Getting Away With Murder

Pataki's Fiscal Follies Pass Unnoticed in Re-Election Fervor

When George Pataki was a Republican assemblyman in 1990 and Mario Cuomo was running for certain re-election while trying to roll up a record victory margin to impress national Democrats, the young, three-term legislator led a filibuster against the state budget. Finally, at 3 a.m., With no reporters left in the Capitol, the Democratic Speaker suspended the rules of debate and moved for an immediate vote, passing the budget over the outraged protests of Pataki, who later called this the "most difficult day" in his decade-long legislative career.

This is how Pataki summed up the experience just four years ago in an autobiography no one bought: "This wasn't just a policy disagreement. It was a bipartisan agreement to enact a budget that put the interests of government—more accurately those of politicians and their careers—ahead of the interests and needs of the people of New York.

"It was a fraud on the people, enacted to protect the incumbents, including Republicans in the senate who were willing to look the other way in order to return Mario Cuomo and company to office. It was a question of deliberately deceiving the public—indeed, just a few weeks after the 1990 election the extent of the deception was finally revealed: The Cuomo budget carried a $6 billion deficit, far worse than any of us had anticipated. The legislature was called back. All kinds of tough decisions were made that resulted in suffering which wouldn't have had to happen if the process had only had some integrity."

Four years after writing those words, Pataki is living them, turning punditry into prophecy. Just as Cuomo's presidential ambitions guided his 1990 decisions, Pataki's naive national political flirtation is shaping his 2002 agenda, leading to profligate fiscal policies that have cast a cloud of shocking uncertainty over the future of an already beleaguered city and state.

Here are the incontestable facts about the budget he recently shepherded through a legislature as compromised as the one he assailed in 1990 and again, in 1993, when he was the only Republican in the state senate to vote against another Cuomo budget deal:

Even after Pataki discovered in April that he had overestimated post-9-11 state revenues by $1.4 billion, he agreed to a budget that increased spending by over $5 billion, a boost of 6 percent in one year, a point more than what he proposed before the shortfall appeared.

All available reserves were tapped out (except $710 million in a fund that can only be used mid-year), leaving no cushion for the next budget. While the governor still estimates that the deficit for 2003 will only be $2.8 billion, that number was put out before the shortfall emerged and before over $700 million in new costs were added to the budget by the legislature. It also assumed revenues would grow next year by 5.25 percent, as rosy a re-election projection as any in history.

Raiding almost a billion dollars in federal welfare funds and $200 million from the Environmental Protection Fund, the state will face the coming gap hampered by its reliance this year on $4 billion in one-shot or nonrecurring resources. That's $4 billion Pataki is spending now that will not be available next year, creating the mirage of balance.

The budget authorizes $3 billion more in borrowing and extends bonding powers to a host of state authorities that previously didn't have it, despite the already record-smashing debt expansion of the Pataki era. With Moody's giving only Louisiana and New York its lowest credit rating, Pataki has managed to hike the state's debt load by 27 percent during six years of budget surplus. The "environmentalist" who kayaked down the Hudson this weekend even snatched $64 million earmarked for the Superfund, mimicking Bush's shutdown of cleanup efforts and leaving only enough money in the till to pay the staff.

Every serious Albany observer on the left and the right knows this budget is a transparently political debacle. Yet when Comptroller Carl McCall issued a chillingly detailed report on the budget on June 28, the only paper in the state to report it was the Albany Times Union. The hard analysis of McCall's experts, warning that the budget fails "to address the imbalance the state will face next year and beyond," was ostensibly dismissed because McCall is himself a candidate, though few would question its accuracy. Frank Mauro, who was once the top budget analyst for the assembly, formed the Fiscal Policy Institute in early 1991 as an outgrowth of the Cuomo crisis of 1990. Mauro recently drew precise parallels between the 1990 and 2002 budgets, predicting flatly that, like Cuomo, Pataki "may have to call a special session this December." At best, Mauro concludes, the day of reckoning will come in 2003.

While Pataki blames the state's weakened condition on 9-11 alone, Mauro points out that tax cuts adopted since 1994 reduced state revenues by over $12 billion this year, making some of them simply unaffordable. Does anybody believe that a re-elected Pataki will stop this hemorrhaging of the tax base to close the gaps he's now aggressively widening?

This budget comes at the same time that Pataki pushed Mayor Bloomberg to make a deal with the teachers union that will open a billion-dollar hole in the city budget. Pataki became the first governor in memory to appear at a press conference announcing the settlement of a municipal labor contract—footage that may wind up in a commercial, though the state's $206 million contribution was a loan the city has to repay. That history-making contract was preceded, of course, by the three-year, multibillion-dollar, middle-of-the-night treasury raid engineered by Dennis Rivera and the hospital workers union.

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