Can things at the state Capitol in Albany get any worse? For some time now, people who pay close attention to New York State government have said each year seems to bring a new low. It’s now clear that 2009 will go into the history books as keeping that lamentable streak very much alive.

We’ve known for some time that disreputable things go on at our state Capitol. It’s not that these things don’t happen elsewhere – of course they do, from small backwater towns to the halls of the United Nations. But in Albany we have more legislators indicted and convicted of crimes than most other states. We see elected leaders engaging in self-promotion paid for by the taxpayers, ranging from their own television studios to sports facilities named after sitting legislators. We have an extraordinarily large and well-funded lobbying industry that supports an exorbitantly expensive campaign system, which in turn is designed to eliminate competitive elections as much as possible. We observe lawmakers who seem to prosper in office by directing taxpayer dollars to supposedly nonprofit organizations that they or their family members control.

All of these things are symptoms of a political culture that folks in a lot of other states would never tolerate. The nature of the individuals holding office, the interest groups that work so effectively to influence them, and the state’s laws – including the Constitution – all shape the environment. But the element that drives events and behavior within that environment is political culture. One definition of political culture is that it defines the boundaries of what is or is not acceptable in political activity. And of course ultimately it’s voters who determine that.

What we’ve seen at the Capitol in Albany these past few days might be thought of as the culmination of a long-term degradation in New York’s political culture. What could be a more minimal standard for representative government than to expect that the elected representatives actually meet to debate the issues of the day? But not in Albany, at least not this week.

The disruption in the Senate came about because members from both political parties decided that gaining or keeping power was more important than dealing with legislative proposals or the state’s chronic budget crisis. The recent developments are really only a more intensive display of what we’ve seen before in other ways. Take a small example, the special grants – pork-barrel funding, if you will – that legislators provide to programs and groups in their communities. Some years ago, legislators started delivering checks of a few thousand dollars each to Little Leagues back home. The net effect in many cases is simply that Little Leaguers no longer have to spend any time selling raffle tickets to help fund the program that benefits them. But it buys the legislator a little more popularity.

Of course there have been much bigger steps along the way to a degraded political culture at the Capitol. Powerful lobbying groups are more and more focused on narrow interests rather than the broad public interest. Unions pressure elected leaders to spend tax dollars in ways that benefit a relative few, rather than working people generally. Businesses ask for Empire Zone tax incentives and other individualized benefits rather than demanding improvement in the overall business climate. There’s a general attitude that if some controversial issue is important to you, it’s always better to work as hard as you can making sure that nothing happens, than it is to talk to people on the other side and see if there is any common ground.

But sometimes big disruptions, like the one that’s taken place in Albany this week, can change the landscape. Maybe when the dust settles, elected leaders will see a need to rehabilitate their image by coming together to work on the problems facing the state. If the voters make it clear that’s what they want in the political culture of New York, it just might happen. Political candidates sense very well what voters want. Ultimately, they act on it.

Robert Ward is deputy director of the Nelson A. Rockefeller Institute of Government, the public-policy research arm of the State University of New York. He is also author of New York State Government: Second Edition, published by the Rockefeller Institute Press.

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California Governor Arnold Schwarzenegger came to office in 2003 promising to fix the mess in the state's capital of Sacramento. He said he would do that by forcing the “girlie men” in the California Legislature to make some tough decisions for a change. For a while it worked. Governor Arnold did persuade legislators to balance the state's budget by limiting the growth of spending in his first year. And he had the benefit of new revenues, largely the result of a strong economy.

But now, California is in deep budget trouble once again. When tax revenues were rising sharply, Governor Schwarzenegger and the Legislature enacted big expansions of after-school programs, health care and other services. The resulting budget growth turned out to be unaffordable when the national recession hit California hard last year. By early 2009, Sacramento was facing massive budget deficits. Right now, the state that is home to one of the largest economies in the entire world is not far from running out of cash. Schwarzenegger and the Legislature asked voters for approval to get through the immediate crisis by raising taxes, reducing spending growth, and borrowing billions of dollars. The voters overwhelmingly said no this week. Now, state leaders have no choice but to make sharp cuts in funding for education, health and other programs, and to make those cuts quickly with little planning. Many schools will eliminate summer classes and a week or more from next year’s regular academic calendar. Services for the mentally ill and developmentally disabled are likely to be reduced; police and firefighters may be laid off.

California’s budget problems are extreme, but by no means unique. Three thousand miles to the east, New York is facing its own chronic budget nightmare. Here, Governor Paterson announced that the state budget adopted just six weeks ago may already be out of balance by $3 billion. Even in a high-spending state like New York, that's serious money. Massachusetts, Connecticut, Vermont – pretty much every state is confronting the same problem.

What can we learn from all of this?

Most obvious is the lesson that the economy goes in cycles. Revenue to the government – whether federal, state or local – goes up and down in conjunction with those cycles. When Wall Street is booming, corporations are making big profits, employment is growing and consumers are spending, New York and other states will see the money rolling in. But the good times don’t last forever. It’s important to be prepared for times when the flow of tax dollars is more a trickle than a flood. New York and California both have well-earned reputations as states that aren’t as careful as they should be during periods of strong economic growth. That helps to explain why both states consistently have real trouble dealing with tough times.

Right now, every one of the 50 states is suffering, to greater or lesser degrees. A Rockefeller Institute study released earlier this month found that state tax revenues across the country dropped by more than 12 percent in the first quarter of 2009. That was the sharpest decline in at least 20 years. But most states do not have budget gaps as large as New York’s and California’s – in large part because other states tend to be more careful about adopting a “let the good times roll” mentality of making big new commitments when the economy is strong.

So lesson Number One for New York and other states is to pay closer attention to the future impact of budget choices, on both the spending and revenue sides of the financial plan. When Governor Schwarzenegger in California and Governor Eliot Spitzer in New York expanded school funding, everyone applauded. There may have been too little attention to the tough question of whether those promises could be kept. Today, some of the fundamental services that both states provide to their residents will be cut as a result of inadequate planning. In New York, even with $7 billion of tax increases in this year’s budget, there simply are not enough dollars to go around. The resulting reductions in services will hurt needy families and individuals the most.

Fortunately, New York is not California. State leaders here have some time to address the new budget shortfall in ways that do not require drastic reductions in programs. If that doesn’t happen, however, we may soon be singing a new tune: California, here we come.

Robert Ward is deputy director of the Nelson A. Rockefeller Institute of Government, the public-policy research arm of the State University of New York. He is also author of New York State Government: Second Edition, published by the Rockefeller Institute Press.

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A little more than seven and a half million New Yorkers voted for either Barack Obama, John McCain or another candidate for president last November. The number voting was just over half the state population of individuals aged 18 or more. In other words, roughly another 7 million New Yorkers made the choice not to take part in the presidential election.

Voters in the Empire State also elected 212 members of the Legislature in November. The proportion of eligible voters who took part in those decisions was, as usual, even lower than the number who voted for president.

When you talk to people who don’t vote, you’ll often hear that it doesn’t really matter – all the politicians are the same. Well, it seems clear that President Obama is doing things a President McCain likely would not have done. But let’s bring the discussion closer to home, and think about the New York Legislature. For the first time in more than 30 years, Democrats took control of the state Senate from Republicans as a result of last November’s elections. Democrats were already in the majority in the Assembly, so this means that they now control both houses of the Legislature. And of course Governor Paterson is a Democrat as well. Has this made any difference?

It sure has. Here’s one example: Democrats talked for years about expanding the container deposit law that now applies to soda and beer purchases, so that it would cover things like bottled water and iced tea drinks. When the Republicans controlled the Senate, they blocked that proposal, saying it would drive up costs for consumers. As a result of action on this year’s budget, the expanded deposits are now law. We’ll be paying the extra nickels – and hoping for the environmental benefits, such as fewer plastic bottles in our landfills – within just a few weeks.

Many of the interest groups that make up the Democratic coalition in New York have said for years that upper-income taxpayers ought to pay more, so the state could increase expenditures on education, health care and other programs. Republicans in the Senate disagreed, saying that raising the income tax would make it harder to keep businesses and jobs in the state. Again, that proposal is now law. Individuals with taxable income above $200,000 will pay more, and those above $500,000 will pay a lot more.

Then there’s the issue of property taxes. Republicans in the Senate pushed through an expansion of the STAR school-tax relief program in 2006. Over the last three years, eligible homeowners received rebate checks, generally ranging from $300 to $500, to help ease the burden of rising property taxes. Those rebates were eliminated from this year’s budget. There’s some talk at the Capitol about trying to reinstate them, but Governor Paterson says the money probably isn’t there to pay for another year of STAR rebate checks.

And of course there are important areas other than taxes where the Democrats who now control the Senate differ from the Republicans who used to be in charge. For example, this year’s budget included major changes to the Rockefeller drug laws, giving judges more discretion in sentencing and expanding the use of alternatives such as drug treatment programs.

Gay marriage may be the next big change. Again, many of the Democrats who control the Senate now are pushing for a vote that would likely result in redefinition of marriage to include same-sex couples. It’s not yet clear whether the proposal will come to the floor this session, but the question is probably when, rather than whether, the legislation will be considered. Such a vote would likely not be on the agenda if the Republicans still held the Senate majority.

Different voters have different opinions on all of these questions. That’s what you’d expect in a democracy. But keep these issues in mind next time you hear someone say it doesn’t matter who gets elected. It sure does matter.

Robert Ward is deputy director of the Nelson A. Rockefeller Institute of Government, the public-policy research arm of the State University of New York. He is also author of New York State Government: Second Edition, published by the Rockefeller Institute Press.

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Governor David Paterson is asking the Legislature to approve a law allowing same-sex couples in New York to marry and to share in the legal and social benefits that men and women have enjoyed for centuries. It seems likely that New York’s legislature will join Vermont and Iowa in approving same-sex marriage. The only question may be: How soon?

It was only five months ago that supporters of gay marriage were despondent over the decision by voters in California to approve a referendum limiting marriage to the traditional definition of husband and wife. But the California vote shouldn’t have come as a surprise. People generally aren’t ready to turn away quickly from centuries of tradition, especially on something so basic to human society as the nature of the family. And surveys tend to show that majorities of voters in most of the country still aren’t ready to accept gay marriage, although the proportion who are in favor is rising. If you’re skeptical of polls, consider the public positions of President Obama and other leaders. Obama said during last year’s campaign he did not support making same-sex marriage legal. Hillary Clinton and many other Democrats said the same thing. On the other hand, Senator Chuck Schumer announced recently he now favors gay marriage, and Senator Kirsten Gillibrand also endorses such a change.

As recently as a year or two ago, even most Democratic political figures favored legislation to allow civil unions, which allow most of the same legal benefits, rather than same-sex marriage itself. The trend toward support for gay marriage, I think, reflects two things.

First, social attitudes are changing. Talk to political figures on either side of the ideological spectrum, and they will tell you that younger voters tend to take a view you could characterize as based in libertarian thought or a concern for social equality – however you describe it, younger Americans are more likely than older generations to see traditional views of marriage as needlessly restrictive, unjust or punitive. Meanwhile, middle-aged and older Americans who may have strongly resisted the idea of same-sex marriage a few years ago see more examples of gay and lesbian couples whom they can only perceive as, well, pretty normal people.

In addition to the change in social attitudes, the rising popularity of gay marriage among elected leaders reflects a determined and effective campaign by the gay community to gain political power. The influence of gay-rights groups in New York goes back to the late 1980s and early 1990s, when AIDS was killing thousands of individuals in New York alone. Groups such as Housing Works and the Gay Men’s Health Crisis successfully organized and lobbied the Legislature to provide support for homeless individuals with AIDS, to expand health care, and to provide other services.

Twenty years or so later, the gay community now plays a particularly important role in the Democratic party. The New York Daily News reported that, when Governor Paterson held his press conference to announce introduction of legislation allowing same-sex marriage, Democratic elected leaders were competing to stand near the podium to make sure they could be in the news photos. It seems likely the movement will have increasing influence within the Republican party as well, as social attitudes change further.

In 1996, Congress approved a law called the Defense of Marriage Act to define marriage as only between a man and a woman. President Clinton signed the bill into law. Critics of the Defense of Marriage Act included those who said that laws relating to marriage should be made by the states, not by Congress. The primary reason we have a federalist system that shares power between Washington and the states is to allow people who live in different areas of the country to make different decisions on controversial issues. On the issue of gay marriage, we’re seeing that happen right now.

Robert Ward is deputy director of the Nelson A. Rockefeller Institute of Government, the public-policy research arm of the State University of New York. He is also author of New York State Government: Second Edition, published by the Rockefeller Institute Press.

