Although Proposal 1 to gut the governor’s budget powers has attracted most of the attention in respect of referendums to be presented to voters tomorrow, city residents will also face something called Question 4, which also deserves an emphatic no. It is an attempt to enshrine into the city charter the ideology of balanced budgets – even if it means tax increases. It would extend the life of key provisions of the current Financial Emergency Act, but like the FEA, the charter revision is mute on how politicians should achieve balanced budgets. Since this question doesn’t distinguish between budgets balanced by massive tax hikes and temporary deficits created by growth-inducing tax cuts, we’re left wishing there were a lever for “Not Good Enough.”

Question 4 would continue the FEA’s requirement that the city balance its budget or limit its deficit to no more than $100 million a year, with all calculations based on generally accepted accounting principles instead of creative bookkeeping. It would also perpetuate the FEA’s mandates that the city prepare four-year financial plans, limit short-term debt, and perform stricter annual audits than are required by the current charter. We have no objection to balanced budgets, per se. What Question 4 lacks is any grounding in the supply-side principles that have been proven out in the years since President Reagan, principles that recognize that what counts is not a balanced budget but a fiscal regime that offers incentives to earn the next dollar.

The FEA was passed years ago as a response to the fiscal crisis of the 1970s, when decades of poor decision-making culminated in crippling debt that combined with militant public-sector unions to threaten the city’s solvency and even its continued existence as a functional fiscal entity. In one sense the reforms have worked. The city is now arguably on a better fiscal footing than the state because the FEA, and especially the Financial Control Board it created, have provided the backbone for city politicians to keep expenditures – especially for unionized municipal labor – from spiraling completely out of control.

But those balanced budgets have too often been achieved through tax increases instead of spending restraint or supply-side tax cuts; witness the rise to the property tax and the temporary imposition of a “surcharge” on personal income taxes while a new teachers contract offers a raise of 15% in the public schools. At various times there has been an odious and discriminatory tax on commuters. The Financial Control Board won’t object to tax increases, and generally accepted accounting principles will not operate against a tax increase. But in the strategic sense, tax increases are far worse for the city than deficits.

New Yorkers would be better off with cuts to both taxes and spending. Or with tax cuts designed to produce greater revenues through greater growth. To gain this kind of approach will require not only disciplined politicians – a charter revision is no substitute – but public policy organizations that have thought more about this than, say, the Citizen’s Budget Commission. Question 4 would simply enshrine a long-discredited approach to all this and give cover for tax increases for years to come in a city whose citizens face among the highest tax burdens in the country. So instead of endorsing Question 4, we’ll endorse almost any candidate who has come out in support of a tax cut that isn’t offset by a tax increase somewhere else in the name of “balancing the budget.” The candidates we endorse nearby are a good start.