Other Ways to Balance Budgets

The federal government was on the brink of shut down. Medicare might never be the same. We must eliminate collective bargaining rights, lay off teachers, and cut human services that protect our most vulnerable. As most of you have heard, it’s budget season. At every level of government, massive budget deficits are creating a sense of panic across the nation. Many politicians and interest groups have come forth with various ideas on how to fix our ailing economy – some more “unique” than others.  But no one seems to have the right answers. You see, when there are revenue shortfalls, the best way to fill those deficits is with new revenue; otherwise we will lose vital programs and services, and not just those for the poor who are usually the target of budget cuts. In many branches of government across the country, politicians on both sides of the aisle are creating and running on electoral platforms that purport to create no new taxes and then are proposing budgets that are catastrophic to the middle class and small businesses. These proposals come at a time in our country’s history when one percent of the population has nearly a quarter of the nation’s income.[1] The wealthy and powerful seem to be not only exempt from being part of a comprehensive budget solution, many are getting special treatment.

Even during such difficult times, President Obama gave in to the Republicans to extend the Bush tax cuts for another year, thus passing up much needed revenue. The House recently passed a budget that claims to cut wasteful spending in order to stay within our means. However, many of their proposals actually increase spending substantially. For instance, their budget sought to permanently slash funds to Planned Parenthood that would eventually cost the government an additional $174 million per year.[2]While that provision was restored by the Senate, when Congressional leaders released the details of their final FY2011 funding bill, the legislation included a total of about $40 billion in cuts compared to FY2010. Many of those cuts target human services programs. For instance, no funding was allocated for the Housing and Services for Homeless Persons Demonstration voucher program, a program that focuses on individuals with special needs and families who are homeless or at risk of homelessness. [3] [4]

A similar trend is also taking place on the State level. Despite taking office and becoming more aware of the State’s substantial financial shortfalls, Governor Cuomo insists on sticking to his election promise not to create any new taxes, even though extending the Personal Income Tax (PIT) on high-income earners is already a law on the books. There is still a small hope that New York State legislators might see the light. Speaking on April 5th to WCNY’s Capitol Pressroom, New York House Speaker Sheldon Silver said that some State policy makers were hoping for a tax on high-income earners in order to generate revenue. “We’re going to continue to push for it,” he said of re-upping the expiring tax surcharge for earners making more than $1,000,000. “There’s no reason why it shouldn’t be in effect. There’s no reason why. The federal government has given people who make over a million dollars a tax cut. There’s no reason why we can’t take some of that back.” [5]

The federal government has not just given people who make over a million dollars a tax cut. They have given them tax credits, as corporations can file their taxes as individuals. The New York Times recently revealed that General Electric, the nation’s largest corporation, reported worldwide profits of $14.2 billion with $5.1 billion of that total made in the United States. However, instead of paying taxes on their revenue like most of the American public, G.E. received a tax benefit of $3.2 billion. President Obama appointed Geoffrey Imelt, G.E.’s C.E.O. to be chairman of his President’s Council on Jobs and Competitiveness. [6]

While we know where our federal and State representatives sit on the issue of revenue creation, now Mayor Bloomberg is tasked with balancing New York City’s budget; a budget that has suffered to a great extent from federal and State spending cuts. The expiring State  PIT tax will mean a loss of $5 billion in State revenue in 2012 at the same time the wealthiest one percent of New York taxpayers receive an average annual premium of $124,000 from the extension of the Bush tax cuts.[7] Mayor Bloomberg faces many challenges in his remaining term.  For example, an all-time record 113,553 homeless people, including 42,888 children, slept in the City’s shelters in 2010, an eight percent increase from the previous year and a 37 percent increase from 2002 when Mayor Bloomberg took office.[8] Cutting services may lead to more government spending in the long term while in the meantime leave many struggling. 

Americans need a social safety net now more than ever. And the safety net does not just include entitlement programs such as food stamps and welfare that financially support people when they are living in poverty. It also includes numerous preventative and supportive programs to keep people healthy and safe during tumultuous times. Human services providers not only offer a wide array of comprehensive programs that allow individuals, families, and communities to remain or become self-sufficient. They also save taxpayers large amounts of money in the long term. For example, child welfare preventive services cost approximately $9,500 per family per year, while foster care costs more than three times as much, at $36,000 per child annually.[9] And In New York City, studies have found that supportive housing saves between $12,146 and $16,282 per client when compared to the use of emergency shelters and services.[10] Yet, these vital programs continue to face devastating cuts every year, thus drastically reducing the number of clients they can serve and jobs they can provide.

The City needs sustainable policy solutions that address the structural and fiscal imbalances and do not punish our most vulnerable populations and end up costing taxpayers more. There are a number of alternative ways to repair the city’s budget shortfalls other than making severe cuts to vital human services programs and services, especially at a time when citizens need those most. Mayor Bloomberg has a responsibility to explore all revenue options to balance the City’s budget.

Contributed by Stephanie Hakes
of the Human Services Council of NYC

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About Human Services Council

The Human Services Council strengthens New York's nonprofit human services sector, ensuring all New Yorkers across diverse neighborhoods, cultures, and generations reach their full potential.
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