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April 9, 2009 - New York’s Budget: How can an 8 percent spending increase bring layoffs?

New Yorkers who pay attention to the ongoing debate over the new state budget may be scratching their heads these days. On the one hand, the financial plan adopted by the Legislature increases overall spending by more than 8 percent. On the other hand, Governor Paterson is warning that he may have to lay off thousands of state workers to keep spending in line with available revenues. At first glance, these two things don’t seem to compute. How is it possible that an 8 percent spending increase doesn’t provide enough dollars to keep the state payroll from shrinking?

The answer mostly comes down to two things: health care, and education. Those pieces add up to two-thirds of the overall budget pie. And in recent years, education and health care have tended to win the lion’s share of annual spending increases.

A couple of quick numbers: Over the five years ending in 2008, New York’s state-funded spending on public schools was up by 46 percent. Spending on Medicaid was up by 40 percent. Both of those increases were more than twice the pace of consumer inflation, which was 17 percent.

So, the state’s budgets for both health care and education have been rising sharply. As a result, there are fewer dollars left over for all the rest of the state budget. Funding for environmental programs and recreation was up over the same period by 18 percent, and for transportation, 22 percent. General assistance for local governments over those five years rose by less than 12 percent.

The bottom line is this: More and more, when the dollars are handed out in Albany, two areas of the budget dominate everything else. And perhaps it’s no surprise that health care and education are the most powerful lobbying interests at the Capitol. The health-care workers and teacher unions stand alone in having the resources to pay for million-dollar advertising campaigns, along with thousands of members who write or visit their legislators to ask for more funding.

When Governor Paterson announced the potential layoffs of state workers, the biggest numbers were in correctional services, mental health, and mental retardation. Those are the largest state agencies in terms of payrolls. But they also are less politically influential than health care and education. It may be useful to think about these other important commitments the state has, next time you hear those campaign-style ads for more spending on health care or education. Our neighbors who are developmentally disabled or suffer from mental illness don’t have advertising campaigns or political action committees. That doesn’t mean their needs are any less real.

Besides the issue of political influence, state agencies often take the hit when times are tough because they are directly under the governor’s control. Whether he wants to single them out or not, Governor Paterson has the power to control expenditures in the state agencies. Education and Medicaid are entirely different. Once the governor and the Legislature enact the budget, he cannot change those areas unless the Legislature agrees.

There’s one other area of the state budget that has been growing rapidly. The cost of employee benefits, including pensions and health coverage, is up by more than $2 billion in recent years. Along with ordinary increases in wages, that means the average cost of each state employee has been growing. The same is true with local governments and school districts. The result is that any given level of revenues does not pay for as many workers as it once did. To put it another way, there’s less bang for each buck in terms of public services.

That’s the backdrop for Governor Paterson’s warning about potential layoffs. The Governor says state worker unions can help him avoid any layoffs by helping the state deal with the rising cost of health care and other expenditures. Most political observers think some sort of deal, to reduce the number of layoffs if not eliminate them entirely, may emerge in the next few weeks. Only time will tell.

Robert Ward is deputy director of the Nelson A. Rockefeller Institute of Government, the public-policy research arm of the State University of New York. He is also author of New York State Government: Second Edition, published by the Rockefeller Institute Press.

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March 19, 2009 - New York State’s budget: When, and what?

A few months back, I made a bet with a friend that the Legislature would complete action on the New York state budget on time, or at least close to it, this year. Call it a case of hope triumphing over experience.

The state’s new fiscal year starts April 1, less than two weeks away. Governor Paterson sent the Legislature this year’s budget proposal earlier than usual, back in December. The level of public cynicism about government in Albany is high, and neither the Governor nor the Legislature enjoy high ratings in the polls. So there is a good political argument, to say nothing of good policy reasons, for delivering the budget on time.

Almost since taking office a year ago, Governor Paterson has been warning that the national recession would knock billions of dollars off the state’s revenue projections. We know now that the Governor was right. And he’s warned that the automatic, built-in level of spending increases for programs such as Medicaid and education would be unaffordable, even if the Legislature agrees to enact new taxes. It turns out the Governor was right about that, too.

We can gain a useful perspective on the problems confronting New York and other states by considering similar problems at the national level. The Peter G. Peterson Foundation is a think tank based in New York City that analyzes economic challenges facing the United States, including the long-term national budget deficit. Gene Steuerle, a budget expert at the Peterson Foundation, says we are now confronting a third historical turning point in the nation’s fiscal policy. The first was just after the Revolutionary War, when the Articles of Confederation had established a national government that did not have the power to raise enough revenue to pay its bills. This led to adoption of the Constitution, establishing a stronger central government, along with a federal takeover of state debts and other major financial innovations. Steuerle says the second major “fiscal turning” in U.S. history was in the early 20th Century, when once again a major expansion of government was needed to respond to the demands of a new industrial age and rising international threats. The results of that second fiscal turning included creation of the Federal Reserve System to regulate monetary policy, and a constitutional amendment to allow a federal income tax to pay the bills.

Now, many experts tell us, there must be another major turning point in our approach to the government’s finances. Steuerle says we find now that we can’t move forward on priorities such as modernizing our health and education systems because of the extraordinary level of commitments we have already made, and the increasing difficulty in slowing the growth of those commitments. Entitlements such as Social Security and Medicare are at the top of the list.

We see a similar picture in the problems New York and other states confront in their Medicaid programs and other big-ticket items in the budget. Governor Paterson is proposing changes to Medicaid that are very similar to those previously advanced by his predecessors Eliot Spitzer, George Pataki and Mario Cuomo. These governors, both Democrat and Republican, recognize that we have become locked into funding health-care, education and other programs that are not flexible enough, and not cost-effective enough, to deliver the services New Yorkers need at a cost they can afford. The institutional forces defending the status quo seem more powerful than ever. Think about the millions of dollars that the health-care unions and others are spending on advertising campaigns to inflict political pain on Governor Paterson, and you have a good picture of why it’s hard to change things in Albany.

A lot of big decisions will be made at the state Capitol in these coming days and weeks – decisions on whether to raise the income tax, whether to approve higher fees on utility bills, whether to reduce the growth in Medicaid and education spending, and so on. The budget that results will almost certainly contain a lot of things that aren’t very pretty. One thing it probably will not do is to address the long-term, structural imbalance between growth in the state’s tax revenues and growth in spending. There’s no question we need another turning point. We may have to wait a while to see that happen. Meanwhile, the problem just keeps growing, and growing.

Robert Ward is deputy director of the Nelson A. Rockefeller Institute of Government, the public-policy research arm of the State University of New York. He is also author of New York State Government: Second Edition, published by the Rockefeller Institute Press.

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A few months back, I made a bet with a friend that the Legislature would complete action on the New York state budget on time, or at least close to it, this year. Call it a case of hope triumphing over experience.

The state’s new fiscal year starts April 1, less than two weeks away. Governor Paterson sent the Legislature this year’s budget proposal earlier than usual, back in December. The level of public cynicism about government in Albany is high, and neither the Governor nor the Legislature enjoy high ratings in the polls. So there is a good political argument, to say nothing of good policy reasons, for delivering the budget on time.

Almost since taking office a year ago, Governor Paterson has been warning that the national recession would knock billions of dollars off the state’s revenue projections. We know now that the Governor was right. And he’s warned that the automatic, built-in level of spending increases for programs such as Medicaid and education would be unaffordable, even if the Legislature agrees to enact new taxes. It turns out the Governor was right about that, too.

We can gain a useful perspective on the problems confronting New York and other states by considering similar problems at the national level. The Peter G. Peterson Foundation is a think tank based in New York City that analyzes economic challenges facing the United States, including the long-term national budget deficit. Gene Steuerle, a budget expert at the Peterson Foundation, says we are now confronting a third historical turning point in the nation’s fiscal policy. The first was just after the Revolutionary War, when the Articles of Confederation had established a national government that did not have the power to raise enough revenue to pay its bills. This led to adoption of the Constitution, establishing a stronger central government, along with a federal takeover of state debts and other major financial innovations. Steuerle says the second major “fiscal turning” in U.S. history was in the early 20th Century, when once again a major expansion of government was needed to respond to the demands of a new industrial age and rising international threats. The results of that second fiscal turning included creation of the Federal Reserve System to regulate monetary policy, and a constitutional amendment to allow a federal income tax to pay the bills.

Now, many experts tell us, there must be another major turning point in our approach to the government’s finances. Steuerle says we find now that we can’t move forward on priorities such as modernizing our health and education systems because of the extraordinary level of commitments we have already made, and the increasing difficulty in slowing the growth of those commitments. Entitlements such as Social Security and Medicare are at the top of the list.

We see a similar picture in the problems New York and other states confront in their Medicaid programs and other big-ticket items in the budget. Governor Paterson is proposing changes to Medicaid that are very similar to those previously advanced by his predecessors Eliot Spitzer, George Pataki and Mario Cuomo. These governors, both Democrat and Republican, recognize that we have become locked into funding health-care, education and other programs that are not flexible enough, and not cost-effective enough, to deliver the services New Yorkers need at a cost they can afford. The institutional forces defending the status quo seem more powerful than ever. Think about the millions of dollars that the health-care unions and others are spending on advertising campaigns to inflict political pain on Governor Paterson, and you have a good picture of why it’s hard to change things in Albany.

A lot of big decisions will be made at the state Capitol in these coming days and weeks – decisions on whether to raise the income tax, whether to approve higher fees on utility bills, whether to reduce the growth in Medicaid and education spending, and so on. The budget that results will almost certainly contain a lot of things that aren’t very pretty. One thing it probably will not do is to address the long-term, structural imbalance between growth in the state’s tax revenues and growth in spending. There’s no question we need another turning point. We may have to wait a while to see that happen. Meanwhile, the problem just keeps growing, and growing.

Robert Ward is deputy director of the Nelson A. Rockefeller Institute of Government, the public-policy research arm of the State University of New York. He is also author of New York State Government: Second Edition, published by the Rockefeller Institute Press.

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President Obama delivered a major address on education this week. “The future belongs to the nation that best educates its citizens,” the president reminded us. He said the United States has all the tools to do exactly that – the best universities, innovative school leaders, passionate teachers, and parents whose top priority is their child's education. At the same time, the president said, despite resources that are unmatched anywhere in the world, we've let our grades slip, our schools crumble, our teacher quality fall short, and other nations get ahead of us in educational achievement.

What can we do about that? The president listed a number of key steps: Spend more on early education. Reward good teachers, and stop making excuses for bad ones. Focus not only on new investments, but new approaches to education. And if you want to look for innovation in our public schools, the president said, you may want to look at the charter schools that have blossomed all over the country in recent years, including those here in New York.

While there is sometimes tension between charter schools and traditional public school districts, the president reminded us that charter schools are public schools. They are schools founded by community organizations, parents, teachers and sometimes school districts – schools that are freed from many of the old bureaucratic rules but are subjected to higher standards of accountability.

The day after President Obama delivered his address on education, the Rockefeller Institute of Government held a Public Policy Forum here in Albany with Jonas Chartock, the executive director of the State University of New York’s Charter Schools Institute. Today, 10 years after Governor Pataki and the state Legislature enacted the law allowing charter schools in New York, there are 115 of these new schools across the state. Most are in New York City, but there are 10 in the Capital Region, including those in Albany, Schenectady and Troy.

All in all, according to the SUNY Charter Schools Institute, charter schools in New York are performing well. Students in charter schools on average achieve at higher academic levels than those in traditional public schools in the same district. Whether you look at math scores, or language arts, three-quarters or more of the charter schools around the state show better results than the traditional public schools, according to the institute’s data.

Clearly, though, some charter schools fail in their mission. The New Covenant Charter School in Albany is one example where measures of student achievement lag far behind. Charter schools that fail to deliver a good education are, at least in some cases, held to the ultimate level of accountability by having their charter removed. At least seven charter schools in New York have already closed their doors for this reason. The same may happen at the New Covenant school in Albany, if student performance does not improve.

Ten years after charter schools began operating in New York, what lessons have we learned? According to Jonas Chartock, we’ve learned some things that all public schools should keep in mind. First, the issue of time on task: Many charter schools have longer days, and longer school years, than traditional schools. Not surprisingly, that seems to make a difference. There is the issue of size: Smaller schools often provide a better learning environment than larger schools. Using data to improve performance is another important lesson – when teachers can see exactly how well individual students are doing throughout the year, they may be able to target remedial efforts more quickly and more effectively.

