Budget Passed, 125 Days Late,
Oil Spill Took 105 Days to Fix Togs Taxed,
Sweet Soda Spared
NEW YORK, NY, August 4, 2010 — The ice broke at about 8:30 p.m. last night, the 125th day that the New York State budget was overdue. The state's fiscal year begins on April 1, and FY 2010-2011 was more than one-third over when the State Senate passed a revenue bill that purportedly closed the budget gap.
The resolution of the four-month crisis was reported on the front page of today's Times in an article by Danny Hakim.
The most newsworthy feature of the revenue bill was the reimposition of a 4% state sales tax on clothing and shoes selling for less than $110. The city and state had previously taxed those transactions, but the city repealed its tax in September 2005 and the state followed suit, effective April 2006. City elections are held in odd-numbered years and state elections in even-numbered years. Connect the dots.
Of course, the $330 million predicted to be collected by the low-end sales tax will not close the state's $9.8 billion budget gap. It was passed to show legislative concern over the state's fiscal plight, a condition directly attributable to consistent overspending proposed by the governor and proudly approved by successive legislatures.
The fiscal crisis will come home to roost when the banks stop lending to an increasingly insolvent state government, as they did in New York City in 1974. The state can continue, however, to loot the pension funds for money that they can have no reasonable expectation of being able to repay. Perhaps the state hopes the federal government will bail it out, the way they protected the banks and auto manufacturers in 2008 and 2009.
Perhaps they hope the Feds will do what they did to/for General Motors: wipe out the stockholders, scalp the bondholders and turn control of the company over to the unions. That may turn out to be a good strategy if the company, much smaller now, prospers again. We would not, however, be inclined to go in on the IPO, however it may be priced.
Two substantive bills that were before the legislature failed to pass. They included allowing the sale of wine in supermarkets, and imposing a penny an ounce tax on sugar in soft drinks. Both bills were defeated because the lobbyists in opposition were stronger than those in favor. In our legal system, a party in a lawsuit may prevail because he has a better lawyer than his adversary. That rule applies, a fortiori, when dealing with legislative matters. It is a shame when matters are not decided on the merits, but on the basis of political influence, which may be purchased from people who are practicing their professions in a free society.
New York State lived up to its reputation, first reported six years ago by the Brennan Center for Justice, as having "the most dysfunctional legislature in the United States." There was no mid-session seizure of power by the opposing party, as there was in the Senate in 2009, which created a situation evocative of the Avignon papacy, which Petrarch compared to the Babylonian captivity. The fact that the Democratic Senate majority was razor-thin, 32 being the Constitutional requirement for the adoption of legislation or a budget, meant that the vote of every Democrat was needed on every occasion, and any one disaffected on any issue could prevent the adoption of any other proposal.
To sum up: the State fisc is going to hell in a handbasket, Albany did nothing to impede its descent, relief will have to come from the application of external forces, and much of what happens is due to the fact that too many people in power have limited abilities but unlimited appetites.
Questions for StarQuest
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