Last April, as COVID was decimating the financial markets and small businesses were being forced to close, New York State legislators passed a business as usual $178 billion budget. It was clearly evident at that time that revenue for the state was going to be dramatically lower because of the pandemic, yet spending was increased 6 percent from the previous year.
Flash forward to today and the current projected $8.7 billion deficit is based on fantasy, because it doesn’t include the $8 billion in assumed recurring budget savings which were planned for but never materialized.
All told New York State’s pandemic related deficit is approaching $17 billion. In response to all the red ink Gov. Cuomo, as reported in a Dec. 9 Wall Street Journal article, said “we’re going to have to raise taxes.”
There seems to be a conception that taxes in New York can be raised indefinitely to plug budget holes.
Politicians would rather call for millionaires to pay more in taxes as opposed to doing the hard work of finding recurring savings and efficiencies, which were supposed to be part of the budget. COVID has proven to many, especially those in the financial district, that they can work from anywhere, and the high cost of doing business in NY isn’t worth it.
Because the Trump administration gave a big middle finger to high tax Blue States, by not allowing for state and local taxes to be deducted from a taxpayer’s federal tax burden, the exodus from New York started as a trickle.
Since COVID the pace has picked up considerably. A few examples of those leaving are Elliot Management, and it’s $41 billion fund run by Paul Singer, who is moving to West Palm Beach. Billionaire Carl Icahn permanently moved his business headquarters and residence to Florida, and now Goldman Sachs recently announced it’s considering moving a money management division to the Sunshine State.
New York’s population growth ranks near last nationally, and when the stats come out next year, we will see wealth has left at an extraordinary rate too. And residents and commerce will continue to flee because the top state tax bracket in New York is 8.82 percent, while it’s zero in Florida.
Attempts to attract big business funded by tax breaks to New York have been met with fierce resistance.
Amazon abandoned its corporate headquarters move to Long Island City almost two years ago, because of a coalition of Progressive Democrats who refused to give rich companies corporate welfare.
When Amazon decided not to move to NYC the rallying cry of far-left Democrats was, “we won.” What we won was the loss of 25,000 high paying jobs, and the countless additional jobs that would have been created from additional economic activity.
Also forever lost are the extraordinary additional amount of new sales, real estate and income taxes that would have been created.
The worst new idea to raise tax revenue I’ve heard of is from NYC Assemblyman Robert Carroll. His proposal is to add a $3 tax ecommerce to items that are ordered online. New Yorkers are currently homebound, by government orders until at least the spring, and the elderly and disabled don’t get out often when there isn’t a pandemic. So why is a regressive tax on the e-commerce a good idea?
There is also a renewed call to raise taxes on millionaires and billionaires because “they can afford it” and should pay their “fair share.”
But unless the wealthy see New York government trying harder to find the $8 billion in savings and efficiencies they projected, then why would rich people want to underwrite poor fiscal management? They haven’t, and the skyrocketing prices of real estate in South Florida reflects the current exodus from New York.
NYC residential and commercial real estate prices are plummeting, and while residential real estate in the suburbs has benefited from COVID, commercial office buildings have not. To combat the municipal fiscal crisis Gov. Cuomo should come out with a Marshall Plan on reinventing government to make it more transparent and efficient. Relying on the federal government for a bailout, if it materializes, will only be a Band-Aid to the problem.
There will be no better time for the radical change needed to accomplish good fiscal governance in New York than during the COVID caused financial crisis. I hope our elected officials have the stomach to get this done.
“There will be no better time for the radical change needed to accomplish good fiscal governance in New York than during the COVID caused financial crisis. I hope our elected officials have the stomach to get this done.”
Let us examine the pathologies of this article.
This lecture comes from someone who is comfortably ensconced in the most fiscally incompetent government east of Chicago, with a multi decade track record of recklessness.
The County Executive, under the guise of “fixing” the assessment system, just raised school taxes on 65% of the residents here. My own school tax increase was 12%, or $1400, and THIS folks, is under the GRADUAL PHASE IN the Executive “fought for.” This, in the midst of a fiscal meltdown.
The assessment system has been a 40 year comedy in this County, resulting in a bond issue feeding frenzy that created NIFA, the “Interim” fiscal watchdog in place for oh, only 18 years. There was always an easy way out, but too many people benefit from putting our residents in a property tax squirrel cage for eternity.
She then caved in to the PBA, (plus ca change…) and doled out raises AND $3000 bonuses for wearing body cameras. She could have just ORDERED them to, but she doesn’t run the County. She does what she’s told. Like with her Sixth Precinct epiphany. Just one phone call changed her mind.
Across this country, governments have been laying off workers and doing without. We have yet to see ANY evidence by state or County authorities to reduce headcount or expense. I mean, NOTHING.
Yep. There’s some real belt tightening there. What a farce of a government.
Then there’s this chestnut:
‘When Amazon decided not to move to NYC the rallying cry of far-left Democrats was, “we won.” What we won was the loss of 25,000 high paying jobs, and the countless additional jobs that would have been created from additional economic activity.”
Which is pure rubbish. The “far-left Democrats” who, unlike the author, are AUTHENTIC Democrats, prevented the displacement of tens of thousands of residents from gentrification, in an area that is already on fire with rapid development. In the meantime, the 25,000 jobs was a fiction, Amazon dropped a billion dollars on Lord & Taylor’s 5th Avenue building, took 300,000 sq. ft. in Hudson Yards, (where they belong) and is accumulating more distribution centers in the region by the month. The State actually offered to pay the salaries of some of the Amazon workers, and the use of a private park on Governor’s Island. Anything else you can think of giving them? Maybe our first born?
As far as the fiscal responsibility from the State, we could have started by electing a real Comptroller, instead of one without any fiscal management experience hand picked by a convicted felon. When the Common Retirement Fund lost over $3 billion under his stewardship, his angry response was “I’m too old to change.”
We all know what the answer is: we don’t need a bicameral legislature, we need to reign in the costs of delivering public services in the County, City and State, and do it responsibly, or we’re going to be living like this forever. We need to have the public services bear a greater portion of health insurance costs, and end public contributions to the pension system. This isn’t 1965. We deal with the reality we have.
Please don’t hand out any lectures on political courage, Adam. You have NO moral standing to do so. You’re emblematic of the problem, not the solution.