The View From Here . . .

By Bob Morgan, Jr.

The proposed New York State budget, whose passage appears likely at this writing, proves that all the bad news lately is not confined to Wall Street or even to Washington. Even supporters of the budget are not singing its praises. "This is not a happy budget," new Democratic state senate majority leader Malcolm Smith declared recently. New York Post state editor Fred Dicker is less kind, calling it "a monstrously bloated, tax-and-spend plan that, in one fell swoop, reverses a three-decade-long effort to strengthen business and prevent taxpayers from fleeing the state."

The budget, which amounts to about $131.8 billion, is $10.5 billion higher than last year, although $7.2 billion of that increase is money appropriated by the federal stimulus bill, which must be spent this year. The budget does not address the problems of the MTA, which will be dealt with later.

The budget includes $7 billion dollars in taxes and fees, which will affect a great number of New Yorkers. The fees and taxes include imposts on electricity, beer, cigars, bottled water, motor vehicle registrations and higher tuitions at state schools.

A centerpiece of the budget is a tax on "wealthy" New Yorkers, defined as singles making more than $200,000 and married couples earning more than $300,000. While most New York families do not have salaries of $200,000 or $300,000, there are serious consequences to taxes on the better off. For one thing, they can move their families out of the state to less unfriendly jurisdictions; it is well to remember that both Florida and Texas have no state income tax. And it is not just the income tax revenue that is lost. Like it or not, wealthy entrepreneurs are the folks who create new jobs for rank and file workers. Some evidence of this is provided by California, a very high tax state that is steadily losing employers and jobs.

New York City Mayor Mike Bloomberg, confronted with a similar proposal to raise taxes on high income city residents, pointed out the obvious, "One percent of the households that file in this city pay something like 50% of the taxes," explained the Mayor. "In the city, that's something like 40,000 people. If a handful left, any raise would make it revenue neutral. The question is what's fair. If 1% are paying 50% of the taxes, you want to make it even more?"" At some point, too much becomes too much

Admittedly, the lawmakers did face a difficult budget situation this year, with tax revenues significantly lower. But the fiscal problems did not stop inclusion in the budget of about $170 million of "member item" projects in the legislators' home districts. According to The New York Times , the recipients of this state aid include gun clubs, churches, a yoga foundation and an American Legion pipe band, among thousands of others.

Republicans will point out that with the Democrats now controlling the governorship and both houses of the state legislature, the Democrats "own" the entire budget process. Indeed, some Democrats in Albany likely miss the days when the "three men in the room" included at least one Republican, who could conveniently be blamed for inclusions or omissions unpopular with Democratic constituencies.

New York politics are difficult to predict. But sooner or later voters are going to demand a legislature less beholden to interest groups that cuts spending in a lean year, rather than reflexively raises taxes. The Empire State will have little future if the individuals and businesses responsible for jobs and prosperity decide that they have seen enough.