Is New York State ungovernable? Back in April, David Paterson seemed to think so. Confounded by the legislature’s paralysis in the face of a deepening fiscal crisis, the lame-duck governor complained to the Wall Street Journal that New York lacked “a structure that empowers a single leader to get his or her state out of a major conflict.” Being governor, Paterson said, was “kind of like being in quicksand. You can move around a lot, but it just makes the problem worse.”

Illustration by Arnold Roth.

Albany’s muck seems deeper than ever, its challenges growing in tandem with a projected deficit that approached $10 billion while the legislature was still dawdling on a new budget in early June. Under the circumstances, it’s tempting to conclude that the fiscal chasm will swallow up the next governor, whether that turns out to be Attorney General Andrew Cuomo, the Democratic nominee and front-runner; former congressman Rick Lazio, the Republican designee; or even the Tea Party–oriented GOP insurgent, Carl Paladino.

But that conclusion is wrong. In fact, Paterson himself has recently been demonstrating how much power his successor will have to reshape the Empire State’s battered finances. The state’s constitution puts the governor squarely in the budgetary driver’s seat. And though recent history seems to belie it, the budget laws actually work to restrain spending—if the governor has the backbone to stand up to the legislature.

Until 1927, New York State’s budget was a messy stew of appropriations bills that legislators concocted with little oversight from the governor. Alfred E. Smith, who governed the state for most of the 1920s, was frustrated by his limited ability to control spending. So that year, his bipartisan reform coalition supported—and New York voters approved—amendments to the state constitution that established executive budgets.

Under Smith’s system, which is still in effect today, New York’s annual state budget process begins with a proposal from the executive branch—as in the federal government. But that’s where the similarity between Albany and Washington ends. At the federal level, House and Senate committees draft all appropriations bills, and Congress is under no obligation to adopt any of the president’s budget recommendations. In New York, by contrast, the governor’s “complete plan of expenditures,” including appropriations bills and supporting statutes, is automatically introduced in the legislature.

Further, the legislature’s ability to alter these bills is tightly limited. Lawmakers can add to appropriations but only “provided that such additions are stated separately and distinctly from the original items of the bill and refer each to a single object or purpose.” The governor then has the power to veto these additions, and only a two-thirds vote of each house of the legislature—the Assembly and the Senate—can override his veto. Legislators do have the power to “strike or reduce” proposed items of appropriation, in which case the governor can do nothing about it—but that power should lead to reducing, not increasing, spending. And the legislature cannot consider any other appropriation until all the governor’s bills have been “finally acted upon.” This effectively allows the governor to frame the budget debate and forces the legislature to deal with the budget on his terms. (New York’s governor lacks the power that many of his counterparts in other states possess to “impound” or withhold spending if a sudden imbalance develops after the adoption of a budget. This makes it even more important for New York to enact a prudent spending plan in the first place.)

Almost from the moment that Governor Franklin D. Roosevelt presented the first executive budget in 1929, the legislature began pushing back, seeking to expand its power to modify spending bills or to get around other provisions of the law. But in a series of landmark decisions, state courts have usually sided with the governor. The most recent court victory for executive power came in 2004, when New York’s highest court ruled that the legislature had overstepped its constitutional bounds when it tried to amend appropriations bills submitted by Governor George Pataki. In 2005, the legislature sought to retaliate by asking voters to approve a constitutional amendment that would have rolled back some of the governor’s powers. But New Yorkers voted a resounding no, leaving the governor more powerful than ever.

If the governor has all this power, why was New York State still operating without a budget this June, even though the 2010–11 fiscal year had begun two months earlier? Because—subject to the limitations of the executive budget—only the legislature can appropriate money or raise taxes. But New York’s governor has one more power: when the state begins its fiscal year without a budget—which has been the case, more often than not, over the past 25 years—the weekly spending “extender” bills necessary to keep the government functioning must also originate in the executive branch. The 2004 court ruling on the executive’s budget-drafting power clarified the governor’s ability to use emergency bills to pressure legislators into voting on cuts that they would rather postpone or avoid.

