the City become more reliant on the real estate market than local income... a move that mirrors that of most of the local tax structures in New York State. It is also a move that probably allows for a more stable revenue stream in the long run... but I will leave such speculation up to the fiscal nuts. Ultimately, though, the bulk of the new revenue comes not from the City but from the commuter. All of this still has the same impact though, as it is the year of "cya".

However, because of a worsening revenue picture that occurred quicker than Mayor Billionaire would have liked, the City had to increase property taxes earlier than just this budget season, and so New York City has already had its property tax increase (in December, 2002). Thus, instead of Albany looking at a plan that has New York City increasing property taxes, decreasing its income tax and reinstating a commuter tax, Albany is looking at a plan from the City that decreases its income tax while reinstating a commuter tax (the prior property tax increase, well it doesn't count anymore). Albany isn't buying that, and in reality, it wasn't going to buy the prior plan either because the commuter tax has already been imposed. The increase in Metro North and Long Island Railroad fares amounts to almost $400 annually. Commuters would be in revolt over another increase. So there will be no commuter tax because it is the year of "cya".

Thus, Albany is sticking it to the City. Mark my word, you will not see much of anything from Albany, especially if the City goes through with its emergency layoffs. Albany is about irresponsibility and avoiding blame and because the City will do the responsible thing and make sure its budget is balanced, Albany will avoid helping it because the City will have already helped itself. Albany, unfortunately, is so devoid of leadership, it can't help itself, let alone anyone else. And, mind you, it is the year of "cya".

Of course, Albany and the City are looking at Washington. But Washington is fighting a war. Washington doesn't care about the City's or State's deficit (or any other city's or state's deficit for that matter). It has its own growing deficit, a war and a desire for tax cuts (Washington, D.C. the home of the delusional Republicans who think money grows on trees... well at the Treasury Department anyway).

Some people brought up the idea of revenue sharing because while the States can't run a deficit, the Federal government can. And why not use some of that deficit spending to subsidize the States (Pat Moynihan, rest in peace, we could really use him on this one)? Well, this White House gets no "cya" benefit if it has a larger deficit to help others with their deficit problems. And besides, the Bush II Administration is too busy looking for Osama Bin Laden, oops, I really meant Saddam Hussein. Moreover, for the Washington masters of "cya", (at least until next year) it is the year of the ultimate "cya".

In all this mix, we have the Mayor and the Governor battling over anti-terrorism funding from Washington, and the Governor acting like a baby because the Mayor seems to have won the fight. Geez, Patacuomo really needs to grow up. Ever since he held Giuliani's coattails (Son of the Great Liberal Governor was right, just impolitic), no one really believes that Patacuomo is the Anti-Terrorism anything that he fancies himself. In fact, Patacuomo is so bland that no one thinks twice about him. (Earth to Democrats, put up a real candidate next time.) Except we all know that for Patacuomo, for this year and every year, it is the year of "cya".

And finally, Governor Patacuomo insists on raising fees. I know a middle class single mom who lives in Nassau County. Between her recent property reassessment, the increase in the Long Island Railroad commute and the increase in the subway fare, she is looking at $1,400 in additional fees annually without a single "tax" rate increase. And while, this woman's tax increase may be deductible from the Federal income tax, the commuting increases are not. Patacuomo is willing to increase fees, but not the State income tax. Thank you, Governor Patacuomo, we are so happy to be paying higher fees on things which are not Federally tax deductible, rather than paying higher income taxes which are Federally tax deductible. Of course, Patacuomo cannot raise state income taxes because it is the year of "cya".

Finally, Patacuomo likes sounding good by discussing the fact that he will not raise "job-killing" taxes, but then he discusses putting back the sales tax on clothing. Why that tax? Could it be that it was really the brainchild of Mayor Prosecutor who received all the credit for it, while Patacuomo received none? And, of course, sales taxes are not Federally tax deductible. Remember, this is all about "cya" and it is the year of "cya".

All this "cya" creates one huge problem. No one in power rationally discusses how to put together a fair budget. What cuts should be made? What taxes should be raised? What fees should be raised? Are there any taxes that should actually be lowered? Are there any programs that should actually be increased? But it is the year of "cya". And Albany and Washington are its masters. So don't expect much, because "cya" is not about responsible government, and it is not about leadership. It is about a deficit in leadership. And when you have no leaders, covering your ass is the only thing you can think of. We are leaderless in the year of "cya".

AND THINK ABOUT THIS ONE

If the City fails to pass a budget by the beginning of its fiscal year, a State board can take over. How ironic is that when the State can't even pass its own budget on time?

* James Eugene is the pseudonym of a veteran of NYC government affairs. Inside The Big Apple will appear exclusively on the Empire Page. If you want to send tips or column ideas to James Eugene, email them to jameseugene@empirepage.com.