George Pataki's 10 Most Unforgivable Decisions

by Larry Littlefield

Many of the inequitable and short-sighted policies that have damaged the state pre-date the Pataki Administration, and are kept in place by perpetual incumbents in the state legislature who are employed by those who benefit from such policies. But although Governor Pataki has done some good things, he has also added to the inequities, and diminished the state's future, through a series of unforgivable decisions. He made these choices for the same reason that other, similar choices had been made by others in the past - because they benefited a small number of well organized, already privileged, politically powerful groups. And as the Governor has sought the third term he said he wouldn't seek, the good things have become fewer, and the unforgivable decisions have accelerated.

10.    The 2000 Public Pension Enhancement

This is number 10 not because it is the 10th most damaging, but because Carl McCall gets most of the blame. He pushed it, and claimed that it would be "free" because the pension funds had plenty of money - even as he released report after report warning that the state budget was dependent on an unsustainable boom on Wall Street. Pataki signed it, however, and deserves some of the blame. As a result of this "free" benefit, the state and its local governments will face higher taxes, diminished services, lower wages for future employees, or all three for decades. New York City is hit the hardest.

9.    2000 Census Local Review

Other states spent millions to ensure everyone was counted, but Pataki gave the state's demographic team very little, since he was afraid that a full count would help New York City. Despite strong local efforts in a few places, Pataki's decision cost New York State a seat in the House.

8.    1995 State Tax Cuts

When George Pataki took office, New York's state taxes were just 5.5 percent above the national average as a share of personal income, but its local taxes were 75 percent higher. He could have reduced local taxes by picking up more of the tab for programs like Medicaid, as other states do, but that would have meant forgoing credit for tax cuts. So he pushed through state tax cuts, taking credit, shifting additional burdens to local governments and blame to local officials.

7.    Rising State Debts, 1994-1999

During these years, the state benefited from an unsustainable windfall - soaring personal income taxes on capital gains driven by a bubble on Wall Street. It could have used this windfall to pay down debt, or to pay for capital spending with current income. Many states did so. Instead, Governor Pataki decided to spend the windfall, and borrow on top of it.

6.    The Debt-Laden 2000-2004 MTA Capital Plan

After being criticized for the state's indebtedness in the 1998 campaign, Pataki decided to pull an Enron-like move and shift more of it off the balance sheet. His 2000 to 2004 MTA capital plan loaded the downstate transit system, the key to the region's prosperity and thus the tax base of the entire state, with enormous debts by diverting other, current revenues elsewhere. Passed over the desperate objections of groups ranging from the business community (the NYC Partnership) to labor unions to transit rider advocates to fiscal monitors, this huge rise in debt virtually insures that the major, essential improvements that are once again on the drawing board will not be built.

5.    Unemployment Insurance Bankruptcy

Almost every state used the late 1990s boom to run up a big trust fund in its unemployment insurance account. Thanks to Governor Pataki's decision to raid the fund and cut taxes, however, New York State's unemployment insurance fund is basically bankrupt, even though the state's unemployment rate is not that high. The state is borrowing billions from the federal government to pay benefits, and will have to pay this back with interest. So it is jacking up unemployment taxes on businesses sky high, and this is a tax that hits new businesses -- and those employing low- and moderate-wage workers -- especially hard. It is a disastrous tax increase in a recession.

4.    The STAR Program

When George Pataki took office, public school spending, staffing, and pay was very high in most of the state, but property taxes in affluent suburbs were also high as a result. In addition, spending and pay in New York City's public schools, and its share of state aid, were low. Pataki ignored the latter problem, instead pushing through the STAR program, a back-door form of school aid directed primarily to those who have, and spend, the most. Far from reducing local taxes, STAR allowed affluent school districts to increase their spending even more, widening the difference between their staffing and salaries and those of New York City and other older cities.

3.    Campaign for Fiscal Equity Lawsuit Appeal

Later, after a judge found that the state's school aid formula was unconstitutional, Pataki chose to postpone any change in policy through dragged out appeals, rather than remedy the inequities. In the lawsuit, the state argued that funding equity was unnecessary, because similar improvements could be gained through improved productivity. Yet for eight years Pataki made little effort to push through any reform of New York City's Board of Education, merely providing weak support for reforms pushed by others, until finally Mayor Bloomberg succeeded in pushing through a change. In 2000, New York State was number one in per student school spending overall, but due to inequity and inefficiency more than half its people live in places - beginning with NYC and other older cities - whose schools would be unacceptable to most Americans.

2.    2002 Medicaid Reimbursement Increase

After September 11th, Governor Pataki finally decided he had to do something for New York City. Not for its overtaxed, under-serviced majority. Not for its future. He decided to increase funding for the city's over-funded, politically powerful health and social services industries, outbidding the Democrats by raising payments per recipient - already double the U.S. average - even higher.

1.    The Enron Budget: Fiscal 2003

Governor Pataki probably expected to be elsewhere by the time the chickens came home to roost, but his failure to win an appointment in the Bush Administration spoiled his plans. Now he is caught. Or is he? At great cost, he sought to win re-election by postponing all the pain until November 6th, the day after Election Day, with an Enron-like budget proposal that will put the state and its local governments even deeper in the hole. The Arthur Anderson of state legislatures promptly made it even worse, and it passed in record time. It appears that despite their divisions, our elected officials can work together. Against the rest of us. George Pataki made ten unforgivable decisions as Governor. Carl McCall made one significant decision as Comptroller, and it was unforgivable.

 

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