Both Pataki and his successor, Eliot Spitzer, refrained from exploiting this opening. So did Paterson at first. But this year, freed from the constraints of an election campaign and fed up with the legislature’s inaction, Paterson began using the temporary bills to advance his budget-reduction proposals on a piecemeal basis. By mid-June, while the state technically was still operating without a new budget, nearly two-thirds of the total 2010–11 budget had been enacted as part of the governor’s temporary bills. This included $50 billion in Medicaid appropriations, which reflected a net reduction of $385 million in Medicaid and other health-related spending from the previous year.

While the final budget was hardly a fiscally conservative product—it will hammer the state’s economy with $1.2 billion in tax and fee increases—Paterson had become a force to be reckoned with. This in itself was remarkable. Only a few months earlier, he had withdrawn from the governor’s race after allegations that he had improperly interfered in a domestic-violence case involving his top aide. In March, his approval rating in one statewide poll stood at just 25 percent, even lower than that of his predecessor, Spitzer, who had been disgraced in a prostitution scandal. Yet as Paterson demonstrated, even the weakest governor can become formidable by effectively wielding New York’s executive budget laws.

The next governor will have another edge, one that gave Paterson crucial leverage this year. For the first time in years, the governor’s threat to veto new spending proposed by the legislature is actually credible. Earlier this decade, Pataki’s relations with the Republican Senate majority leader, Joseph Bruno, soured, leading Bruno to ally himself with the Democratic Assembly speaker, Sheldon Silver of Manhattan, who has long controlled an overwhelming majority of Assembly seats. The Senate’s Democratic minority lined up against the governor as well. Pataki’s vetoes of tax hikes and billions of dollars in spending were repeatedly overridden, mostly by unanimous votes in the Senate.

In 2008, Democrats recaptured control of the Senate by a narrow two-seat majority. Their fractiousness, combined with Bruno’s preelection resignation to face federal influence-peddling charges, led Republicans to become born-again fiscal conservatives, signaling that they could no longer be counted on to help block gubernatorial vetoes of extra spending. The new dynamic wasn’t relevant in 2009, when Paterson and legislative Democrats agreed on a budget partly financed by a huge, supposedly temporary, income-tax increase. But this year, Democrats knew that trying to add or restore spending to Paterson’s temporary budget bills without the governor’s agreement would prove futile, since the Senate would be incapable of overriding his veto. The lesson for the next governor is obvious: in seeking to goad the legislature’s majorities into accepting fiscal discipline, he should not ignore the minorities.

Of course, the governor’s powers are worthless if he lacks a consistent and carefully prioritized agenda, which has been Paterson’s shortcoming throughout his troubled tenure. What’s needed above all, in Alexander Hamilton’s words, is “energy in the executive.” George Pataki’s name might not be the first that comes to mind in connection with that phrase, but the first of his three terms as governor nevertheless provides a few examples of how an energetic, focused governor can achieve real change.

In 1996, Pataki sought passage of a major workers’ compensation reform package supported by employer groups. The reforms had stalled for years because they included the repeal of a liability loophole cherished by trial lawyers, whose closest ally in Albany has long been Speaker Silver. But Pataki refused to agree to a budget deal that Silver wanted until the bill passed, and Silver ultimately folded. Two years later, Pataki won approval of the law that first authorized charter schools in New York, despite opposition from the state’s muscular teachers’ unions and the Assembly speaker. The governor’s leverage that year was even more powerful: in exchange for the charter-school bill, he signed off on a pay increase for state legislators.

New Yorkers who think that the next governor can’t turn the state around should keep in mind the pull he has under the budget laws. And those who assume that fundamental changes like a tax cap or public-pension reform are hopeless should keep something else in mind: it’s been 12 long years since lawmakers last got a raise.

Research for this article was supported by the Brunie Fund for New York Journalism.


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