Charter schools represent an interesting array of political support. Conservative Republicans were among the earliest supporters of the idea. President Obama made it clear that he wants to see more charter schools across the country – he called on states to lift some of the restrictions on creation of new charter schools. In New York and elsewhere, elected leaders from minority communities are often among the strongest supporters of charter schools, because they and their constituents are frustrated with what they see as the failure of traditional public schools to deliver the quality education every child deserves.

Now in their 10th year of operating in New York, charter schools are here to stay. Maybe soon we’ll reach the point where we can stop the acrimony between these newer schools and the traditional school districts. Maybe we can look for ways that all schools can learn from each other, so kids can benefit from a better education no matter what kind of school they attend.

Robert Ward is deputy director of the Nelson A. Rockefeller Institute of Government, the public-policy research arm of the State University of New York. He is also author of New York State Government: Second Edition, published by the Rockefeller Institute Press.

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It’s never a good sign when Congress or the state Legislature passes an important, wide-ranging law one year, and then has to rewrite major parts of it a year or two later. That’s what happened back in the 1970s, when the New York Legislature adopted what became known as the Rockefeller drug laws – the toughest anti-narcotic penalties in the nation.

Thirty-six years after their enactment, the Rockefeller drug laws are under increasing attack. Speaker Sheldon Silver and other leaders in the state Assembly point out there appears to be little, if any, connection between tough drug laws and changes in crime rates since the laws went on the books. Violent crime rates rose throughout New York and nationally through most of the 1970s and 1980s, after the laws took effect. Crime rates fell sharply through most of the 1990s, a period when there was no significant change to the drug laws. Tougher punishment for drug crimes doesn’t seem to have reduced drug abuse, either. But there has been one clear result – a sharp increase in the number of individuals imprisoned for drug crimes. And there’s no question that incarceration has a strong racial element: Rates of drug use are fairly similar among whites, African Americans and Hispanics. But those who end up in prison on drug charges are far more likely to be black or Latino than white.

Then there are the questions about costs for taxpayers. Public safety may be the state’s fundamental responsibility. But when the state faces a huge budget gap, it’s worth asking if the dollars we spend on prison cells are worthwhile. If the tough drug laws don’t reduce crime, why do we want to spend hundreds of millions of dollars enforcing them?

Critics of Nelson Rockefeller sometimes forget that, while he initiated the drug laws that bear his name, he also developed the nation’s largest system of drug treatment programs. Over time, though, New York put far more dollars into its prison system than into addiction treatment and alternatives to incarceration. One result of the state’s current budget crisis has been the closing of halfway houses and other programs that help inmates make a successful transition from the highly structured world inside prison walls to the very different society outside those walls. Meanwhile, we continue to pay more every year for prisons, even though the system now holds 8,000 fewer inmates than it did a decade ago.

Speaker Silver, Assemblyman Jack McEneny and some of their colleagues paid a visit this week to the Eleanor Young addiction treatment clinic in the South End neighborhood of Albany. The clinic is part of Father Peter Young’s organization, which provides drug treatment, job training, and a clean, sober place to live for men and women who otherwise might be homeless or back in prison. Programs like Father Young’s can’t guarantee success. But the proportion of individuals who go through such programs and return to the criminal justice system is a small fraction of those who do not have the benefit of rehabilitation. Father Young was a chaplain in the prison system for more than 20 years and saw the difference that addiction treatment and job training can make. He says his mission is “creating taxpayers” – taking individuals who otherwise would be dependent or a drain on society, and helping them create productive lives instead.

Speaking of taxpayers, it’s clear that the current budget crisis facing New York will not go away any time soon. New money from Washington will help close the gaps, but only for the next year or two. The long-term picture is disturbing: More growth in the cost of health care and education, and an economy that historically has depended far too much on Wall Street. With rising costs and stagnant revenues, the only options are imposing higher taxes on working people, shifting expenses to our children with more borrowing, or undertaking some radical rethinking of the ways that we structure major programs.

Something tells me if Nelson Rockefeller were alive today, he’d be among the first to say the time has come for big new thinking . The drug laws that bear his name may be the perfect place to start.

Robert Ward is deputy director of the Nelson A. Rockefeller Institute of Government, the public-policy research arm of the State University of New York. He is also author of New York State Government: Second Edition, published by the Rockefeller Institute Press.

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If you remember the musical phenomenon known as the British Invasion back in the 1960s, you may recall a group called Herman’s Hermits. One of their big hits was a simple song called “I’m Henry the 8th I Am.” The first verse started like this:

I’m Henry the 8th I am,
Henry the 8th I am, I am,
I got married to the widow next door,
She’s been married seven times before.

Robert Ward is deputy director of the Nelson A. Rockefeller Institute of Government, the public-policy research arm of the State University of New York. He is also author of New York State Government: Second Edition, published by the Rockefeller Institute Press.

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New York State Attorney General Andrew Cuomo is drawing renewed attention to the thousands of overlapping pieces of local government in the Empire State. The attorney general is, of course, a Democrat and the son of Governor Mario Cuomo, who established a national reputation as a leading spokesman for liberalism – or, as Governor Cuomo called his philosophy, progressive pragmatism. But despite any differences in ideology, the attorney general drew rave reviews when he spoke to the New York State Conservative Party a few days ago about his proposals for scaling back the number of local government entities. In other words, this is not an ideological issue – it’s a practical one that has important implications for the cost of government, the taxes that working people and businesses pay, and for the quality of public services.

Over the last century, two overarching changes took place in the nature of government throughout America. First, the role and responsibilities of government grew dramatically. In 1902, the first time the Census Bureau made a full count, expenditures by the federal government, states and localities added up to a grand total of $1.7 billion. Let me repeat that -- $1.7 billion. Today most states, and many counties and cities, spend more than that amount just by themselves. Total spending now by all levels of government in the United States is around $3.5 trillion. That’s up by a factor of well over 1,000 from a century ago. Of course, our population and the size of the overall economy have grown as well. But not nearly as much as the size and responsibilities of government. In 1929, around the start of the Great Depression, all the expenditures by the federal, state and local governments represented about one in every 12 dollars in the gross domestic product. Today that figure is over 30 percent of GDP, or close to one dollar in every three in the overall economy.

So the size of government, as well as the importance of the services it provides, grew sharply during the 21st Century. That was one major change. At the same time, additional changes took place in the complexity of government. In some ways, things became more centralized. The most obvious example is school districts. A century ago, we had more than 10,000 school districts in New York State. Today we have fewer than 700. And at the same time, control over our tax dollars generally moved upward and farther away – from local governments to states and Washington.. A century ago, the federal and state governments were small and didn’t do very much. Local governments, especially cities, did most of the work. The rise of the social services safety net brought a big new responsibility with some costs for counties and municipalities, but mostly new costs for states. In the 1960s, the federal government got into the game in a big way with President Johnson’s Great Society. New welfare dollars and the Medicaid program went through the states, and since then states have been – for the most part – bigger players than local governments. New York is one of the few exceptions, where local governments spend more than the state. And Washington is by far the biggest player of all, with more control than ever over education, social services and other jobs once controlled entirely by states and localities.

We may be entering a new era now in the federal-state relationship. Washington is going to provide, at least temporarily, a major boost in funding for state Medicaid and education programs. That’s appropriate in tough times. But will more control over important programs move to Washington as well? And equally important, what happens when the new federal money runs out? New York and other states will see revenues fall off the cliff once again. We can expect the economy to recover somewhat in the next couple of years, and tax revenues will grow as well, but it’s probably not going to be enough to replace the temporary federal aid.

That means government leaders in New York and elsewhere, at all levels, will need to do a lot more to bring spending into line with revenues. Taking a careful look at the size and structure of local government is one good step. It’s not about ideology. It’s about making government work and deliver services better at a cost we can sustain in the long run.

Robert Ward is deputy director of the Nelson A. Rockefeller Institute of Government, the public-policy research arm of the State University of New York. He is also author of New York State Government: Second Edition, published by the Rockefeller Institute Press.

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In the era of the 24-hours-or-less news cycle, the once-unimaginable development of an African-American president of the United States is fast becoming unremarkable. That itself is … well, pretty remarkable.

Those of us who have reached a certain age each have our own experiences dealing with racial differences – experiences that are blessedly less of a concern for our children’s generation. I recall reading The Adventures of Huckleberry Finn around 5th grade, finding excitement in the adventure of a boy who ran away and floated down a big river on a raft. And realizing, dimly at first and then more clearly, what was going on in Huck's relationship with Jim, the runaway slave. Realizing, from the uneducated perspective of a 10-year-old, how Sam Clemens was making it clear that even though Jim’s society did not treat him as a man, a man he was. Even in a supposedly progressive state such as New York, in the mid-1960s, this was something worth thinking about.

I was so captivated by the story of Huck Finn that I introduced some of his language to friends at school. One day my friend Mike went home and said "yes’m" to his mother, imitating an expression Huck and his friend Tom Sawyer used. Mike and his family are black. His mother was not at all amused by “yes’m,” and warned him never to use that word again. She said it was language that slaves would use, an insult to black Americans, suggesting ignorance and backwardness. I tried to explain that Clemens put the word in the mouths of both white and black characters, but to no avail. It was an early education in the reality that two centuries of legal and extra-legal subjugation could naturally give some of us very different perspectives from others.

When I first read Huckleberry Finn, 20 years or so after Jackie Robinson joined the Brooklyn Dodgers, it was accepted that black Americans could playing leading roles in sports – at least some, such as baseball and basketball. The country had granted marquee positions in entertainment to Nat King Cole and others. Gradually, some African-Americans rose to the top in the corporate world, as CEOs of global giants such as Time Warner, Merrill Lynch and American Express. It's now unexceptional to see black Americans as mayors and members of Congress. Finally, the ultimate glass ceiling is broken by a man we’ve come to know not just as the first African-American president but as an enormously impressive policy wonk, strategist, family man and leader.

In judging modern political leaders, those who make their living in and around government will often say that a particular elected official either is, or is not, “a grownup.” Some politicians are mainly in the business of enriching themselves with money or power. Others may be honest, but have little grounding in ideas, and goals, and accomplishments. In this taxonomy, a grownup is someone who cares deeply about getting things done, knows how to set an agenda, and is willing to accumulate and use political capital for important goals. In countless ways – his respectful treatment of his predecessor, honor for the nation’s heritage, and willingness to confront the difficulties of the future – President Obama has quickly earned placement in this category.

Today, our short-term national conversation is about rebuilding and maintaining the high level of economic comfort that we’ve built up over the last century. The pain of a recession has made Americans forget that, from a long-term perspective, we have things pretty good today. And the long-term perspective for the future tells us that it’s time now for some sacrifice, so that our children and grandchildren can move forward rather than falling back. President Obama talked of this in his inaugural address when he criticized “our collective failure to make hard choices.” He’ll challenge our comfort more definitively in the weeks ahead by forcing us to confront the unaffordable cost of Social Security, Medicare and other entitlement programs.

Forty-eight years ago, another young President urged Americans, “Ask not what your country can do for you, but what you can do for your country.” If we have forgotten this goal since then, a new President is here to remind us. There was a time when a man who looked like Barack Obama would be dismissed as less than a man. We’re fortunate not only that we’ve mostly moved beyond that sorry chapter, but that we have a grownup leading the nation today.

Robert Ward is deputy director of the Nelson A. Rockefeller Institute of Government, the public-policy research arm of the State University of New York. He is also author of New York State Government: Second Edition, published by the Rockefeller Institute Press.

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In New York, Governor Paterson is asking the Legislature to hold spending nearly flat in the coming year and raise $4 billion or so in new taxes and fees. In Massachusetts, Connecticut, Vermont and almost every other state, there's more gloomy budget news. It now appears certain that, as part of its response to the national recession, Congress will step in with yet another bailout package – this one for state governments.

For today, that’s good news. But what will happen when the temporary infusion of cash runs out in a couple of years? Will the new money support spending that the states can't afford in the long run? Will governors find themselves scrambling for money all over again?

Questions such as these suggest that both taxpayers, and those who rely on vital public services, might be better served in the long run if new federal money for the states comes with some strings attached.

There's no question that states will face tough choices in the coming year if left on their own. A survey by the Rockefeller Institute of Government shows overall state tax collections going down by an average of 4 percent in October and November of 2008, compared to the previous year. Spending on education, health care and other programs tends to go up by an average or 5 percent or so annually, meaning there's a very big disconnect between revenue and expected spending.

So, supporters of increased federal aid for states have the right idea for right now. The key question is this: Should Congress simply give the states free money, or should it require something – like increased fiscal accountability – in return?

