How will you spend your Thanksgiving break?
A special session of the New York state legislature convened earlier this week in an attempt to ensure that New York is able to pay its bills in the coming months. Facing a $3.2 billion shortage for the fiscal year ending on March 31, Gov. David Paterson requested this extraordinary session and urged legislators to pass his controversial savings plan.
Paterson has become desperate, and rightly so. In addition to the current fiscal year's shortage, the Comptroller's Office estimates that New York will face a three-year budget deficit of $27.5 billion. Almost no politically acceptable options remain to increase revenue to overcome these shortages. Therefore Paterson has been forced to propose controversial cuts in the previously untouchable areas of education and Medicaid as part of his savings plan.
For this reason, Paterson should bite the bullet — he should quit the 2010 gubernatorial race now and employ every last ounce of his remaining political power to put New York on a more sustainable fiscal path for the long run. It may be his last option to be viewed favorably in history.
Though he would become a lame duck, Paterson would otherwise be in the awkward position of fighting a steep uphill re-election battle while pushing politically unacceptable measures to balance the budget. Currently, he has little hope of achieving either goal and is likely to spend more time hedging between the two rather than pursuing either one. This unfocused strategy would turn two probable failures into definite failures.
Instead, Paterson should focus on balancing the budget and, more importantly, putting New York on solid fiscal ground. With calls for a jobless recovery, income tax revenue will be slow to return to previous heights, and Wall Street won't be able to furbish 20 percent of state revenues as it has in the past. Alternative sources of revenue need to be found, whether through increased taxes, transportation cost hikes or cuts to education and Medicaid. And there's no one better to enact the requisite pain than a lame-duck governor.
The state Senate has sought to avoid this pain by proposing several one-time measures that won't fix the underlying situation or prevent future shortages. These measures include expanding gambling hours, dipping into funds for public authorities and restructuring tobacco bonds. Since the budget shortage isn't expected to reverse anytime soon, these one-time measures are useful only in appeasing key constituencies and keeping these Senators' seats safe.
This string of temporary fixes to New York's budget needs to end. Over the past year, Paterson has become increasingly strident about the budget, much to his credit. But due to political pressures, he's been left in a deadlock and hasn't enacted anything remotely effective. And if he runs for governor, that deadlock certainly won't improve.
Of course, quitting the gubernatorial race won't automatically provide Paterson with the right answers. Paterson will still face tough decisions on which constituencies to disappoint and grueling battles to convince legislators to vote for his savings plans. So quitting the gubernatorial race may not be a sufficient condition, but it is certainly a necessary one. Otherwise, his decisions and battles will be tainted by politics and the electoral hopes of fellow democrats from the start, leaving him no room to consider the alternatives.
