The Dire State of New York Finances:

New York State is facing the same dilemma as most of the other states are: how to provide services without spending cuts and tax increase. This has led to infighting between the Governor’s office and the legislature. The latter is trying to preserve most

of the spending and trying to avoid cuts and raising taxes while the former has to balance the budget in accordance with the state’s constitution but have to pass through the legislature which has the purse to pass the budget.

It is becoming an uphill battle between the two. Now the MTA (the metropolitan transportation authority) the agency running the New York subway and the LIRR and the metro-north and the buses with drastic cuts in subway and bus services because they are in the deep red. Now the question is what gives. The most obvious choice for New York State will be curtailing spending. Although it will hurt the poor the most, but to raise taxes will have more direct effect. And for how long and how high the taxes should go before it becomes counterproductive.

You can tax the rich but you have only so many rich in the State and they have the option to leave if taxed too much. New York has been relying too much on Wall Street bonuses for too long to balance their budgets but with the current economic environment and the hostility the country has shown towards outsize bonuses, the state will have a hard time to lean on these bonuses in the future. They will have to make a budget with less bonuses in mind in the future and they will have to stop promising the unions money which they promises when times are flush because times have now changed and everybody (including the unions) will have to make sacrifices to make New York city better and financially more stable unless it wants to end up like California (which is much more diversified but has its share of dependency on personal income taxes).