New York’s Gov. Andrew Cuomo has led his state to the edge of bankruptcy. Mr. Cuomo’s strategy for avoiding disaster is to bank on a Biden win in November that swings Congress Democratic. A left-leaning Congress would undoubtedly bail him out; but if Mr. Cuomo is wrong about the election outcome, he is in a great deal of trouble.
New York has been living beyond its means for years, and the COVID-19 crisis is pushing it over the brink. Years of expensive “nanny state” regulations and a bloated state governmental bureaucracy have been supported by some of the highest taxes in the country. Mr. Cuomo’s targeting of New York businesses during the pandemic has driven sales tax revenue to all-time lows, and it will get worse.
Sixty-three percent of New York bars and restaurants are projected to close within the year. Large companies and young workers are fleeing the state in droves, which will further drive down income tax revenue. Mr. Cuomo has recently doubled-down by threatening to close establishments not complying with his COVID-19 edicts.
This brings up the question of how Congress should react to a New York default. It is obvious that a Democratic Congress and president would enable Mr. Cuomo by bailing the state out. His policies may not go as far as the Democratic Socialism advocated by the left wing of his party, but they are as close as any that exist today.
However, if the Republicans win the presidency and maintain a majority in Senate, I would suggest the following approach. Most of the counties in New York are fiscally responsible. Any bail-out money should be sent directly to them bypassing the state government until Mr. Cuomo can present a balanced budget that forces New York to live within its means. This would likely mean some of the “nice to have” items such as extreme gun control and environmental restrictions would be eliminated as would gestapo-like enforcement of unreasonable sanctions on small businesses.
The counties in the northern and western portions of New York along with Long Island have managed the COVID-19 pandemic much better that the New York City region, but have been tarred with the same brush as the Big Apple in the eyes of the governor. Although Mr. Cuomo has allowed openings by region, his micromanagement of how businesses operate in limiting COVID-19 spread continue to strangle the state’s recovery.
Some New Yorkers are trying to do something about the fiscal irresponsibility. They want to amend the state’s constitution to create three autonomous zones which would levy their own taxes and reduce the state governor’s power to that of the British queen.
Two upstate legislators have introduced a bill which — if passed — would trigger a constitutional referendum. New York would still be a state under this arrangement, but it would have a government that would give much more power to local citizens to determine their own destiny reducing the ability of New York City liberals to dominate the upstate region, which is more conservative. Upstate counties have much more in common with rural Ohio than Brooklyn.
It is probable that the partition initiative will fail because downstate Democratic politicians now control both houses of the state legislature and the governor’s mansion, and they are unlikely to willingly give up their stranglehold on the rest of the state.
However, there may be some hope for the idea of partition in that many people in the New York City area believe that upstate residents get more from the state than the five boroughs and their suburbs. There have been instances in the history of the state when New York City residents have initiated efforts to secede from the rest of the state. Consequently, if it ever comes to a referendum, a partition might have a chance. Unlike secession - where a part of a state tries to break free - the proposed partition is an internal state matter and does not require congressional approval.
New York’s budget crisis will become critical within the year. If Congress bails Albany out without demanding significant reforms in the way New York State manages its finances, it will set the stage for enabling other incompetent state governments such as California’s to follow. On the other hand, states such as Florida — much maligned in the press for their handling of the pandemic - are doing much better in financially weathering the crisis. New York must learn that it is not better to be a bad example than no example at all.
• Gary Anderson lives in rural Upstate New York.