Taxes, Spending Still Priorities in Albany: Analysis

Gov. David Paterson on Tuesday called legislative leaders to gather around a table in the Capitol to find ways to reduce New York's high taxing and spending. But it looked more like a holiday dinner, where only the relatives holding grudges showed up.
    
Almost a year ago, the governor boldly warned that New York was headed into a fiscal crisis and ordered the Legislature back to Albany for emergency economic sessions. He was praised for decisive leadership.
    
Now, Paterson is in more of a mediator's role trying to resolve, in what's left of the legislative session, a problem that's been at the heart of New York's decline.
    
After more than an hour of political posturing Tuesday, the newest idea was a temporary cap on state spending tied to inflation. Paterson asked legislative leaders to consider it, after they'd already made it clear they are cool to his calls for a permanent cap on state spending and a cap on local property tax growth.
    
"He's the governor. He's in the driver's seat and he keeps asking the passengers for direction,'' said E.J. McMahon, director of the Empire Center for New York State Policy that's part of the fiscally conservative Manhattan Institute. "What he needs to say is, `Here's where we're going and you need to overpower me if you want to go in a different direction.'''
    
That was how Paterson presented the social issue of legalizing same-sex marriage. He struck a powerful position, defining same-sex marriage as nothing less than a civil right, then threw it back to the Legislature where the bill is wending its way to a historic vote.
    
But with taxes and spending, the latest meeting agenda was fuzzy, where his gay marriage stand was focused. Tuesday's discussion included talk of a new soda tax, tax amnesty, reforming tax-break zones for businesses, restoring tax rebate checks, and consolidating local government services.
    
Paterson prefers this style to the approach used by his predecessor, Gov. Eliot Spitzer, whose battles with Republicans contributed to gridlock and helped erode Spitzer's appeal. But McMahon said Paterson is confusing Spitzer's own personality excesses with acting like a firm executive who should be able to direct state government without alienating it.
    
McMahon called Paterson's meetings "window dressing. I don't think they are productive. They seem to think that this will give the impression they are actually trying to do something.''
    
On Tuesday, Paterson pushed his proposal to cap state spending at the rate of inflation but the Democratic majorities of the Senate and Assembly aren't going for it.
    
McMahon isn't surprised but argued New York already has a spending cap: "The governor.''
    
Paterson could propose an austere executive budget -- Gov. George Pataki once proposed an actual cut in overall spending -- and then veto the inevitable adds by the Legislature that in recent years have added billions to spending.
    
And, McMahon said, Paterson's got an advantage that could allow him to carry off the veto without fear of an override in the Senate. Democrats in the chamber hold an unstable 32-30 majority and Republicans are trying to define themselves as the only fiscal conservatives in town, meaning it would be difficult to get the two-thirds vote to override a veto.
    
"I think our conference would have been in a position to agree with the governor and not support overrides,'' said Senate Minority Leader Dean Skelos, a Nassau County Republican who also supported Paterson's proposal to cap local property tax growth.
    
Of course, there was no cap. Instead, Democratic majorities in the Senate and Assembly agreed with Paterson to raise $4 billion in tax and fee increases in the 2009-10 budget that increased spending by about 9 percent, including temporary federal stimulus cash.
    
It wasn't what Paterson promised or wanted during his year in office.
    
He has repeatedly warned how New Yorkers are being driven from the Empire State every year. He even fought, for a time, the Assembly's push for a higher income tax on wealthier New Yorkers to raise revenue. Paterson ultimately relented, while warning it would hasten the exodus.
    
And it did in a big way.
    
B. Thomas Golisano, the three-time independent candidate for governor and billionaire from Rochester, last week moved his primary residence to Florida, cutting his annual income tax bill by $5 million.
    
"You expect your governor to hold the line and draw a line in the sand ... He just folded,'' Golisano said. "He OK'd it. It's just bizarre.''
    
Golisano, who created 5,000 upstate jobs, bristles when Albany politicians say he's bailing on New York.
    
"If anything, New York state has bailed out on us.''