The Governor's Speech

Cuomo Warns Legislature

Fiscal Disaster Lies Ahead

Without Sharp Reductions

The new Governor Cuomo delivered his first State of the State message yesterday. I watched the speech and found it credible and constructive. Cuomo seems to be making a conscious effort to get along with the legislature. At the same time, he outlined spending reductions, ethics reforms, independent redistricting and other proposals which have been anathema to the Senate and Assembly in years past.

Politics requires a certain level of optimism, and with a new governor, there is more reason for hope than there has been for many years. The wrenching disappointments of the Spitzer and Paterson administrations are now behind us, the ever-mounting budget deficit is before us. The device of expert panels proposed by Governor Cuomo in his speech will have limited impact in reaching agreements or even postponing the day of reckoning, but to the extent that it brings new people into the mix of decision-making it may be helpful.

I liked the informal approach of Cuomo's PowerPoint presentation in principle, although it was not particularly proficiently executed. That will be cured by staff training or staff upgrading. The governor of 19 million people should have the highest level of technical support when he reaches out to the public.

The substance of the message showed clearly the Governor's awareness of fiscal reality and his willingness to make hard choices. Of course, he didn't get around to specifying those choices precisely; that will presumably come in the budget message next month. What seems clear, today, is that Andrew Cuomo is conscious of how his policy decisions will be perceived not just by New Yorkers, but by people across the nation as well, the potential greater constituency.

It was said that in the French Army, every corporal has a field marshal's baton in his cap. So it is that every governor of New York State dreams of the White House. So far three have made it, Martin Van Buren (1837-41) and the two Roosevelts, Theodore (1901-09) and Franklin (1933-45). Among those who tried and failed in the 20th century are Charles Evans Hughes (1916), Alfred E. Smith (1928), Thomas E. Dewey (1944, 48), and Nelson A. Rockefeller (1960, 64 and 68). George Pataki tested the waters in 2008 and found them frigid, as everyone knew.

Perhaps the most dramatic non-candidacy occurred on December 21, 1991, when Governor Mario Cuomo, whose staff had chartered two planes to fly him and the press corps to Concord, New Hampshire - where he would have paid a $1000 filing fee and announced his candidacy in the Democratic Presidential primary in front of the State House - unexpectedly left the aircraft waiting on the tarmac when he decided not to take flight. That afternoon, Cuomo announced his decision in the New York State Capitol. He said that the Republicans, who then controlled the State Senate, had made it impossible for him to run "for their own purposes". Click here to read a fascinating Times account of that eventful day.

It was twenty-nine years ago that budget problems obstructed Mario Cuomo's presidential campaign, and those difficulties have only grown in the years that followed. Although there have been years of unheeded warnings that the days of reckoning were at hand, the national recession of the past two years and the continuing spiral in health and pension benefits have brought a number of state governments to the brink of insolvency.

Some cities and counties have been through bankruptcy, but no state has yet defaulted on its sovereign debt. No government wants to be the first to blow, so fiscal reality has been widely concealed by bookkeeping devices loosely described as Enronian. The budget problems that New York State faced in 1992 are dwarfed by the $10 billion deficit the state must deal with today. However, New York is not the worst. The California state budget deficit is expected to be $19 billion in the next fiscal year - and this after seven years with Arnold Schwarzenegger, who was not a weak public figure, as governor.

There is a problem in the governor's plan to enlist groups of stakeholders to recommend policy changes and service reductions. Many of these stakeholders have directly conflicting interests, and it is hard to foresee what they might agree on to suggest to the governor. Cuomo evoked the Berger Commission, ably chaired by Stephen Berger, which recommended hospital closings in 2006. There is enormous local resistance to closing hospitals, or any other state facilities. Whether they are medically needed or not, they are job providers, like the upstate prisons and juvies (juvenile detention facilities) which Cuomo specifically targeted in his remarks.

We think the Governor jumped the first hurdle nicely, with spirit and good humor, showing his desire to bring people together, which is urgently needed. The next test will be his executive budget, which is due on February 1, twenty-six days from today. The deadline for adopting the budget is April l, but that date is rarely met, and no one seriously expects a ten billion dollar gap to be closed in two months.

We enjoyed the spirit and verve of Andrew Cuomo's speech: the young lancer laying out the problem and part of his plan (if there be a plan); the Albany veterans, expressing verbal support and encouragement, the infighting necessarily left for another day and a place outside public view. Nonetheless, Cuomo made real progress, speaking bravely about the fiscal chasm. For a Democratic governor, it was an astounding admission of reality. There were no impractical schemes to tax rich people who, by pressing a button, can move their industries and their income outside the state.

The merger of the Departments of Banking and Insurance is quite sensible. Since the repeal of Glass-Steagall by Congress, the same companies are in both fields. The Consumer Protection Board will find a home in a larger agency. I was in city consumer affairs (first deputy to Commissioner Bess Myerson) in 1970, when the state agency was formed by Governor Rockefeller with Betty Furness, formerly with LBJ's White House, as chair.

A great deal will depend on who is chosen to staff the new State Department of Financial Regulation, but it will give Governor Cuomo a piece of the action in a field otherwise likely to be dominated by the new Attorney General, Eric Schneiderman, a man who is as ambitious and as enterprising as his two immediate predecessors, the Governors Spitzer and Cuomo.

Let the games begin.

StarQuest #731 1.6.2011 1075 words