States across the country face long-term fiscal challenges that are becoming ever more clear. The Government Accountability Office, a watchdog agency that reports to Congress, concluded in a report last year that state and local budgets across the country will become increasingly unmanageable over the next decade unless there is serious action to restrain spending or increase revenues. The study pinpointed two primary causes of increasing fiscal challenges. Both relate to the cost of health care: Medicaid for the poor and disabled elderly, and health insurance premiums for state and local government workers and retirees.

President-elect Obama’s promise to provide health coverage for millions of uninsured Americans may add billions more to those future budget gaps. Experience with both Medicaid and the children’s health insurance program shows that program expansions in Washington – even if they are advertised as providing new assistance for states – often result in states spending more of their own money in order to qualify for the federal "aid."

So, how can states avoid yet more widespread budget gaps? One answer might be to borrow from the debate over a bailout for the auto industry, and ask states to show how they plan to move toward long-term sustainability -- that is to say, how they will balance their budgets when the new dollars stop coming.

Some of the new federal aid is likely to be targeted at Medicaid costs. In return for those dollars, states could reasonably be asked to report on how they expect to pay for rising health-care costs once the temporary flow of new aid comes to an end. Such a requirement would make it easier for governors such as New York’s David Paterson -- who have proposed forward-looking but politically difficult Medicaid reforms -- to win legislative approval.

New federal aid could also be conditioned on states identifying their potential budget problems, and at least starting to identify potential solutions. Without such longer-term thinking, many states may deal with the end of temporary federal assistance by enacting sudden cutbacks in services that would be damaging to their neediest citizens. Or, they may turn to economically harmful tax increases and undesirable revenue sources such as expanded gambling opportunities and borrowing.

Painful experience in New York, Massachusetts, California, and elsewhere shows that states find it much easier to increase spending and cut taxes in the good times, than to bring budgets under control during the inevitable tough times. Every state legislator hears from hundreds or thousands of constituents asking for more spending, while virtually no one asks for restraint and fiscal balance. New accountability mechanisms are essential to promoting long-term fiscal sustainability for states and, ultimately, protecting vital services. President Obama and Congress could use their new assistance for states to take a major step in that direction.

Robert Ward is deputy director of the Nelson A. Rockefeller Institute of Government, the public-policy research arm of the State University of New York. He is also author of New York State Government: Second Edition, published by the Rockefeller Institute Press.

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Governor Paterson covered a lot of ground in his State of the State address to the Legislature this week. Among the topics was a concern that’s at the top of the list for many New Yorkers – the high and rising cost of property taxes.

“Property taxes are too high,” the Governor told members of the Legislature assembled at the Capitol. Hardly anyone would argue with that, of course. And he renewed his call for a cap on annual increases in school taxes, the biggest part of the property tax bill for homeowners and businesses.

Across the state, local school boards are just getting to work on the budgets they will submit to voters this coming May. If recent history holds true, the average school budget will include an increase in property taxes of 6 to 7 percent, roughly twice the rate of inflation.

A new study by the Rockefeller Institute of Government, conducted on behalf of the Education Finance Research Consortium, traces changes in the burden of New York’s property taxes over more than a decade. The Institute’s research found that the property tax burden on homeowners and businesses rose substantially from 1993 to 2006, whether you measure it by inflation-adjusted dollars or in taxes as a proportion of property value.

After adjusting for inflation and student enrollment, total school taxes rose by 25 percent over that period. This was not a result of declining revenue from other sources – state aid rose by more than a third after adjusting for inflation. Aid from the federal government makes up only a relatively small part of school district budgets, but it rose noticeably, as well.

There are two factors that really drive property taxes: first, the level of spending, and secondly the value of the local tax base. There’s relatively little difference in spending increases over time from district to district. Wealthier districts spend more than poorer districts, of course, but in terms of the level of change over time, differences among districts aren’t as great as you might expect. That’s because the process for negotiating union contracts, and the cost of benefits such as pensions and health coverage, is largely directed by the Legislature in response to requests from public-employee unions. Your local school district has no power to negotiate pension benefits, and too little flexibility when it comes to other compensation costs. Governor Paterson is asking the Legislature to enact a new and less costly pension plan for public employees hired in the future. That proposal, and others in his budget, could help reduce future costs for property taxpayers.

With spending going up in every district, the main factor that makes a difference in property taxes is whether the local tax base is healthy and growing. Most cities in Upstate New York have seen many businesses close or move to the suburbs in recent decades, so their tax bases tend to be stagnant. Across all Upstate school districts, there was slow growth in the tax base, and the average effective tax rate rose by 25 percent over the last decade. Property values generally tend to rise over time, and many communities in the Hudson Valley and the Adirondacks have seen especially sharp jumps in their market values. That means homeowners and businesses get hit by a double whammy – they pay more because the property is worth more, and pay still more on top of that increase because tax rates have risen as well.

Someone smarter than I am said once that the greatest force in the universe is the power of compound interest. If your bank account or mutual fund earns, let’s say, 3 percent a year, that’s nice. But if you can find a good investment just a couple of percentage points higher, say 5 percent instead of 3, the difference over time becomes dramatic. The same is true with property taxes. The reason they’re so high is not a big increase one year or the next, but the fact that every single year we see increases in the range of 5, 6, 7 percent or more. Slowing that growth by a percentage point or two would make a big difference over time. Reforms such as the tax cap that Governor Paterson has proposed, and more affordable employee compensation practices, might be steps in that direction. The alternative to such changes is likely to be the status quo – continuing and larger increases in property taxes all across the state.

Robert Ward is deputy director of the Nelson A. Rockefeller Institute of Government, the public-policy research arm of the State University of New York. He is also author of New York State Government: Second Edition, published by the Rockefeller Institute Press.

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Well, it's not even Christmas yet. And already, a month before the usual schedule, we're hearing the bad news about New York State's budget for the coming year. But give Governor Paterson credit for getting an early start – after all, you can’t solve a problem until you face up to it. The state is looking at a huge budget gap next year, and the Governor wants to identify and begin working on solutions earlier instead of later. That makes sense.

Already, in response to the Governor’s budget, the hyperbole, not to say hysteria, is well under way. The Times Union quoted one unnamed source as saying the Governor's budget would mean, quote, “blood in the streets.” Sure, there are real cuts in the Governor’s plan, affecting schools, hospitals, and every state agency. But let’s have a little perspective.

The Healthcare Association of New York State said Governor Paterson’s budget will, quote, “effectively cripple the health-care system, jeopardizing life-saving care for millions of vulnerable New Yorkers.” Jeopardizing life-saving care for millions of vulnerable New Yorkers? Hmm.

Somehow, other states provide care for the needy at costs that are far lower than New York’s. Let’s take Medicaid, the taxpayer-funded program that provides health coverage for low-income families and pays for most nursing home care for aging individuals. If you look at the amount spent on each beneficiary, the average for all states is about $5,400. New York spends nearly $9,000, two-thirds higher than the average. Even when you compare New York to a state like Massachusetts, another liberal state with a respected hospital system, Medicaid costs in New York are far higher.

We spend far more than other states – and, equally troubling, the results we get for the dollars are in many ways mediocre. The federal government’s Agency for Healthcare Research and Quality rates New York only average in treating cancer and heart disease. The quality monitoring agency gives New York a rating of weak, or below average, in treating diabetes and providing health care to expectant mothers.

Dr. Richard Daines, the state health commissioner, wants to improve our performance in those areas. Speaking at the Rockefeller Institute of Government in Albany last month, Dr. Daines said that New York “overspends but under-invests.” Our hospital system is the classic example. For more than two decades, New York State health commissioners have said that we make a bad mistake by putting too many dollars into hospitals and too few dollars into community clinics, primary care and preventive treatments that represent the future of health care. So when you hear those advertising campaigns telling you that Governor Paterson is decimating the hospital system, remember – the experts tell us we need to scale back the traditional part of our health-care system so that we can afford to provide more modern and cost-effective types of care.

The bottom line on any budget is whether it provides needed services in a way that’s fiscally sustainable. States all across the country, not just New York, are struggling with the same question. Massachusetts Governor Deval Patrick is facing a looming deficit in his budget. The same is true of Arnold Schwarzenegger in California, Ed Rendell in Pennsylvania and leaders in most of the other states. And all of the governors are looking at the same areas in their budgets to close the gap – education and health care. Those are the two biggest areas in every state budget. If you want to solve the problem, you have to go where the money is.

Then there’s the long-term question. The U.S. Government Accountability Office, which serves as a Congressional watchdog on government spending, issued a report earlier this year predicting that, in the years ahead, New York and other states will face increasing trouble balancing their budgets without raising taxes or cutting services. How does Governor Paterson’s plan help the state lay a better foundation for the future?

One major long-term concern for the state, local governments and school districts is the rising cost of pensions and retiree health benefits. Public employees in New York can retire at a relatively young age – in their early 50s, or even in their 40s – with a full pension and health benefits for life. Some will collect a pension for 30, 40 years or more. Our retirement systems weren’t designed or intended to provide benefits for that many years, and there’s an issue of fairness when the gap between public and private sector benefits is large and growing. Again, give the Governor credit for tackling an unpopular issue that demands attention.

Robert Ward is deputy director of the Nelson A. Rockefeller Institute of Government, the public-policy research arm of the State University of New York. He is also author of New York State Government: Second Edition, published by the Rockefeller Institute Press.

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When the New York State Commission on Property Tax Relief issued its final report this week, most of the attention was on the proposal for a legal limit on school property tax increases. That’s not surprising. From the Hudson Valley, through the Capital Region, to the Adirondacks and all across the state, residents and business owners are saying loudly and clearly that property taxes are more and more unaffordable every year.

But the Governor’s Commission on Property Tax Relief, chaired by Nassau County Executive Tom Suozzi, examined more than the high cost of public schools in New York. It also asked about the quality of education that we’re delivering to our kids. One important example: Special education.

More than a decade ago, the Board of Regents, which governs New York’s Education Department, began urging local school districts to be more careful about classifying children as disabled and in need of special education. In a report to the Regents back in December 1996, Education Commissioner Richard Mills wrote, “We obviously have problems with the growth, quality, and costs of special education. … Children with learning difficulties must be able to get the help they need in the general classroom.”

Over the 12 years since Commissioner Mills wrote that report, the proportion of children classified as disabled, and in need of special education, has gone up rather than down. This despite the fact that the Regents, every single year, have issued reports saying that school districts classify too many children as disabled. Many kids who are placed in special education might be better off going without that label, and receiving enriched services in the general classroom instead, according to the Regents and many other experts.

When you first hear about this, it’s natural to think, “well, if a child needs a particular kind of educational program, the most important thing is to make sure he or she gets it, regardless of whether it’s in special education or not.” Of course that’s true. Both the Regents and the Commission on Property Tax Relief say that an essential part of reforming special education is making sure that teachers in the regular classrooms are equipped to work effectively with children who have a wide range of individual needs, based on clear understanding of best educational practices.

Unfortunately, there’s evidence that best practices in special education are lacking in many of our schools. One illustration is the fact that school districts have very different practices in the proportion of children they classify as disabled. For instance, in the Rensselaer school district, about 15 percent of students were in special education as of 2006. In a similar district not far away, Watervliet, the classification rate was one-third higher, almost 20 percent of all children.

And the specific disability classifications that districts assign to students vary widely from one district to another, as well. For example, city school districts in Albany and Utica are fairly similar in overall enrollment, poverty levels and some other characteristics that affect special-education rates. But in Albany, one in six kids in special ed is classified as “emotionally disturbed.” In Utica, the proportion is much lower, about one child in 20.

So, districts that are similar in many ways have widely varying practices in the ways they approach special education. That tells us there is no common understanding of best practices for helping children with special needs. And when the Suozzi Commission held hearings around the state, it became clear that one big reason school districts place children in special education is because doing so brings more financial aid from the state to the district. The school aid formula in New York creates an incentive to classify more children as disabled. No wonder that the classification rate has gone up over the years, despite the Regents’ official policy that encourages districts to bring those rates down.

New York spends far more than other states on special education. Our staffing ratios for special ed are twice the national average. But when it comes to results – such as the proportion of students receiving a diploma, and other indicators of success – New York is behind most other states. We’re spending far more, but our kids often don’t receive the benefit that we want.

Back in the 1970s, Congress passed a law requiring that all students with disabilities be provided access to a free, appropriate public education. The good news is, we’ve come a long way since then in helping children with special needs get the good education they deserve. But here in New York, if we’re spending far more than other states on special education and delivering results that are below par, we still have a long way to go.

Robert Ward is deputy director of the Nelson A. Rockefeller Institute of Government, the public-policy research arm of the State University of New York. He is also author of New York State Government: Second Edition, published by the Rockefeller Institute Press.

