Dear Legislator:
On behalf of the National Taxpayers Union’s (NTU’s) 18,000 members in the state of New York, I write to commend you on your work to begin the process of reforming the state’s long-term pension obligations. Now the state needs to take the same attitude toward reform when addressing New York’s other finances.
Last year, Governor Cuomo and the State Legislature solved a $10 billion overspending problem without raising taxes through cutting year-to-year expenditures by a modest 3 percent. Furthermore, the state enacted taxpayer protections by capping local property tax increases at 2 percent annually or the rate of inflation, whichever is less. Not only did these vital steps close last year’s budget gap, they also reduced the projected overspending for this year from over $14 billion to $3.5 billion.
Unfortunately, the proposed executive budget and current legislative proposals do not build upon the strides made last year. Governor Cuomo has insisted upon increasing education and Medicaid spending by 4 percent. While the Governor’s budget reduces overall spending by $225 million, or 0.2 percent, enlarging education and Medicaid commitments sets the stage for future deficits as they comprise over 40 percent of the budget. In addition, it is disappointing that the Legislature voted to raise income taxes on high-earners by partially extending the Patterson-era “millionaire’s” tax. New York currently has the 3rd-highest state and local tax burden in the country. The result of this action will be to make the state less competitive in the long run and make state finances more volatile by relying on a highly-unstable revenue source that is subject to dramatic fluctuations. Rather than resort to tax hikes, the state should continue to pursue ways to trim spending down to more affordable levels.
Notwithstanding the aforementioned concerns, NTU appreciates the work already done to address the most fiscally irresponsible facets of the state’s pension system. As you know, from 2000 to 2011 payments made by the state’s pension fund doubled from $4.2 billion to $8.4 billion. Absent a long-term overhaul of how the state compensates public sector workers, pension burdens will continue to crowd out other budget priorities. With that in mind, the new Tier VI plan and its estimated $80 billion in savings over 30 years represents a good first step towards fixing the crisis. Among other provisions, the new plan raises required employee contributions, places important controls on pension spiking abuses, and creates an optional defined contribution plan. Since these reforms only apply to new hires, however, NTU hopes your efforts are a start, not an end, to long-term pension reform.
For the sake of New York’s beleaguered taxpayers, NTU urges you to continue advocating for a meaningful shift in Albany’s fiscal philosophy, rather than reverting to the behavior that drove the state toward its current quagmire.. NTU and its members stand ready to assist all elected officials in New York who are seriously committed to addressing the state’s crippling tax burden and unsustainable overspending.
Sincerely,
Brent Mead State Government Affairs Manager