Apartment of Mental Health

City Budget: Agreement:

State Issues: Unresolved

Court Decision to Raise

Mental Health Expense

Day 86 without a budget.

86 - to ignore, cancel or get rid of, with prejudice; 86 - atomic number of radon, working our way up to uranium, which is 92. (July 1)

Mayor Bloomberg and the City Council agreed amicably on a budget last night after several days of intensifying negotiations. The Times reported on the process in a story by Javier C. Hernandez on pA25, headed straightforwardly, CITY COUNCIL AND MAYOR REACH ACCORD ON A BUDGET. The first two grafs:

"Faced with a sputtering economy and uncertainty in Albany, Mayor Michael R. Bloomberg and the City Council agreed Thursday night on a $63 billion budget that would slash at least 2,000 jobs but increase no taxes.

"The deal would mean painful cuts in a variety of city services, including the elimination of some senior centers and day care programs, and less money for education and adult literacy programs. But over all, spending would increase by $3.6 billion, or about 6 per cent, compared with the budget approved a year ago, because of rising pension and health care costs."

Note the contrast between the state and the city when it comes to the budget process. Here are some reasons the city did better:

1. Strong, consistent leadership by the elected executive and his experienced professional staff.

2. A relatively responsible, hierarchical but functioning unicameral legislature.

3. The absence of a $10 billion deficit, due to the mayor's putting money aside during the boom years rather than spending every cent that was available.

4. The willingness of unions to make adjustments in staffing to avoid layoffs of their members and closing of facilities.

5. The absence of diversions such as investigations and indictments in the executive and legislative branches.

6. The relatively lesser strength of lobbyists in influencing city government.

One depressing aspect of the municipal budget is that despite the layoffs, attrition and other reductions, total spending still rose substantially ($3.6 billion) because of mandated increasing costs for pensions and health benefits. These areas must be dealt with if the city and state are to emerge from the chronic budgetary imbalance they have suffered from for years. Some day, the pension system will have to go from defined benefit to defined contribution, as the great majority of pension plans already are.

Almost by coincidence, there is another story in today's Times, just two pages later, that describes a court decision which, if upheld as it is likely to be, will have a considerable financial impact every year on the New York State budget. The decision is reported by A.G. Sulzberger on pA27. The head: US APPEALS COURT LIFTS STAY ON RELOCATIING MENTALLY ILL. The lede:

"A federal appeals court has ruled that New York State must comply with a lower court's order to begin immediately transferring thousands of people with mental illness in New York City out of large, institutional group homes and into their own homes and apartments, where they will continue to receive specialized treatment and services."

The story quotes the executive directors of two advocacy organizations. It closes with a senior citizen adult home resident who said: "I'd be better off in a studio or one-bedroom. Once you get here, you sort of get stuck here." Earlier in the story, a spokesman for Gov. David A. Paterson, said that "the state, wrestling with severe budget deficits, was in the process of determining its next steps." The article does not identify the two judges on the Court of Appeals for the Second Circuit who made the decision. They are Pierre N. Leval and Debra Ann Livingston. Judge Leval, a senior judge, is held in particularly high regard. Judge Livingston, an appointee of President George W. Bush, was confirmed in 2007. She was Vice Dean of Columbia Law School from 2005 to 2006.

This case is a classic example of the unfunded mandates which make it impossible for state executives or legislators to balance budgets. It may well be beneficial for many people with mental illness to have their own apartments with visits from case management services, psychiatrists and nurses, as the plan would require. Others may do better in group homes. Much depends on the quality of the group home.

There is no question that this mandate will be expensive to fulfill. Nor is there any question that the state is severely financially stressed, and that it would be extremely difficult to incur additional expenditures. Nor is there any limit on the level of service that the Federal courts would eventually require for individuals who have mental problems.

There are fiscal consequences to every new law and regulation, and some legislatures have rules that these consequences must be calculated and stated. No such rule applies to court decisions, which are often made without regard to how the decrees will be paid for (except for tobacco companies). Nor is it considered what or other services may be adversely affected by additional expense incurred in this area.

We recommend that you read today's Times article in full here. Are humanitarianism and fiscal responsibility inconsistent? How should judgments be made when these objectives are in conflict? Does the fiscal condition of the state have any relevance when the needs or desires of persons with disabilities are considered?

