With a No vote of more than 60 percent on November 8, voters in New York state rejected “Proposal One,” a proposed state constitutional amendment opponents had dubbed the “Runaway Spending Amendment.”
The amendment was offered as an extension of Assembly Bill 2, related to “the submission of the New York state budget to the legislature by the governor.” Tax watchdog groups, Gov. George Pataki (R), Attorney General Eliot Spitzer (D), and numerous business leaders had strongly opposed the measure, saying it would hand too much spending authority to legislators. The amendment was supported by most state lawmakers, the state’s League of Women Voters, and government employee unions.
“We think it’s clear New Yorkers want real reform, and it’s clear they correctly diagnosed this as bogus reform,” said Matthew Maguire of the Business Council of New York State, which opposed the measure. “This was an unexpected triumph for fiscal conservatives who overcame long odds [to defeat the proposal].”
“This is a stinging rebuke of the legislative leaders and a huge victory for taxpayers,” said E.J. McMahon of the Manhattan Institute, a New York-based think tank that also opposed the measure.
Pataki, who fought hard against the proposal, told reporters it was “the most important initiative I’ve seen in my entire time in politics. We are not going to give the legislature control over the purse strings.”
Vow to Try Again
Blair Horner of the New York Public Interest Research Group, a key supporter of the plan, told the Rochester Democrat & Chronicle, “It turned out to be a referendum on the legislature. It wasn’t like there was a compelling argument for keeping the status quo.” Another supporter, Barbara Bartoletti of the League of Women Voters, told the newspaper the group would continue to push for reforms like those in Proposal One.
State Rep. Ivan Lafayette (D-Jackson Heights), House speaker pro tem, supported Proposal One. Several weeks before the vote he said, “People think poorly of government. When you have a proposal that on one side is portrayed as an attempt to grab power by senators and representatives as opposed to the governor and his agencies [having power], it’s hard to tell which way the vote will go.”
Prompted by Court Ruling
Lafayette said part of the reason many legislators supported Proposal One was because of a ruling by a New York court two years ago that prevents lawmakers from changing budget language.
“Until two years ago the governor could not legislate through the budget,” Lafayette said. “We had the right to review money and language.” Since losing the right to change budget language, Lafayette said, “Pataki has put items in the budget we thought were unfair.”
Proposal One would have allowed the legislature to adopt its own budget if it failed to approve the governor’s budget by the start of the fiscal year. Legislators approved the ballot measure on May 5.
Unintended Consequences
The amendment would have guaranteed late budgets every year, making big budget gaps more frequent and leading to even-higher taxes and debt, according to a statement issued in mid-October by the Public Policy Institute of New York State.
According to the state legislature’s Web site, Proposal One would have:
- required that copies of the release of agency budget requests furnished to the executive be made available to the legislature and the public;
- authorized a contingency budget to take effect in certain circumstances;
- reduced from 30 to 21 days the amount of time during which the governor could amend the executive budget without consent of the legislature; and
- created a fiscal stabilization reserve fund.
Many Called It Dangerous
“The proposal came to be known as the Runaway Spending Amendment,” noted Robert B. Ward, director of research for the Public Policy Institute of New York State and author of the organization’s October report on Proposal One.
“The amendment would, among other things, have given legislators the power to spend even more taxpayer dollars, and would have sharply curtailed the governor’s right to veto excessive spending,” Ward said. “We’re not the only ones who thought this proposal was dangerous. Both Governor Pataki and Attorney General Eliot Spitzer condemned the amendment. So did most of the state’s editorial pages and fiscal-policy experts.”
Ward pointed out that New York lawmakers “added $1.3 billion to Governor Pataki’s spending proposal this year [2005] and $1.4 billion the year before. In the past 10 years, the legislature has added a total of more than $12 billion to the governor’s executive budget proposals. In good times and bad, the legislature always wants to spend more. The real budget problem in New York is too much spending.”
Spending Limits Suggested
To address the spending problem, the Public Policy Institute’s report recommends the state enact a constitutional limit on spending and tax increases. In 1990, then-Governor Mario Cuomo and the legislature enacted a spending cap, but they allowed it to expire in 1992. A spending limit linked to population growth and inflation would have allowed Pataki and the legislature to increase spending by roughly $2 billion this year.
“That would provide substantial increases in aid to education, Medicaid, transportation, and other programs,” said Ward. “It would not provide increases as big as Albany’s powerful pro-spending lobbies want–the actual increase was $4.9 billion. But it would make the state budget more responsibly balanced and ease pressure for new taxes.”
John W. Skorburg ([email protected]) is a visiting lecturer in economics at the University of Illinois, Chicago and associate editor of Budget & Tax News.
For more information …
Robert Ward’s October report for the Public Policy Institute of New York State, “New York Needs Real Budget Reform,” is available online at http://www.ppinys.org/reports/2005/runaway05.pdf.
