So
you think the new Bush federal budget is a disaster? A closer look at the New
York State budget proposed by Governor George Pataki indicates that another
disaster is in the making and, as they say, the devil is in the details.

Grover
Nordquist, one of the Bush administration’s government-spending gurus, is
famous for his mantra of “drown government spending in the bathtub.” The
formula to do this is a simple one: cut taxes dramatically — especially for
the rich, thus creating huge deficits — and then use that as an excuse for
slashing federal non-defense spending.

These
radical spending cuts will siphon off funds earmarked for the states. The
states in turn must repeat this process often using the same formula of
regressive tax and spending policies. The final chapter in this sad story is to
pass the growing bubble of under-funded but needed programs down to the local
level. This process is in full swing right now in New York State. The outcome
and the impact on those most vulnerable has yet to be determined.

There
is a strongly held myth that New York State is a one of the highest taxing
states in the country, way out of line with most other states. The obvious implication
of this belief is that taxes and spending must be brought down, consistent with
the Grover Nordquist mentality. A look at the facts will indicate that New York
is not out of line, especially when compared to other states in the urban
northeast. Data on state taxes per capita for the nine northeastern states
indicates that New York is right in the middle of the pack. Looking nationally,
in the states that have 80 percent of the national population — large states
with significant urban populations — New York is again in the middle group.

New
York and the other northeastern states have significantly better public schools
than the low-tax states. A study released several years ago by a national
accrediting agency ranked the 100 top public high schools in the US. New York
had about a third of them and the rest of the northeastern states had a
majority of the rest. It is true that less-populated southern, midwestern, and
mountain states have lower taxes per capita. But they also have much lower per capita
incomes and terrible public services and schools. These, of course, are the red
states.

The recent
history of tax changes in New York shows a drastic reduction in the top tax rates since
1994. These reductions parallel the federal cuts, and have dramatically reduced
state taxes for the most affluent New Yorkers. The top rate is now about half
of the amount in effect prior to 1994. For high-income New Yorkers, this has
been a very significant reduction in state tax payments. The cumulative impact
of these top-rate reductions has been to reduce annual tax revenue by $15
billion, almost four times the projected state budget deficit for the coming
fiscal year.

New
York’s deficit is at $4.1 billion, and Governor Pataki’s proposals to close
this gap are now before the state legislature. And his budget-reduction
proposals will impact the most vulnerable citizens in New York. The major
proposals are summarized below:

Reduced
Medicaid payments: $1.9 billion

Reduced
mental health support: $.4 billion

Reduced
tuition aid and SUNY cuts: $.3 billion

Reduced
contributions to state pension funds: $.9 billion

Eliminate
tax holiday on clothing: $.5 billion

All
of these reductions will impact people who are hurting financially or are
already at the bottom rung of the economic ladder. The Medicaid cuts will
impact hospitals, nursing homes, and individuals in ways that may well
eliminate needed medical care now but lead to much higher costs and suffering
later.

Some
obvious options for reducing Medicaid costs have not been addressed.
Prescription drug costs are up 23 percent, yet no attempt is made to use
purchasing power to get lower prices or develop a program to obtain drugs from
Canada. Why aren’t these options on the table? You must assume that federal
mandates emanating from the Bush Administration are responsible.

Built
into the budget already are significant increases in SUNY tuition and a reduction in the top income-tax rate. In
every instance of budgeting priorities, the Pataki administration has a choice
between meeting essential needs of New Yorkers or protecting the interests of
the most affluent. Whenever that choice is available, the decision is always in
favor of the affluent.

Wealthy
New Yorkers can well afford to have a small increase in the top rate to make
these draconian budget cuts unnecessary. The federal tax cuts already enacted,
which are a major direct cause of the state’s budget shortfalls, have provided
these high income New Yorkers with a significant tax reduction. This should
enable these taxpayers to redirect a small portion of their federal tax savings
back into New York State to address this budgetary issue.

If
the top tax rate was increased from 6.85 percent to 7.7 percent for taxpayers
with taxable incomes of more than $150,000 per year, and to 8 percent for those
with taxable income of more than $500,000 per year, the budget shortfall would
be largely eliminated. For these high-income taxpayers, approximately one
quarter of their federal tax reduction would be redirected to New York State.

For
taxpayers below the $150,000 mark, no change would be needed. The added revenue
would restore at least a level of fairness in addressing the desperate needs of
the most vulnerable citizens of New York.

To argue that the
affluent cannot afford this type of tax is ludicrous on its face. Other easily
found budget options — using purchasing power to lower drug costs and closing
corporate tax loopholes — could completely eliminate the budget deficit. Why
aren’t these options even under consideration by Governor Pataki?

Such
proposals clearly conflict with the mentality of Grover Nordquist and the
ideologues of the Bush Administration. They apparently expect the states to
follow the dictum of every man (as well as woman and child) for himself and let
the devil take the hindmost. Is this the kind of a country, or state, we want
to live in?

The
resolution of this question is being played out in New York, all the other
states, and at the federal level. How it is resolved will tell a lot about us as
a state and a nation. And the prospects are not encouraging.

This article appears in Feb 23 – Mar 1, 2005.