Paterson Channels Polonius

Albany Skirmish

Over Borrowing

Day 78 without a state budget.

78 is the speed of some old records, in rpm, the atomic number of platinum, and the number of chromosomes in a dog's DNA (39 pairs). We have 23 pairs.

We have not written since last week about the state budget and the contortions now under way as the legislature and governor try to reach agreement. It is not clear how hard they are trying, but we believe they are making a serious effort to come to terms. Governor Paterson's threat to shut down state government alarms incumbents who do not want to be blamed for any of their constituent-contributors not receiving their paychecks.

In the last months, the courts have shot down the governor's planned furloughs and layoffs as part of the judiciary's ever-expanding sense of its own responsibilities (see Citizens United v. Federal Election Commission). It was a Federal judge who ruled, in Donohue v. Paterson, that the governor could not impose a four-day work week, pursuant to the next to last prohibition of Article I, Section 10 of the Constitution. For those of you who may not recall the section, we reprint its relevant first paragraph:

"No State shall enter into any Treaty, Alliance, or Confederation; grant Letters of Marque and Reprisal; coin Money; emit Bills of Credit; make any Thing but gold and silver Coin a Tender in Payment of Debts; pass any Bill of Attainder, ex post facto Law, or Law impairing the Obligation of Contracts, or grant any title of Nobility."

In the past, Speaker Sheldon Silver has won many political battles by delaying a decision until the last minute, and then making a proposal which could not be refused. He is the most proficient politician in the Albany swamp, and his skills should not be underestimated. Some of his strength comes from the fact that he is responsive to his base (the Democratic Assembly caucus) and tries to protect his members, although a few of them are felons.

Silver is responsible for two major appointments made by the governor: Lieutenant Governor Richard Ravitch and Chief Judge Jonathan Lippman of the Court of Appeals. Both men are competent. Judge Lippman persuaded a bare majority of the Court of Appeals to sustain the appointment of LG Ravitch, a decision that may well have been in the public interest, although it would probably not have been the correct answer in a law school examination.

The decision certainly blindsided Attorney General Cuomo, who took the opposite position, but he has recovered nicely. He awaits the opportunity to choose Judges of the Court of Appeals himself, and will use his wits to avoid being boxed in by nominating committees which substantially limit his power of appointment by minimizing the number of papabili from whom he must choose.

The story today was that Governor Paterson said he would rule out borrowing, which is in direct contrast with the Ravitch plan, which calls for two years of borrowing, limited by the imposition of strict fiscal controls by a financial control board. If Paterson sticks to his guns, more layoffs will be required.

We expect some sort of flim-flammery to be proposed, which means borrowing billions from somewhere without calling it that. Raiding the pension funds is one possible scheme, vaguely justifiable because it is the swelling pension funds which got us into this trouble in the first place. Any more state borrowing, however, will further increase the interest on the public debt, which must be paid before one begins to provide for vital services like police, fire and education.

Paterson's problem is somewhat mitigated by the fact that President Obama, Governor Schwarzenegger and many other public officials have the same difficulties. The national debt today is about thirteen trillion dollars, or $13,000,000,000,000. We left off the number of cents so as not to appear to exaggerate the number of zeroes (12).

The problem at all levels of government, in many countries around the world, is that public expenditures exceed revenues. This can lead to devaluation of the currency, which makes debt less burdensome, and at the same time destroys people's savings. New currency was issued in the Democratic People's Republic of Korea (Pyongyang), and resulting public dissatisfaction led to the execution (by the regime) of two officials held responsible for the decision, and the demotion of others.

Living in a more gracious and gentle system, our economic blunderers go off to academia and think-tanks of like-minded souls. They are replaced by others whose views are just different enough to convey a sense of change. The first TARP program was enacted under President George W. Bush and Treasury Secretary Hank Paulson, former chairman of Goldman Sachs.

When Mr. Bush was asked why he had approved such a substantial bailout in view of his generally conservative economic views (but not practices, he was a mega-spender), he replied in effect that he did not want to go down in history as being President of the United States when the economy collapsed completely. The shade of Hoover was in his mind, and that was an image he urgently desired to avoid, and for the most part successfully did, although the subprime crisis and market collapse took place in 2008, and led to the defeat of the McCain-Pain ticket.

Every cloud has a silver lining.