New York’s Money Drain
Albany, NY – Rising energy and health care prices have been slowly creeping their way up the city of Albany’s annual budget, backing a nationwide trend towards higher state expenditures on these basic costs.
Mayor Gerald D. Jennings, in his State of the City Address to the Albany common council mentioned the costs currently appropriated in Albany’s budget. “Expenses such as State pension payments and health insurance expenses for employees, utility expenses and the like continue to be a challenge,” he said.
Residents of Albany won’t have to fear a deficit or higher city taxes just yet, since according to Jennings, Section 19-a payments, which come from the state of New York, currently offset these increases in city expenditures.
“We’ve succeeded in this regard largely because of the successful efforts to obtain and increase the State payment in lieu of taxes on the Empire State Plaza – our Section 19-a payments,” the mayor said. “During 2006 and again for 2007 through 2010 our 19-a payments will total $22,850,000.”
For the state of New York, however, the problem is mirrored, albeit in a much larger scale.
The State and the Cost of Health
Currently, the state capital Albany allocates fifteen percent of its annual budget of around $175 million on health insurance expenditures for its employees, or around $27 million annually. Employees of the local government are in pretty good shape however, compared to their private sector counterparts, where employers are facing a rough choice on how to face the escalating cost of health care.
Yet New York is again facing a cut in health care spending, ushered in by then-incumbent Gov. Eliot Spitzer, who had previously proposed a $1.3 billion, cut in the expense last year. Gov. Spitzer resigned last March after an unrelated prostitution scandal, which left the talks with the health care lobby hanging. Before Spitzer left, discussions about the cut in health care services this year were already ongoing.
In a New York Times interview, Dennis P. Whalen, Spitzer’s deputy secretary for health, commented on the change of mood. “I think you can see already that the level of discussion and reaction is different this year than it was last year,” said Whalen. “We’ve been engaged in productive discussions with hospitals about these changes that we’re pursuing.”
While health care budgets are being cut, health insurance has been growing at a steadily alarming rate in recent years. In 2007, nationwide averages for health insurance premiums increased by 6.1 percent—two times the rate of inflation.
For employees’ insurance, the state isn’t so much squeezed as much as small businesses are. Private employers are taking the brunt of the action, especially with state mandated benefits which in New York cover more than 30 different instances. According to the Employer Alliance for Affordable Health Care, New Yorkers pay 26 percent more than the national average for health care.
The Alliance is also pointing fingers at the proposed 2008-09 budget plan for the state, which includes a $140 million increase in the Covered Lives Assessment—a surcharge paid on every insurance policy and premium tax on some health insurers, which the Alliance claims will ultimately be borne by consumer.
“With small and medium businesses in New York struggling to provide health insurance coverage and state leaders who have called for expanding health insurance coverage to all New Yorkers, it doesn’t make sense to propose taxes that will make it even harder for business to offer coverage at all,” said Alliance chair Jeff Leland.
It all makes for a sticky situation, but another potential headache for legislators is simmering within New York’s extensive power supply grid
Rising Energy
Last winter, Gov. Spitzer announced additional emergency home heating assistance to New York’s most vulnerable residents. That winter, qualified applicants through the Home Energy Assistance Program (HEAP), a federally funded program, issued benefits to more than 719,000 families, totaling more than $178 million.
The government subsidizing energy costs is inevitable however, with the way energy prices are going. Residents of New York have long paid some of the highest electricity prices in the United States. According to a conservative think tank, New York should reconsider some of its most ambitious energy policies to keep costs down.
The study, “NY Unplugged? Building Energy Capacity and Curbing Energy Rates in the Empire State,” was released in March by the Empire Center for New York State Policy, which is a project of the Manhattan Institute for Policy Research.
“New York will need a lot more power—the equivalent of more than five new 500-megawatt generating plants—to avoid blackouts early in the next decade,” said the study. “Yet only one new large-scale generating plant, representing barely one-eighth of the required additional capacity, has been proposed in the state since the expiration five years ago of Article X, the landmark state law designed to speed the building of such facilities.”
Donald LaVada, director of marketing and development at the New York State Energy Research and Development Authority, said energy spending in New York tops $53 billion annually, and 85 percent of the energy used is imported into the state. And half of it comes from OPEC nations. With oil heading towards $120 a barrel, energy spending has nowhere to go but up.
The cost to the local government remains a drain for taxpayer money. Back in Albany, the 2008 has appropriated around $33 million for operating expenses, the majority of which will go pay for energy consumption by the city. A policy change, however, remains to be seen in the country’s third largest state.
References
- Peters, Jeremy W. (2008). Time Runs Short to Decide Albany Health Care Cuts. The New York Times. February 22, 2008.
- “A Better Albany”. (2007). State of the City Address by Mayor Gerald D. Jennings of Albany New York. Retrieved May 2, 2008 from http://www.albanyny.gov/Government/
- MayorsOffice/StateOfTheCity.aspx
- “Governor Spitzer Announces Additional Heating Assistance to Combat Rising Energy Prices”. (2008). Division of Housing & Community Renewal, New York State. Retrieved May 2, 2008
- “NY Unplugged? Building Energy Capacity and Curbing Energy Rates in the Empire State”. (2008). Empire Center for New York State Policy. Retrieved May 2, 2008 from http://www.empirecenter.org/Special-Reports/2008/03/NYUnplugged.cfm
- “Proposed Budget Increases Costs to Small Business”. (2008). Alliance Alert. The Employer Alliance for Affordable Healthcare. Retrieved May 2, 2008 from http://www.employeralliance.com/images/Newsletter_spring08.pdf