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Fifty-two years ago, John F. Kennedy published Profiles in Courage, the book that would win him the Pulitzer Prize and help him gain national attention. The book celebrated eight of JFK's predecessors in the United States Senate, from John Quincy Adams to Robert Taft, eight politicians who didn’t act like politicians. Instead, they went against voter and interest-group pressure to do what they thought was right.

Kennedy had this to say about courage: "In whatever arena of life one may meet the challenge of courage, whatever may be the sacrifices he faces if he follows his conscience – the loss of his friends, his fortune, his contentment, even the esteem of his fellow men – each man must decide for himself the course he will follow."

This week in Albany, members of the Legislature decided what course they would follow in response to the state's growing budget gap. Did you see any profiles in courage at the state Capitol?

Governor Paterson, who asked the Legislature to act on a $2 billion package of spending cuts and revenue increases, candidly acknowledged that his plan was not easy to embrace. Every program in the state budget has a constituency, including unions and other interest groups that are among the most powerful players in New York electoral campaigns. The Governor called for more than $1 billion in reductions to education and health care, a 50 percent cut in the Legislature’s special member items, and various revenue measures including new bottle deposits for water and other non-carbonated beverages. The Legislature refused to take up the Governor’s proposals, or to put any of its own on the table.

At some point in the next few months, though, the Legislature will have to take action on the 2009 budget. Despite the lack of agreement so far on what Governor Paterson has proposed, the sheer size of the projected budget gap means there will have to be major reductions in the planned levels of spending increases. Those reductions will be widely described as spending cuts.

How can taxpayers judge whether the final product is a good one? Here’s one simple test: If the budget cuts things that you and I consider important, that’s a good sign. If there are no cuts to important programs, that will be a sign that our elected leaders may not be doing their job.

Of course, that’s the opposite message you’ll hear from the interest groups that were rallying outside the Capitol a few days ago, and that no doubt will be back in force in the coming weeks and months.

But just a quick look at the numbers is instructive. The state faces a $12 billion gap next year. That’s the equivalent of one in every seven dollars the state spends, not counting federal funds.

Speaking of federal aid, it seems likely now that Congress will approve new funding for states next year. A rough guesstimate of how much more New York might receive would be in the range of one and a half to 2 billion dollars. Compared to the $12 billion gap, that’s a good start – but no more.

Many of the unions and other groups rallying outside the Capitol want a big increase in the income tax on higher-income New Yorkers. Governor Paterson is resisting that idea, saying it will drive more of our wealthy neighbors to move to Florida and other low-tax states, so that we’ll lose their tax payments altogether. But even if the Governor and the Legislature go along with the idea, it would probably bring in no more than, say, another $2 billion. Combine that with new federal aid, and you’ve solved maybe a third of next year’s budget gap.

There are other ideas. CSEA, the union representing many state and local government employees, wants the state to sell the modern art that Nelson Rockefeller installed along the Concourse at the Empire State Plaza. Personally, that’s OK with me; it might be nice to replace the abstract paintings and sculptures with more intellectually accessible artwork for visitors to the state capital to enjoy. This and other creative ideas could help with the budget, too, but again – they will play at most a relatively small role.

Ultimately, it appears impossible for the Legislature to avoid taking the step Governor Paterson has been suggesting: Cut the rate of increase in state spending. If nothing changes in current education, Medicaid and other spending formulas, the budget will go up by 9 percent next year. The Governor is essentially asking the Legislature: Can we live with an increase of something less than 9 percent? There’s no getting around the answer: We probably have to.

Robert Ward is deputy director of the Nelson A. Rockefeller Institute of Government, the public-policy research arm of the State University of New York. He is also author of New York State Government: Second Edition, published by the Rockefeller Institute Press.

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When Barack Obama was campaigning for president, he promised major increases in spending on health care, education, clean energy, technology and other programs. Two years ago, when Eliot Spitzer and David Paterson were running for governor and lieutenant governor, they, too, committed to more spending in schools, health care, economic development and other areas.

Now, budget reality is setting in. It's hit Albany like a slap in the face, and is likely to change the nature of change in Washington, as well.

The unavoidable fact is that when the private sector economy slows down or goes into reverse, government revenues do the same. Here in New York, for instance, the recent devastation of the financial markets has cut income-tax projections for the coming year by more than $4 billion. That alone explains one-third of the $12 billion budget gap Governor Paterson projects for the coming year. President-elect Obama does not have to deal yet with the budgetary problems he will confront after taking office in January. But like the last Democratic chief executive, Bill Clinton, our incoming president will face the tough choice of giving up some plans for new spending or risking budget deficits that might drive interest rates higher and weaken the economy even further.

So while neither Obama nor Paterson campaigned for the job of accountant-in-chief, both will be spending a lot of time balancing the budget in these next weeks and months.

Governor Paterson, of course, has already begun. The Governor presented the Legislature this week with proposals to cut $2 billion out of this year's budget, and plans to outline further reductions for the 2009 budget in just a few weeks. His administration created a website called www.reducenyspending.gov where taxpayers can offer their own ideas for getting the budget down to size.

Governor Paterson says the state's real financial problem is not weak revenues but spending that has grown at unsustainable rates. As of now, for example, this year's budget provides for aid to public schools to go up by 9 percent. The Governor's new plan would cut that increase down to about 5 percent, or a billion dollars - still a healthy gain for schools. The hospital workers' union and other critics say Governor Paterson is harming health care with proposed cuts there. But his plan would reduce a 12 percent increase to a 10 percent increase. It’s hard to call that draconian.

Three times in the last 20 years, Albany has had to deal with major budget problems. The spending reductions Governor Paterson proposed this week are remarkably similar to those that his predecessors Mario Cuomo and George Pataki proposed when they faced similar challenges. Governors Cuomo, Pataki and Paterson are different individuals who brought differing political perspectives to the office. Their approaches to holding spending in line have been similar because if you really want to have an impact on the problem, you have to go where the money is. That means starting with education and health care, the two biggest elements in the overall budget.

There's one especially refreshing difference about the way Governor Paterson is approaching this problem.

"The more we delay action," he says, "the more we are going to compound our problems later on." Delaying action on tough issues like balancing the budget is a specialty in Washington. Congress and presidents have balanced the federal budget only six times in the past 50 years. By the time my children are as old as I am now, if current trends continue, interest on the federal debt will be the single largest expenditure in the federal budget.

Compared to Washington, New York and most other states have a big advantage: Constitutional and statutory rules requiring some form of budget balance every year. Still, New York and other states too often delay the day of reckoning as well. California, Florida, Connecticut – most states across the country face major financial problems today not only because the sagging economy has hurt revenues, but because when times were good they didn’t plan carefully enough for the inevitable rainy days.

There’s no denying that bringing spending into line will mean cuts in real services. The members of the Legislature will look for ways to minimize the damage, as they should. The economy will rebound, eventually, and New York and other states will be able to provide more resources for important services. Perhaps next time, the new investments will be made more carefully, as part of a more sustainable strategy before the next, inevitable downturn.

Robert Ward is deputy director of the Nelson A. Rockefeller Institute of Government, the public-policy research arm of the State University of New York. He is also author of New York State Government: Second Edition, published by the Rockefeller Institute Press.

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Every four years, political candidates tell us this year’s election is the most important of our lifetime. It’s obvious now that the 2008 presidential election will, in fact, go down in history like no other. But what will be the impact of the voters’ clear choice to elect the first African-American president in the nation’s history?

Black Americans have made enormous gains in recent decades, thanks to more progressive laws and a broadly rising economic tide that lifted millions to a higher standard of living. Still, a century and a half after slavery came to an end, it remains the case that a child who is born African-American has a higher likelihood than most other children of living in poverty, receiving an inferior education, not having a father in the home, and of being involved with the criminal justice system. Senator Obama touched on these themes in his address on race last March. It’s a speech well worth revisiting today.

In his address, Senator Obama said many of the lingering ills that confront African-Americans can be traced to the brutal legacy of slavery, as well as discriminatory laws and social practices that remained in place a full century after Abraham Lincoln’s Emancipation Proclamation. He talked of a history of inadequate schools, discrimination by employers and unions, welfare laws that may have worsened the erosion of black families rather than providing a hand up from poverty. Many such criticisms echoed those made over the decades by civil-rights leaders such as W.E.B. DuBois – a native of Great Barrington and one of the founders of the National Association for the Advancement of Colored People.

But in his campaign speech on race, Obama also touched on themes that might more likely have been heard from another great African-American thinker and writer, Booker T. Washington. Unlike DuBois, Washington emphasized assimilation into the wider, white-dominated society. In that speech last March, Senator Obama said that for black Americans today, the drive for progress must include, as he put it, “taking full responsibility for our own lives – by demanding more from our fathers, and spending more time with our children, and reading to them, and teaching them that while they may face challenges and discrimination in their own lives, they must never succumb to despair or cynicism; they must always believe that they can write their own destiny.”

Americans hold widely ranging views on big issues facing the country – questions such as what we should do about Iraq, Afghanistan, and Darfur; the proper size and role of government in the private economy; how we can best improve our schools and our health-care system. Those issues will test the new president and his administration. And, as is always the case, we can be sure there will be ways in which Americans will find his leadership wanting. But this next president is unquestionably a very smart man who thinks deeply about the problems we face, who knows where to find talented people, and who led an extraordinary campaign that overcame long odds to achieve success. Those qualities bode well for the next four years.

Aside from all that, though, President-elect Obama is already achieving one of his most important goals. Americans of all backgrounds, he said last March, must always believe that they can write their own destiny. Perhaps more than anything else, that’s the definition of what it means to be an American. And today, for many millions of Americans, Barack Hussein Obama is making that ideal a reality.

Robert Ward is deputy director of the Nelson A. Rockefeller Institute of Government, the public-policy research arm of the State University of New York. He is also author of New York State Government: Second Edition, published by the Rockefeller Institute Press.

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It was back in April that Governor David Paterson started ringing the alarm bell about overspending in the New York State budget, and the likelihood that the state would face a big budget gap that would require steps to bring down the level of expenditures. Six months later, is there anything new to be said?

It turns out, the answer is yes. The state budget outlook continues to go downhill, as economic conditions drag down the state’s revenue projections. Unlike Washington, New York and most other states are required to achieve at least a semblance of budget balance every year. State leaders cannot build up continuing annual deficits as presidents and the Congress have made a habit of doing since the days of Franklin Roosevelt. So Governor Paterson and the Legislature have to find some combination of spending restraint, and higher revenue, to close the gap.

The size of that gap, and the scale of the response needed to fix the problem, continue to produce new headlines. In early October, Governor Paterson said continuing decline in the economy had created a hole in this year’s financial plan of around $1.2 billion. Less than four weeks after that, in the wake of turmoil in the financial markets, the Governor raised his estimate of the budget gap substantially.

The projected gap for 2009 now stands at $12 billion. Numbers can seem meaningless, but a $12 billion gap represents roughly 15 percent, or let’s say one in every seven dollars in the budget, not counting federal funds. For some additional context, you could eliminate that $12 billion gap by cutting state aid to school districts in half. Or, you could shut down the State University, and close all the state prisons, and stop providing care for mentally disabled individuals. Or, you could solve the problem by doubling the state’s share of the sales tax, so that overall it would go from 8 percent in most areas to 12 percent, including the local county share.

None of those options are good. The point is this: New Yorkers of a certain age can recall times in the past when the state budget was in tough shape. Right now, the picture is as bad as it’s been in modern history. Big budget problems confronted Governor Pataki in 2002 and 2003; Governor Cuomo in the early 1990s; and Governor Carey in the mid-1970s. With the possible exception of Governor Carey’s inaugural budget, when New Yorkers were first confronted with the reality that the days of wine and roses could not go on forever, today’s gap is worse than those others.

The immediate cause of the problem is the national recession, which has not been officially declared but almost certainly is in place now. Governor Paterson said declining conditions just in the past three months have wiped out a stunning $4 billion in projected revenue from the income tax. A lot of that is due to the decimation of Wall Street – but not all of it by any means. As the recession spreads from the financial sector into what is sometimes called the real economy, or Main Street, working people in all kinds of businesses are losing their jobs, losing customers and sales, and in many cases seeing their incomes drop sharply.

The Governor has been forthright in saying that declining revenues are not the full explanation for the state’s budget problems. Over the past decade, state spending has risen by nearly twice the rate of inflation. Automatic increases in aid to schools, Medicaid and other programs would drive the state’s General Fund up by nearly 12 percent next year if no changes are made. So even substantial cuts to the trend line could still leave the overall budget going up.

