Task Force Warns of NY Budget Meltdown

[Valin]

Via Meadia:

12/20/12

 

Last week it was New Jersey, this week it’s New York. The nonpartisan State Budget Crisis Task Force just released a report stating that New York’s fiscal accounting is “papered over with gimmicks” and that the state will face a serious budget crisis unless it changes course quickly. The report does commend Governor Andrew Cuomo for taking real steps to address the issue, but it also warns that, as in New Jersey, even these measures are not nearly enough to keep the state’s finances in line. As usual in these cases, high spending on pensions, services, and entitlement programs like Medicaid is growing much too fast for revenues to keep up. The New York Times reports:

 

As one major area of concern, the report highlighted the state’s enormous Medicaid budget, which is larger than those of Florida, Pennsylvania and Texas combined. The report said that while the Cuomo administration had put in place a cap on annual increases in health care spending, it was not certain the measure would drive down costs over the long run.

 

Rather than honestly dealing with the problem, many politicians prefer accounting tricks:

 

(snip)

 

In short, the budget is a stinking mess, and New York has now officially joined the list of blue states where public sector unions and weak or corrupt political leaders promise utopia to voters but drag them down into fiscal crisis. Like their blue colleagues in other states, New York pols are quickly learning that even an able and serious governor cannot single-handedly undo decades of disastrous fiscal policy.

 

Ugly, painful cuts and protracted political battles loom for a state that has spent itself into a corner in pursuit of a set of social policies it cannot afford.

[Valin]

200 New York Cities Headed for Pension Trouble

8/22/13

 

In April we warned that dozens of cities in New York State were facing financial catastrophe stemming from underfunded pension liabilities. It turns out that we may have been lowballing it. Moodys has just announced that the Long Island town of Huntington, NY could be downgraded for repeatedly delaying pension payments to fund short-term projects. The announcement is also a warning to the 200 other New York cities that engage in the same practice, as Reuters reports:

 

(Snip)

 

In city after city weve seen how mismanagement and underfunding of pension funds have led to financial ruin. Yet despite the cautionary tales presented by cities like Detroit and Stockton, cities still persist in kicking the can down the road, hoping that good times will return and strong investments will keep funds afloat. Until such a happy day dawns, theyre plagued by credit downgrades and massive debts, and face an ugly choice: either renege on their pension promises or slash public services to the bone in order to fulfill them. Any New Yorker counting on these pensions should begin to think seriously about a backup plan for retirement.