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Experts Say State Faces Substantial Financial Problems

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While the nation is fixated on the so-called fiscal cliff and negotiations on the federal budget, potentially catastrophic fiscal problems in New York are being overlooked, according to a new report from two highly-respected fiscal experts. NY1's Bobby Cuza filed the following report.

Albany’s fiscal problems can be broken down into simple terms: large, and growing, expenditures, and not enough money to pay for it all.

"We made a series of commitments without making adequate provision to pay for them," said former Lieutenant Governor Richard Ravitch.

But for years, critics say Albany has masked the problem by balancing budgets with gimmicks and so-called one-shots, one-time revenue that leaves future gaps unfilled. That’s one finding of a panel chaired by Ravitch and former Federal Reserve chairman Paul Volcker, who sounded alarm bells in a report released Tuesday. Among the culprits include sky-high education costs, pension and retiree health care obligations, and Medicaid.

“Medicaid spending crowds out other needs," said Carol O’Cleireacain of the State Budget Crisis Task Force. "New York spends more of its own funds on Medicaid than Florida, Texas and Pennsylvania combined.”

It’s simply unsustainable, the panel said. And Washington’s solution to the fiscal cliff could make things worse if, for instance, the federal deduction for city and state income tax is eliminated.

The report’s authors emphasized the report was not a political document, just an attempt to lay out the problem. But the New York State Republican chairman, Edward Cox, was already criticizing Democrats Tuesday, and Governor Cuomo in particular, for failing to be part of the solution.”

"Governor Cuomo made his rounds on radio stations, saying, 'This is my agenda, and you better follow it or else,'" Cox said. "And none of these fiscal issues were on that agenda in a realistic way."

The report does, in fact, credit Cuomo for taking some steeps to rein in Medicaid and education spending.

"Fiscal responsibility and accountability has clearly been a priority for the governor, but it’s also a matter of us as leaders and policy-minded people to say that we have a crisis that needs a systematic solution across the board," said Stephanie Miner, the co-chair of the New York State Democrats.

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