We’re just beginning to see the results of the spending reductions that the Governor’s own agencies are making. The state announced that some state parks would close for the winter. More ominously, community halfway houses for parolees, including one in Albany, are being closed. That means there will be less supervision for some convicted criminals who need to find their way in society.

In such an environment, it will be essential for every area of the budget to come under scrutiny. It’s hard to argue, as some observers have done, that big areas such as education can simply escape any cuts – especially when school aid is one of the biggest growth areas in the budget. Willie Sutton said you have to go where the money is. That’s still true today.

Robert Ward is deputy director of the Nelson A. Rockefeller Institute of Government, the public-policy research arm of the State University of New York. He is also author of New York State Government: Second Edition, published by the Rockefeller Institute Press.

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As Wall Street continues its ups and downs, it’s clear that the continuing impact of crisis in the financial sector will hurt New York State badly. Governor Paterson warns that tax revenues will decline, and that state spending has to be brought under control as well. We’ve been through this before, in the aftermath of the 9/11 terrorist attacks in 2001 and during recessions in the early 1990s, early 1980s, and mid-1970s. But there is a real possibility that this latest downturn is different.

This could be the start of a long-term realignment in the national and international financial markets. New York has enjoyed a quarter-century of previously unknown riches because Wall Street was the dominant financial center in the world. Now, with multi-trillion-dollar centers of wealth in Asia and the Middle East, the financial markets in New York are no longer as exceptional as they have been. New York’s most important industry is almost certain to lose significant market share in the years ahead. Think of the U.S. auto industry in the 1960s. Here in New York, we have to hope that the long-term decline of the city of Detroit and the state of Michigan will not foretell our future. That means we need to think seriously about how to keep our economy growing for the long term. During a conference at the Rockefeller Institute of Government a couple of weeks ago, a variety of experts talked about how we might do just that.

Carl Hayden, the chairman of the State University Board of Trustees, analyzed the steps that some of our international competitors have taken to make higher education a key part of their economic-development strategies. He talked about Ireland, China and other countries that have made major new commitments to public colleges and universities, and urged New York’s elected leaders to do the same.

“We’ve reached an era in which virtually everything is transportable … especially intellectual capital,” Hayden said. He went on to add, “If workers here possess a high level of skills, America and New York would never abandon our position of leadership in the world. The future belongs to those who can best create, nurture, and commercialize intellectual capital.”

Other speakers talked more broadly about human capital, including the key role that immigrants have played in New York’s economy. From its founding in the early 1600s as a Dutch settlement, through more than a century as an English colony, and finally as one of the original United States of America, New York has always been a magnet for people from around the world who wanted and needed new opportunities. In New York City, more than one-third of all residents were born in another country. In Upstate regions, the proportions are smaller but still significant. For example, about 7 percent of Albany County residents are foreign-born, and in Dutchess County, 10 percent.

More importantly, an even larger proportion of our population growth is coming from international arrivals. In Dutchess County, well over half of the population growth from 1990 to 2006 was individuals from overseas or across the border. In Albany County, immigrants represented nearly 40 percent of the growth during that period.

Where do these new Americans come from? In the Albany area, largely from countries such as the Phillippines, India, China and Guyana. In Utica, the largest numbers of immigrants are from Bosnia, Ukraine and Burma. For New York State as a whole, the Dominican Republic, China, Jamaica and India are at the top of the list.

Contrary to what Lou Dobbs and other critics might suggest, immigrants have high rates of employment, often running their own small businesses. Along Central Avenue in Albany, and major streets in other cities, new immigrant businesses are the best things happening.

So how can we keep New York’s title as the Empire State? The best strategies are likely to include capitalizing on the brainpower and hard work of the new Americans who come to New York from around the world; and making sure that our higher-education sector can give all New Yorkers the opportunity to bring their skills and learning to world-class standards. New York may not always be the financial capital of the world. But if we can be a center of intellectual capital, we can always be confident that we’ll make out pretty well.

Robert Ward is deputy director of the Nelson A. Rockefeller Institute of Government, the public-policy research arm of the State University of New York. He is also author of New York State Government: Second Edition, published by the Rockefeller Institute Press.

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The big front-page message on the cover of the New York Post the other day invoked Franklin Roosevelt’s famous Depression-era message to the American people: The only thing we have to fear, is fear itself. Thursday morning’s Albany Times Union had a headline that took the alarm metaphor even further, asking readers: How much can we bear?

Whew! Let’s take a deep breath. How much can we bear? What does that mean? How much can we bear, before we all start jumping off of buildings like stockbrokers during the worst days of the Depression? How much can we bear, before we give up the idea of a modern economy and all return to the little farm on the prairie?

Let’s keep two things in mind. First, it’s likely that there will be more bad news before things start getting better. It’s always wise to be prepared for bad news from the financial markets. Second, while all the turmoil in the economy is troubling and even scary at times, it’s good to keep in mind a certain phrase we’ve heard recently in the context of the presidential debates. It goes like this: the fundamentals of the American economy are still sound.

In a presidential campaign that has often been devoid of real policy debate, this issue may top the list of important questions that have received far too little substantive discussion. A few weeks ago, John McCain echoed President Bush in saying that the fundamentals of our economy are sound. It’s a plain-vanilla piece of reassuring rhetoric that presidents and other leaders have invoked during tough economic times for many years. Barack Obama cited the comment as evidence that Senator McCain is out of touch with the realities facing many Americans. Rather than debate the point, Senator McCain made a half-hearted argument saying he really meant that American working people are not going to give up and let our economy go down the drain. That’s a little help in thinking about whether our economy is fundamentally sound or not. But let’s think a little further about this.

What are the fundamentals of the U.S. economy? First, that it’s a capitalist system, in which private individuals and companies make most of the decisions about where and how to invest, what kinds of businesses to open and operate, and so on. No one is suggesting we fundamentally change that. So we seem to have an implicit understanding that a capitalist economy is what we want.

How well, or badly, are we doing right now? Well, as of September, roughly 145 million Americans were working. That was down by about 1 million from a year earlier. It’s bad news that a million Americans who were employed a year ago do not have jobs today, and we should be concerned about that. But how bad a decline is that? About seven-tenths of one percent. In other words, more than 99 percent of folks who had jobs a year ago are still employed today.

Those 145 million jobs we had in September of this year are more jobs than we had two years ago, or the year before that. Go back five years. We’ve gained more than 8 million jobs during that time. That includes the million jobs we’ve lost in the last 12 months. So again – our long-term picture is actually pretty good. We have to get back the jobs we’ve lost. But let’s not forget the fact that we’re still up 8 million jobs just in the last five years.

We could look at other indicators. If the fundamentals of our economy are not sound, no one with any sense would be putting any money at risk in the marketplace. What have we seen lately? We’ve seen a Middle Eastern nation, Abu Dhabi, invest more than $1 billion in a new computer chip plant that’s going to be built in Saratoga County. Look at Warren Buffett, the most widely respected investor in America. In the past few weeks, Mr. Buffett has bought three billion dollars worth of stock in GE. He put ten billion dollars into Goldman Sachs, one of the major players in the financial markets. And as a part-owner of Wells Fargo, he’s helped lead the effort to take over another major bank, Wachovia. I have no idea whether these are good investments. But Warren Buffett is known as a conservative businessman who doesn’t make an investment decision without doing his homework. If he’s putting billions of dollars into the American economy right now, that tells me he thinks, at least, that the fundamentals of our economy are … quite sound.

Robert Ward is deputy director of the Nelson A. Rockefeller Institute of Government, the public-policy research arm of the State University of New York. He is also author of New York State Government: Second Edition, published by the Rockefeller Institute Press.

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We hear a lot of talk about leadership these days, as the candidates for president and vice president compete for votes. One of the most important functions of leadership, of course, is setting priorities – making tough choices. How much of that have you heard?

Let’s take the issue of federal spending and taxes. Independent, nonpartisan groups such as the Committee for a Responsible Federal Budget say that the proposals by both Senator Obama and Senator McCain would add hundreds of billions of dollars to the budget deficit in Washington. Both candidates are promising to cut taxes while adding spending to a budget that is already in the red. Neither talks very much about making tough choices in this area – such as holding down the dramatic growth in health care costs, raising the federal gasoline tax to provide the dollars we need for roads and mass transit, or anything else.

This lack of leadership is not limited to the presidential candidates. I moderated a debate among candidates for one of our local Congressional seats a few weeks ago. I asked each of the candidates if they had any proposals for limiting the growth of federal spending, to help balance the budget. Basically, their answer were the same: Nope.

How about another big issue – energy. The options are pretty well known. One, which we probably would like to avoid, is to continue the current trend of sending billions of dollars to countries that in some cases use the proceeds for purposes that undermine our security and human rights. A second option would be to reduce dependence on fossil fuels with a broad tax on carbon content in gasoline, fuel oil, natural gas and so on. Still another possibility is increasing domestic production of energy sources by allowing more drilling for oil and gas, and building more nuclear power plants.

One national leader, Al Gore, has been promoting major change in U.S. energy use – for instance, decreasing our use of coal. But I haven’t heard the former vice president talk about how much more we might have to pay if we switch from coal, which is relatively cheap, to other fuels that are not.

Dr. Shirley Ann Jackson, president of Rensselaer Polytechnic Institute, outlined a broad roadmap toward energy security, innovation and sustainability in an address to the National Press Club in Washington a few days ago. She serves as one of the leaders in the Council on Competitiveness, a coalition of corporate executives, university presidents and labor leaders.

Among other things, Dr. Jackson says energy security means that the next President should encourage the development and use of all energy sources, in a sustainable way.

Let’s think about some of the tradeoffs that might follow from that. Making full use of all energy sources would include nuclear power. Here in New York, it’s common for politicians to demand the closure of a major nuclear plant at Indian Point, without telling us how we would replace that power in the New York metropolitan region’s already strained electrical grid.

Speaking of the transmission and distribution grid, the Council on Competiveness plan calls for major improvements in electrical transmission lines nationwide. Virtually every expert on energy says this is badly needed if we are going to avoid more blackouts and brownouts in the future. But when proposals for new transmission lines are advanced, the response is usually “not in my backyard.”

What kind of leadership – what kind of talk about tough choices – have we seen from the candidates on energy issues?

John McCain is one of the very few politicians who has consistently opposed federal mandates for ethanol content in gasoline. That’s always been a hard, even courageous, position to take politically. Corn growers in Iowa make big profits off ethanol, and Iowa is important both in the nomination process and as a swing state in the general presidential election. Now that scientists are concluding ethanol is not as environmentally friendly as we thought, Senator McCain’s opposition looks better and better.

Senator Obama also took a tough stance earlier this year, when he stuck to his guns and refused to support a holiday from the federal gasoline tax when other candidates favored such a politically popular step.

Whether you look at the federal budget, energy or other issues, that sort of leadership – again, defined as willingness to make unpopular choices – has been more the exception than the norm. Maybe this will change once the elections are over. Let’s hope so!

Robert Ward is deputy director of the Nelson A. Rockefeller Institute of Government, the public-policy research arm of the State University of New York. He is also author of New York State Government: Second Edition, published by the Rockefeller Institute Press.

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Now that this year’s presidential campaign is officially underway, we can hope that the debate will quickly move past the convention speeches and start focusing on more detailed discussion of how the next President might work to solve the big problems facing the United States.

Few if any of those problems are more important than the fact that Washington is on a course to bankrupt our children’s future. The federal budget already generates deficits of hundreds of billions of dollars annually. Just a few years down the road, the problem will grow much worse. Spending on Medicare, Medicaid and other health-care programs will continue to rise sharply. Social Security will soon face a cash deficit, meaning that monthly checks to retirees will total more than the system takes in from taxes on active workers. Military spending is part of the equation, too, although not as much as you might think. More than half of the federal budget goes to what the experts call mandatory or nondiscretionary spending – programs such as Medicare and Social Security where spending is driven by formulas rather than annual decisions in Congress. Only 38 percent or so of the federal budget is in the category called “discretionary,” and that’s split evenly between military and non-military spending.

What difference does it make if revenues to the U.S. Treasury don’t add up to the same level as expenditures? Much of that big federal deficit is funded by borrowing from governments and other investors in the Middle East and Asia. That raises the specter of political leaders in those regions gaining significant new influence over economic and political decisions here in the United States. Then there’s the reality that we’re spending tens of billions of dollars each year simply paying back previous borrowing, rather than applying those dollars to important services or tax relief. We’re limiting the options our children will have to solve the problems they will inevitably face in coming generations. This isn’t just a bookkeeping issue. In the finest tradition of Michael Moore and Al Gore, there’s even a documentary – called “I.O.USA” – that may soon come to a campus or theater near you.

