This article was provided exclusively to the New York Analysis of Policy and Government by Ted Flint, works for the New York State Assembly Republican Conference.
New York and California, two once great states, are locked in a race to see which state government can dole out more free stuff to its citizens. But as the old saying goes, nothing in life is free.
Both states, like many, are in the middle of their budget seasons. Both states are deep blue and are controlled top-to-bottom by the Democratic Party.
Let’s begin with California. On the plus side, the state’s economy is the fifth largest in the world and boasts a gross state product of 3 trillion dollars. Governor Gavin Newsom has laid out his priorities in a $222 billion spending plan that he says will enable state leaders to make “responsible investments” while meeting, head-on, the challenges facing the Golden State.
According to Newsom, California is eliminating debts, paying down pension liabilities and growing the state’s reserve funds, now up to 21 billion dollars, the largest amount ever. And the state is projecting a $7 billion budget surplus. But the Governor paints too rosy a picture. Despite the fact that one out of every seven new U.S. jobs is created in California, the Golden State continues to battle what Newsom calls, “a widespread affordability crisis.“ Then, there’s expanding homelessness, raging wildfires and structural challenges that Newsom admits, threaten the state’s future. So what is the antidote for these deficiencies, in addition to a widening disparity in incomes and a disappearing middle class? A conservative Chief Executive would get a handle on spending and cut taxes and regulations to spur the economy. That’s not the approach either state is taking. As so-called sanctuary states, each is looking to provide free education for illegal aliens while funding generous medical benefits to millions, many of whom are not legal citizens.
Some economists say government leaders should focus on reducing poverty and not so much on narrowing the income gap. Income inequality, they say, is not such a bad thing. But every progressive Democrat, especially the current crop of presidential hopefuls, believes in taxing the rich to reduce the disparity in incomes. Despite what Bernie Sanders, Liz Warren and other so-called progressives would have us believe, the rich already pay more than their fair share – much more.
In California, high income earners pay a disproportionate share of the personal income tax. According to Governor Newsom’s Office, in 2017, the top one percent paid over 47 percent of personal income taxes, which is the state’s largest revenue source. In fact, this fiscal year, the state expects to haul in 103 billion dollars from personal income taxes, $28 billion in sales and use taxes and $16 billion in corporate taxes. Despite being awash in tax dollars, California is finding more and more of its people taking up residence on city streets.
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Plus, Cuomo doesn’t have the luxury of a budget surplus that his counterpart in California enjoys.
Like most states, funding for healthcare and education make up a lion’s share of New York’s budget. The state’s Medicaid bill is 79 percent above the national average and three times higher than Florida’s despite the fact the Sunshine State has more people.
Nearly one in three New Yorkers is enrolled in the program.
Granted, New York has an aging population, but it’s estimated the Governor’s $15-an-hour minimum wage will hike Medicaid costs by another $1.5 billion this year alone. And, according to the New York Post, he’s also green-lighted increased payments to hospitals and nursing homes, two months after a hospital trade group gave the State Democratic Party $1 million.
The Trump Administration recently announced that it would allow states to cap Medicaid spending, which would give states the option of reducing health benefits for millions who received coverage under the Affordable Care Act. That approach, block granting, would save states money and afford them more flexibility in designing health coverage for those truly in need of it.
It has become increasing difficult for many New Yorkers, especially those upstate, to make ends meet. Much of the reason is the high cost of Medicaid and other social programs, coupled with an economy that continues to lag behind the rest of the state and nation. According to the Empire Center, New York State is roughly in the middle when it comes to creating private-sector employment and gross domestic product. The news isn’t so good for upstate. Since the end of the recession, upstate has gained jobs at a third of the national rate and less than a quarter of the downstate rate.
That is why it is critical that state leaders around the nation work to reduce government’s footprint and let the private sector do what it’s designed to do: create jobs and generate wealth which would afford more people a higher standard of living and a better quality of life.
Illustration: Pixabay