Currently, New York state spending is around $86 billion dollars (excluding federal “handouts”) and faces a $2.1 billion budget deficit. This number is projected to reach $4.62 billion for next year and whopping $13.7 billion for the following year.  So, in an effort to rein in spending Governor David Paterson has proposed a 2 percent cap on spending growth for next year. A 2 percent spending growth limit would be less than a third of the 6.9 percent increase projected by the state budget office for next year – a notable achievement.

 Yet, Gov. Patterson should have thought of this back in April when he, Speaker Sheldon Silver (D), and Senator Malcolm Smith (D) came to a $131.8 billion budget agreement, which ramped up spending by a ridiculous 9.8% in the midst of a recession and massive decline in tax revenue.  Reached in completely closed door sessions, the budget raised taxes by $7.8 billion.
Regardless, this proposed cap on spending growth is a step in the right direction for NY lawmakers and taxpayers. As a result, state agencies would no longer face the prospect of continual budget increases year after year. This incentivizes wiser and more efficient spending.
The next step for fixing New York’s budget problems are overall tax cuts and spending reductions. States with higher tax burdens are more likely to see residents move to states with lower rates. When residents move, so goes their income and wealth. The result: decreased revenue and an ever-increasing tax burden on an ever-shrinking tax base.
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