So what do the presidential candidates promise to do about this problem? Well, they’ve both committed to … making thing worse. Both Senator Obama and Senator McCain have proposed spending and tax changes that would widen Washington’s budget gap by hundreds of billions of dollars a year.

Now, it seems likely that, once Election Day is past, the winning candidate and next president will scale back those campaign promises. But the question will remain: How can we stop ourselves from stealing our children’s resources, and start a realistic effort toward balancing the federal budget?

Well, the best ideas are often stolen. This may seem implausible, but one place that a President Obama or President McCain might consult for advice on fiscal responsibility is New York State.

Here, Governor Paterson has been doing three things that we haven’t seen in Washington in quite some time.

First, the Governor used the bully pulpit of his office to identify the problem clearly. Second, he identified solutions – specific ways to limit the growth of state spending to a more affordable level. And third, against the odds, Governor Paterson persuaded the Legislature to act, in large part by generating public support for fiscal responsibility.

Bill Hammond, a columnist for the New York Daily News, wrote that the national candidates might benefit by studying what the governor of New York has been doing.

“Maybe politicians don’t have to pander and make expensive promises to get ahead,” Hammond said. “Maybe they can level with voters for a change.”

Paterson himself, in a television interview, recommended that his fellow Democrats consider “laying our problems to Americans as they are, and not offering a bunch of exciting-sounding ideas that anybody will swallow whole.”

The political consultants advise candidates to stick to the exciting-sounding promises. But this may be a year when voters are looking for a grown-up who will talk honestly about the long-term financial problems that the political class wants to ignore. That approach is working pretty well in New York. The Empire State once was regarded as a leader in setting the national policy agenda. Maybe our time for leadership is coming once again.

Robert Ward is deputy director of the Nelson A. Rockefeller Institute of Government, the public-policy research arm of the State University of New York. He is also author of New York State Government: Second Edition, published by the Rockefeller Institute Press.

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When David Paterson succeeded Eliot Spitzer as New York’s governor in March of this year, some political observers wondered whether Governor Paterson would be up to the task. Before Spitzer chose him as lieutenant governor, Paterson had been a member of the minority conference in the state Senate and thus had never held real power in Albany.

But Governor Paterson’s performance with regard to the state budget in recent weeks shows that he knows a lot about leadership and how to exercise it.

The national economy is weak. Experts argue over whether we’re in a recessionary downturn or only stuck in neutral. On Wall Street, which generates one in every five of the dollars that New York State spends, major stock-market indices are down 20 percent from last year’s peak. Financial firms are expected to lay off a total of 35,000 workers this year. The Governor’s budget advisors and the state comptroller, Tom DiNapoli, have been warning that it’s urgent for state leaders to take real action on balancing the budget.

That’s exactly what Governor Paterson is doing. A few weeks ago, he ordered the state agencies that are directly under his control to reduce their spending by $630 million this year. He told his department heads to rank every program as high, medium or low priority so that the most important services could be protected. Then he asked the Legislature to get involved in making some of the politically difficult fiscal decisions that the law does not allow the Governor to make on his own.

Again, the political pundits said they doubted that much would happen when the Legislature returned to Albany for the special session called by the Governor. After all, legislators are up for election this year, and they prefer to tell voters about new spending on popular programs, rather than talk about holding spending increases to affordable levels. But when the special session in Albany was over, it turned out that the pundits were wrong. Governor Paterson, the Senate and Assembly agreed to trim $400 million from this year’s budget and $600 million from the projected 2009 financial plan. To be sure, those are not enormous amounts in an overall budget of $121 billion. The Governor said the state still faces a $5 billion gap between revenues and expenditures in 2009, and that more difficult decisions lie ahead. But the improvement in the state’s financial position is real. And so is the leadership that Governor Paterson demonstrated in making it happen.

As a member of the Legislature, David Paterson was known as a liberal Democrat more likely to support spending increases than budget restraint. As governor, his leadership style has a lot in common with two well-known Republicans of recent decades – Nelson Rockefeller and Ronald Reagan.

Rockefeller was by no means a fiscal conservative. He believed that the state ought to spend more – a lot more – on education, health care and other programs. He worked with a Legislature that tended to resist some of his more ambitious ideas for spending and taxing. But Rocky generally got the Legislature to do what he wanted. He knew how to cultivate both the leaders, and rank-and-file members. As a result, he was the most consequential governor of his time.

Ronald Reagan was the ideological opposite of Nelson Rockefeller. But the two men had something important in common – they both knew how to pull the political levers that make things happen. Reagan convinced a Democratic House of Representatives, led by the liberal Tip O’Neill, to enact major reductions in federal taxes and funding for various programs.

Just like Nelson Rockefeller and Ronald Reagan, David Paterson recognizes that the chief executive can make all the proposals he wants, but ultimately depends on the legislative branch for action on the budget and most other big issues. Unlike some of his predecessors, Governor Paterson works effectively with the Legislature to accomplish the goals he believes are most important. That bodes well for action on next year’s budget. And it increases the chances that the Governor will win on other key issues, such as his proposal for a cap on school property taxes.

An academic think tank known as the Brennan Center issued a report a few years ago calling New York’s Legislature the “most dysfunctional” in the country. But sometimes leadership from the chief executive is what it takes to get important things done in the Legislature. Governor Paterson is making it happen.

Robert Ward is deputy director of the Nelson A. Rockefeller Institute of Government, the public-policy research arm of the State University of New York. He is also author of New York State Government: Second Edition, published by the Rockefeller Institute Press.

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Here’s a new idea from your state government in Albany: Let’s take real action now to solve a budget problem before it becomes a budget crisis.

Decades ago, New York State government was perceived as a national leader, in areas such as enacting human-rights laws, supporting an industrial and financial sector that was the envy of the world, rooting out corruption in government with a professionalized civil service, and otherwise setting an example other states wanted to follow. Unfortunately, more recently, Albany has been thought of as almost a caricature of government that was dysfunctional and unresponsive to even the most pressing issues facing the state.

Right now, a new problem is on the table. It’s a looming budget gap that threatens to become a major crisis if state leaders try to sweep it under the rug. Governor David Paterson is breaking with recent tradition in Albany by making it clear that the state will act now to address the problem, rather than wait until later. Well, what do you know about that? If this keeps up, Albany just might lose its reputation as one of the most dysfunctional state capitals in America.

The Governor and the Legislature just completed action on this year’s financial plan four months ago. At the time, some observers said that the budget was probably more than the state could afford. Now it’s clear that that is the case. Major weaknesses are showing up throughout the private-sector economy that pays the state’s bills. Big Wall Street companies are losing billions of dollars and laying off thousands of employees. Consumers are being more careful with their spending, and home foreclosures are troublingly high. As a result of all those things, the outlook for tax revenue in Albany is down. Governor Paterson says that means spending has to be brought under control as well.

The Governor has directed the state agencies that are under his immediate control to revise spending targets for the coming year downward by 10 percent. That will only solve a relatively small part of the problem, though. Most of the state’s spending – and, more importantly, most of the year-over-year budget growth – is in school aid, and in Medicaid and other health programs. The Governor can’t change the budget in those areas without the approval of the Legislature. As of now, legislative leaders are saying they’re not interested in any such action.

In the coming weeks, taxpayers who try to keep informed about what’s going on in Albany will read a lot about budget cuts. It’s worth keeping in mind that the cuts are being made to a budget which would otherwise grow by more than twice the rate of inflation this year and next. As E.J. McMahon of the Manhattan Institute’s Empire Center said, the state doesn’t really need to do more with less – it just needs to do the same without so much more. Without careful action now, the odds of a crisis in the coming year rise dramatically. That could mean things such as mid-year cuts in school spending and large numbers of layoffs.

Some political observers are suggesting that Governor Paterson is hoping to show that he can manage the state’s finances responsibly in case he decides to run for re-election in 2010. If so, it could be a case of good government being the same as good politics. On the other hand, budgeting conservatively and cutting spending can be unpopular, and thus require a certain amount of political courage. Some public-employee unions are already harshly criticizing the Governor’s plans. They’ve been known to use their big political-action funds for campaign-style television and radio ads intended to pressure elected leaders into larger spending increases.

Back when Franklin Roosevelt was president, one of his advisers supposedly said the FDR approach to politics and government could be summarized in these words: Tax and tax, spend and spend, elect and elect.

Governor Paterson’s insistence on dealing with the state’s current budget problem is not only a break with Albany’s recent history of budgetary inertia. It also represents some political risk for the sake of responsible financial management. Whether that will turn out to be good politics remains to be seen. There’s no question, though, that it is real leadership.

Robert Ward is deputy director of the Nelson A. Rockefeller Institute of Government, the public-policy research arm of the State University of New York. He is also author of New York State Government: Second Edition, published by the Rockefeller Institute Press.

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As the national economy remains weak, and states across the country are finding it hard to balance their budgets, Governor David Paterson continues to hammer home the message that New York State has to take real action to get spending under control.

In his latest announcement, the Governor said he will require state agencies to designate each individual program as either high, medium or low priority in terms of their relation to the agency’s core mission.

As Governor Paterson put it, “For years, our state government has simply accepted the fact that spending will increase without a fundamental reevaluation of what we spend money on.” The governor went on to say, “We can no longer afford this kind of budgetary inertia.”

“Budgetary inertia” is the perfect term for the way that New York State has tended to operate over the years. Of course, the same is true generally in governmental organizations, and even private-sector companies often take too long to respond to changes in the marketplace.

Budget experts commonly say that times of financial trouble are the best opportunity to look critically at expenses that may not be essential but divert resources from where they’re needed most. Governor Paterson’s budget director, Laura Anglin, told news reporters, “in the midst of a fiscal crisis, we have to separate the critical functions of state government from those that we can no longer afford. Every program cannot be top priority.”

This is exactly why the state Constitution gives the governor of New York primary control over shaping each year’s budget. A chief executive who is elected statewide has to think in terms of overall priorities. When the budget goes to the Legislature each year – and the same is true in Congress – the idea of key priorities tends to get lost amid the pressure to say “yes” to every constituency.

Now, let’s say that you are the commissioner of a state agency and you receive this directive from the governor, telling you to rate each of your agency’s programs as high, medium or low priority. What’s your response likely to be?

Perhaps your answer to the question is that you’ll take a hard look and recommend a certain number of programs that are lower priority, and might be eliminated to help the state deal with tough economic times. If that is your answer, then there’s a good chance you have not spent your career in public administration. Folks who run government agencies tend to see their mission as protecting the interests of their staff, their clients, and other constituencies – including, perhaps, legislators who created some of the individual programs now being assessed in terms of their importance. The reality is that it’s not easy for any commissioner to say that any program is not important to somebody. That’s precisely why New York and other states usually suffer budgetary inertia, to use Governor Paterson’s term.

But the alternatives to the Governor’s approach are not always attractive either.

One traditional way for states and municipalities to balance their budgets is to stop spending money on long-term maintenance for highways, bridges, sewer systems and other capital assets. The result of that strategy is eventual failure in terms of public safety and health, or greater cost to taxpayers, or both.

Like many other states, New York is already ramping up state-sanctioned gambling centers to produce hundreds of millions in new revenues. But that raises human concerns and political opposition related to the social impact of gambling.

How about tax increases to balance the budget? New York has already enacted, by legislation and administrative action, close to $1 billion in business-tax increases over the past year. At a time when the Upstate economy continues to struggle, further tax increases may not be the best answer.

So Governor Paterson’s initiative to prioritize state agency programs makes a lot of sense. Many taxpayers, and individuals who work for the state or local governments, may have their own ideas about where the state could save a few dollars. If you are the sort of citizen who likes to write an occasional letter to the editor, or to contact your public-radio station’s listener call-in line, I bet your ideas on how the Governor and his commissioners can balance the budget would be welcome.

Robert Ward is deputy director of the Nelson A. Rockefeller Institute of Government, the public-policy research arm of the State University of New York. He is also author of New York State Government: Second Edition, published by the Rockefeller Institute Press.

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Have you caught a game at The Joe this summer? The Joe – the Joseph L. Bruno Stadium, home to the Tri-City Valley Cats of the New York-Penn League. If you haven’t been to a minor-league baseball game, you owe yourself a trip. Bring the kids, older members of the family, or just yourself. You can’t help enjoying the crowd, the fun stuff between innings, and of course the baseball.

The Joe is one piece of the legacy that its namesake, former Senate Majority Leader Joe Bruno, has given to his home region. Senator Bruno announced his retirement from the Legislature this week after more than 31 years of service – including 13 of those years as the leader in the Senate and thus one of the most powerful leaders in New York State.

