Lieutenant Governor Richard Ravitch has just unveiled his five year fiscal plan for NY State. Details had been leaked over the past few days, so it was no shock that the plan includes limited borrowing, adopting GAAP accounting, and creating a Financial Review Board to monitor and review the plan.
The biggest concern is over borrowing. While the plan would limit borrowing to $2 billion with other rules in place, Senate Minority Leader Dean Skelos said, "Borrowing for operating expenses is just absolutely the wrong way to go, and will just dig the hole even deeper in New York state."
Mayor Bloomberg also hates the idea of borrowing: "They just can't keep spending money the don't have. The federal government can print money, the state government can't. In the end, they have to be fiscally responsible." But the Times-Union also points out that borrowing is the "least objectionable option" for politicians because "no lawmaker wants to be blamed for imposing a tax hike to balance the budget."
As for GAAP (Generally Accepted Accounting Practices), the NY Times says "budget watchdogs say [the move] is long overdue," because "The change would make it much more difficult for the state to defer budget problems into future years by holding off on paying bills." Currently, there's a $9 billion budget deficit for this year and $15 billion gap next year. Bloomberg News reports: "The deficits are the result of a decline in tax revenue brought on by the worst recession since the 1930s and the spending plans approved in past years by lawmakers and governors. Spending by New York, the third most populous U.S. state, grew 5.6 percent annually, or twice the inflation rate, in the 10 years ended in 2009."
