New York's budget is a fool's delight.
The Cuomo Budget process and its Committees and teams were all a big farce, because Cuomo operatives prepared the outcomes and the committees were left with a rubber stamp. "Add Common Cause to the list of organizations unhappy with the about-to-be-completed 2011-12 budget. Rather than the cuts, they are upset about the level of secrecy involved in crafting the spending plan, which appears to be a replay of the time-tested “three men in a (closed door) room” method.
"Localities were quick to knock the first report ... from Mandate Relief Redesign Team, saying it falls short of the reforms needed. ...Gov. Andrew Cuomo ... is seeking to cap the growth in property taxes to 2 percent a year. Governments and schools said they would be hard-pressed to abide by the cap without having some state requirements removed." "What irked some on the 23-member panel was that while they had discussions with Cuomo's staff about the final version of the report, they only saw it minutes before it was released publicly." Suffolk County's Steve Levy said Cuomo's team report was 78 pages of nothing.
This was a temporary victory for Cuomo, but disaster is ahead, because the revenue side of the budget is a farce. "The new governor holds the commanding heights,” said Robert B. Ward, deputy director of the Rockefeller Institute, a research center. “The role for the Legislature often is to wait out a governor — and certainly the speaker has proven he’s a master of that." Was Assembly Speaker Sheldon a sly fox who knew Cuomo now had responsibility for the budget and the phony revenue predictions? "Mr. Silver [had]explained, it would be the widely reviled Legislature — not the popular governor — that would be blamed [if a budget wasn't passed]." Didn't Silver responsibly want more taxes?
Local schools are announcing layoffs in response to budget cuts. A sample of schools follow.
Beekmantown School layoffs
Saranac Central School District has no reserves and layoffs needed
Ausable Central School district has low reserves and layoffs will be needed
Cohoes City school district proposes layoffs
And these unemployed workers won't pay State income taxes (reduces Income Tax revenues) and also drains State coffers (unbudgeted expenditures for benefits), because NY State can't borrow its share of unemployment expenses from the federal government as it did in 2010. Worse still many local districts have to layoff more workers because they don't save the entire cost of wages paid, because many must still pay the full cost of unemployment benefits, because they use the benefit reimbursement plan instead of making regular unemployment contributions (in other words, they paid nothing until a worker is laid off and then they pay the full benefits)
"The Benefit Reimbursement program lets employers reimburse the Unemployment Insurance Fund for benefits paid to their former employees in place of paying on a tax rated basis. The following groups that are tax exempt under Section 501 (c) (3) of the Internal Revenue Code qualify for this option: Nonprofit organizations organized and run only for: religious, charitable, scientific, literary or educational purposes and Government entities."
This same unemployment benefit (unbudgeted expenditure) payment will affect any New York State layoffs Cuomo plans, because the promised savings will have to be reduced by the full cost of all unemployment benefits paid.
And NY Counties will follow with more layoffs because of Cuomo's pass down of a 9.4% increase in Medicaid County expense which is the largest expenditure for Counties and the failure of his Mandate Relief Team. Things get worse because a Pension Tsunami is going to hit California and New York. New York State has an absurd assumption that it earns 7.5% on its pension funds when the real rate was 1.1% for the past five years. This will effect New York's credit rating and lending rates.