Capital Region residents know of Senator Bruno as the man who brought home the bacon, by the barrel full. Millions of dollars to expand and modernize the Albany International Airport. Hundreds of millions, in partnership with the governor and the state Assembly, to build an entire new sector of industry and jobs centered around the College of Nanoscale Science and Engineering at the University at Albany. State funding for literally hundreds of community groups, municipalities and businesses. Sure, Senator Bruno gained a lot of public attention and praise for these grants of taxpayer dollars. But many folks could tell you of things he did without a press release – like supporting services for the homeless and addicted.

Then there’s his statewide legacy. Joe Bruno entered the Senate as a successful businessman who was aware that the Empire State was falling behind the rest of the country in generating new jobs. As a result, New York was losing population to other states – and thus losing political power in Congress and the Electoral College. Senator Bruno enacted reforms in the tax code to make New York more competitive. And he led new initiatives that match technology companies and university scientists to work together on world-class, cutting-edge research. Senator Bruno started talking about that idea a decade ago. Today, it’s widely accepted as one of the best ways to stimulate business growth and create high-paying new jobs.

Decades ago, no one thought of the government as the initiator of economic development. Cities were built on private initiative – the iron industry in Troy, General Electric in Schenectady, Eastman Kodak in Rochester, and so on. The economy of much of Upstate New York has been depressed for so long that it’s easy to think government has to solve the problem by bringing in new businesses. I think Senator Bruno would be the first to say that taxpayer dollars can only be a catalyst for private-sector investment – that we need to encourage entrepreneurial individuals and companies to start their business in the Empire State, and grow here over the long run. When we look at leading technology companies across the country – Microsoft in the Seattle area; Apple and Google in California; Boston Scientific in Massachusetts; IBM right here in New York – it’s clear that the communities where those firms are based have a major stake in their success in the marketplace. Achieving that kind of success is the only way to ensure long-term stability and growth.

Now that the Capital Region won’t be able to depend on Uncle Joe, as he’s affectionately known, relying on home-grown initiative will be even more essential. For the first time in recent history, the state’s top policymakers – the governor and the two major legislative leaders – are from downstate. That doesn’t mean local Senators and Assembly members from the Capital Region won’t work hard for the interests of their constituents, of course. But there’s no question it changes the political landscape for Upstate New York considerably.

Senator Bruno says he’s riding off into the sunset. But it’s likely he’ll be around and visible in the community for a long time to come. Why, it wouldn’t be surprising to run into him enjoying a game at the Joe, maybe this weekend.

Robert Ward is deputy director of the Nelson A. Rockefeller Institute of Government, the public-policy research arm of the State University of New York. He is also author of New York State Government: Second Edition, published by the Rockefeller Institute Press.

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I still remember the sound of summer days as a boy growing up in Albany in the late 1960s. CLANG... CLANG… CLANG... CLANG... CLANG. It was the sound of the pile-drivers at what we then called the South Mall, and now the Empire State Plaza. Like many things in New York today, it was part of Nelson Rockefeller’s grand vision to remake state government – not only its physical representation in the capital city, but the nature and scope of government itself.

And that, Governor Rockefeller surely did. The Rockefeller era brought dramatic expansion of the State University; creation of what is now the largest overall state program, Medicaid; enormous increases in spending on public schools, environmental protection, transportation, the arts, housing and virtually every other area of state activity.

This week marks the 100th birthday of Nelson Rockefeller, who died in 1979. A number of those who worked in his administration gathered at the Empire State Plaza the other day to kick off an exhibition of some of the modern art that he loved, and to commemorate his great achievements.

There’s an awful lot to appreciate in the Rockefeller legacy – more than one can summarize in a few minutes. Take just one under-appreciated area in higher education, the role of community colleges. When Rocky took office, about 31,000 New Yorkers attended public two-year colleges, an important and accessible rung on the ladder to career success and further education. When Governor Rockefeller left office at the end of 1973, the number of students in New York’s community colleges was up by a factor of six, around 200,000. Because of him, millions of additional individuals – many of them struggling to move into the middle class – have had the benefit of a community-college education. And of course he also expanded the state’s network of four-year colleges and other educational institutions.

Years before the first Earth Day, Governor Rockefeller saw that environmental pollution was threatening our quality of life and even our health. He persuaded voters to approve billions of dollars in funding for sewage treatment plants and other steps to clean up the Hudson River and other bodies of water around the state.

To be sure, these things came at great cost. New Yorkers loved Rocky because of his forceful leadership and eagerness to make things happen, but they didn’t like what he did with taxes. He doubled the income tax, created a sales tax that eventually rose to one of the highest in the country, and imposed new costs on local governments and school districts, thus driving up property taxes. Things reached the point where the Governor himself said that high taxes were driving business and jobs out of New York. We’re still dealing with that part of his legacy.

Talk to any experienced observer of our national or state governments these days, and they’ll tell you one of our big problems is persuading smart, accomplished individuals to work in government. It’s so hard to get important things accomplished, with all the competing interest groups in place today, that high-achieving men and women tend to see the private sector – whether business or even the nonprofit world – as the place where things can really happen. One indicator of Nelson Rockefeller’s success was that he attracted knowledgeable, effective leaders to work for him in carrying out his vision for the state.

Above all, Nelson Rockefeller was an executive who both had a vision, and knew how to turn it into reality. We’ve seen few leaders like him since. Rocky’s lieutenant governor and successor as governor, Malcolm Wilson, said years later that changes in our political systems made it harder to nominate giants like Rockefeller, Tom Dewey, Al Smith or Franklin Roosevelt. In recent years, we’ve had debates both here in New York, and at the national level, asking whether too much power is concentrated in the hands of the chief executive. It seems to me the opposite may be the case. We see too many big issues that are either ignored, or dealt with only on the margins – from creating a better health-care system, to improving our schools, to dealing with the long-term fiscal disaster that looms as the Baby Boom ages. Governors and presidents such as Smith, Roosevelt, Rockefeller and Reagan made important things happen by using the bully pulpit and other powers of the chief executive. If we never again have strong leaders like those, we’ll continue to drift along without tackling our toughest problems.

Robert Ward is deputy director of the Nelson A. Rockefeller Institute of Government, the public-policy research arm of the State University of New York. He is also author of New York State Government: Second Edition, published by the Rockefeller Institute Press.

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O beautiful for spacious skies, for amber waves of grain…For purple mountain majesties…

Two hundred and thirty-two years after the United States of America’s first Independence Day, we’re still defining just what it is – beyond the spacious skies and the fruited plains – that makes this country unique.

It’s hard to imagine that the Founders could have envisioned the commanding position of world leadership their nation would reach. Then again, George Washington himself prophesized that New York would become “the seat of empire.” He and others understood that the great natural riches of the North American continent created nearly unlimited opportunity – if people could be free to use their own abilities to reach their destiny.

Today, we take for granted the economic blessings that this nation enjoys as a result of those natural advantages, generations of hard work and lots of what we used to call good old American initiative. We take those things for granted, but people elsewhere in the world aren’t so dismissive of them. That’s one reason more than 1 million men, women and children from other countries move to the United States every year – more than a million, year in and year out! The high tide of immigration poses its own challenges, but you couldn’t ask for a clearer sign of what so many around the world think of this country.

Immigrants flood into the United States not just to find jobs, but to build a future in the nation that has inspired movements for liberty on every continent. That’s another reminder of the genius in the political system that was born in the Declaration of Independence and matured in the U.S. Constitution. It’s a democracy, along with inalienable individual rights that are not to be trampled by majority rule. A federalist system – meaning that when it comes to big questions like how we run our schools, how we balance taxes and spending, and even how we define social and business relationships, people in one state have the freedom to make choices that differ from those in neighboring states.

Celebrating how far we’ve come in the two hundred and thirty-two years since that first Independence Day doesn’t mean ignoring the problems we still face. Near the top of that list is the recent question of why a 15-year-old African-American boy in the city of Albany – like too many others in cities across the country – finds himself in a situation where, police say, he fires a gun and kills a little girl, winding up in jail for what is likely a very long time. Perhaps this is a reminder that there are some problems no form of government can solve, at least by itself.

There was a time a couple of decades ago when it was popular in some quarters to question the very validity of the American system. You’d see things like people spelling “America” with KKK in the middle. It’s interesting that today, although we’re in the middle of an unpopular war and governed by a highly unpopular president, there’s much less knee-jerk cynicism about America itself – and, perhaps, less mindless patriotism. Maybe our view of our country has matured.

We really have two great occasions each year to celebrate the genius of the American founders and the achievements of the American people. The Fourth of July is one. Election Day, which I like to think of as Celebrate Democracy Day, is the other. Today we know to a certainty that, this coming November, and in January 2009, we’ll see a peaceful transition of power from one individual to another, perhaps from one political party to another. Two hundred and thirty-two years ago, that was a foreign concept to most humans. In some parts of the world, it still is today. So celebrate democracy this Fourth of July weekend.

America, America – God mend thine every flaw, and shed his grace on thee.

Robert Ward is deputy director of the Nelson A. Rockefeller Institute of Government, the public-policy research arm of the State University of New York. He is also author of New York State Government: Second Edition, published by the Rockefeller Institute Press.

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You’ve heard the slogans: “All it takes is a dollar and a dream.” “Hey, you never know.” “Today could be your day.”

New York, Massachusetts, Connecticut and other states use those slogans to help sell the lottery tickets that have become increasingly important pieces of the state budget picture over the past two decades. A new study by the Rockefeller Institute of Government reports that states across the country collected more than $23 billion in revenues from lotteries, casinos, racinos and other forms of gambling during the 2007 fiscal year. In 10 of the 50 states, gambling revenues now total more than $1 billion a year. New York is Number One, with revenue around $2.5 billion in 2007.

While state lotteries have been around for decades, the fastest-growing sector of gambling revenue for states has been casinos and racinos, which are racetracks where video lottery terminals, slot machines or other casino-type devices are available. One example is Saratoga Gaming and Raceway, formerly known as the Saratoga harness track. There, you can find more than 1,700 machines offering video poker and other gambling options. Rhode Island was the first state to legalize racinos in 1992, and now 11 states have authorized a total of 41 such facilities. Again, New York is the national leader among the states with eight racinos. Governor Paterson and the state Legislature acted in recent days to pave the way for a major new casino at Monticello Raceway in the Catskills.

In New York and most other states, lotteries were originally described as efforts to boost funding for education – and in many cases such revenue is targeted for schools under the law. But it’s probably more accurate to say that lotteries and other gambling operations increase overall state revenues, and help support general increases in spending without the need for equivalent increases in taxes or fees.

Over the years, revenue from lotteries, casinos and other gambling has been a bonanza for states. But that bonanza may be turning into something more like a blue-chip stock – one that reliably generates large amounts of cash, but no longer promises dramatic growth in revenue. New York and other states are finding that the only way to produce significant growth from one year to the next is to add more gambling opportunities for residents and tourists. Nationwide, as such expansion has slowed down, revenue from casinos was up by less than 1 percent during the first three quarters of the current fiscal year.

The revenue slowdown comes in part because more states are encountering strong opposition to expansions of gambling activities. Massachusetts is a case in point. Governor Deval Patrick proposed authorizing three casinos last year, saying such a move would create jobs while helping support the state budget. The Rockefeller Institute’s report on gambling revenue in all the states showed that Massachusetts already relies more heavily on lottery revenue, as a share of its overall budget, than most states do. The Massachusetts Legislature defeated Governor Patrick’s proposal last year, with one opponent saying the state should avoid creating a “casino culture” that would impose big social costs. Observers say the Governor may bring the idea back in the coming year.

For all the opposition, gambling is big business nationwide, and it’s likely to grow further in the years ahead. But at some point in the not-too-distant future, we may reach a saturation level. And New York may get to that point before others, given that we already lead all the states in overall gambling revenues and in the number of the new facilities known as racinos. When the saturation point comes, the growth in gambling revenue will slow substantially.

If there’s a bottom line here, it’s probably that New York and other states are using gambling revenue to delay longer-term solutions to the inevitable challenges of balancing each year’s budget. We’ve known for many years that the state has a structural gap between revenues and expenditures – each year the automatic growth in spending tends to be larger than the automatic growth in revenues. Solving that imbalance is politically difficult because it means either raising taxes or other revenues, or saying no to influential groups that want more spending. Will there come a time when states make those tough choices instead of turning to more gambling? Hey – you never know.

Robert Ward is deputy director of the Nelson A. Rockefeller Institute of Government, the public-policy research arm of the State University of New York. He is also author of New York State Government: Second Edition, published by the Rockefeller Institute Press.

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