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How to Cut

June 16, 2010

There are a million spending categories in state government. It’s everything from wage rates for road crew laborers to vendor services for data management to Medicaid reimbursement rates for podiatric care. Each of these happens to be a real category of spending for DOT, OGS and DOH. Each is fairly standardized. That is, you can check to see whether New York’s annual expenditure in each area is comparable to that of other states. 

When you do this, you may find that New York spends more than other states — significantly more. Now on it’s face, this may not be a big deal. In fact, there could be a good reason that New York spends more. 

For example, when it comes to DOT road crew expenditure, you just know that we’re going to spend more than Louisiana. That’s because it doesn’t snow very much in Baton Rouge, and it snows a lot in Plattsburgh. But should we be spending significantly more than the average of Northeast states? And if we were spending a lot more than Vermont per road mile, it would bear some scrutiny, right?   

When it comes to the cost of data management services, you’d think that New York would probably do well. After all, it’s a technologically savvy state. In fact, IBM was founded in New York. In addition to IBM, there are dozens of data management firms vying for state business. This fierce competition would drive down the costs in New York, right? 

If  the state consolidated virtually all of its data management services not in the hands of IBM, but some other company that nobody heard of, then there’d be a good reason for it, a reason that benefitted state taxpayers, right?   

And when it comes to podiatry services covered by Medicaid, if New York was spending three times the national average, there’d be a clear reason, right? There’d be an epidemic of bunions in New York that was undermining the productivity of our workforce, and the added expenditures would be the result of that calamity, right? 

Road crews, data management vendors and podiatry service providers are just three of the many categories of expenditure in New York that should be scrutinized. There are many more categories in health and education (which collectively account for more than two-thirds of the state budget) that should be carefully reviewed as well. Such scrutiny might produce fascinating results.

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