Upstate’s woes are city’s problem, too

“I think that proportionately, the cuts inflicted on New York City are an outrage. We’re the one that is generating the money.”

—Mayor Michael Bloomberg on the state budget

The mayor has a beef with the governor and the Legislature. The just-adopted state budget, while painful for many, is too hard on New York City. In particular, it eliminated some $300 million in direct aid, while maintaining similar aid for other localities.

This is outrageous, Mr. Bloomberg says, because it hurts the state’s economic engine and further widens the yawning gap between what New York residents and businesses pay to and get back from Albany.

Though Mr. Bloomberg is correct, he misses a more important point. It is precisely because it is doing better than others that the city can be—and maybe should be—shortchanged.

A leading New York City business leader explained the problem succinctly several years ago. “Unless the upstate economy can be turned around,” she said, “it will become a welfare ward of the city.”

Fighting over a few hundred million dollars in this year’s budget is shortsighted; working on ways to turn upstate around would be more productive. Unfortunately, improving matters is a daunting task.

Many areas are in need: western New York cities like Buffalo (which lost 10% of its population in the last decade) and Rochester; central New York; the North Country; and the Southern Tier. Some have lost their manufacturing base; others never had much to begin with.

Few care. The New York Federal Reserve closed its Buffalo office in 2008, and I have found no one tracking the upstate economy in any detailed way since. And many initiatives have failed. Unshackle Upstate, a movement to revive the region by exempting it from the high costs of government rules on prevailing wages, workers’ compensation, unemployment insurance and the like, went nowhere. Likewise, Gov. Eliot Spitzer’s attempt to split the economic development apparatus into upstate and downstate components produced only bureaucratic paralysis.

Downstate lawmakers have blocked the effort to free the state university system from Albany’s micromanagement—a move that could unleash creative forces on campuses in Buffalo, Albany and Binghamton. Could there be a better example of downstate interests trumping upstate needs?

The state budget is a step forward for upstate because it didn’t raise taxes. A property-tax cap would assist, too, as those taxes are an extra-heavy millstone upstate. More will be needed, however. The Committee to Save New York, so helpful in winning approval of the budget, could then turn its attention to reinvigorating the upstate economy—a benefit for all New Yorkers.