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I am working in my State to get this protection passed, and I would respectfully urge the Members of this committee to do the same here in Washington.

Our mission in New York 4 years ago wasn't just to lead the Nation in cutting taxes. Our mission was to restore freedom. To truly fulfill that mission, we knew that in addition to cutting taxes, we had to eliminate the layers of unnecessary bureaucracy that those taxes created in the first place. We knew we had to significantly reduce the size of the big overbearing government bureaucracy that was intruding into the daily lives of our people.

After all, that big government didn't just disappear when I took office. It was still there, turning out rules and regulations like never before. To date, we have reduced the size of the government by almost 20,000 positions. And we have done virtually all of that through creative measures like early retirement and transfers without large layoffs.

We streamlined or abolished unnecessary and ineffective programs. In fact, in 1995, we abolished an entire government agency, the Department of Energy, which was created during the 1970's to deal with the gasoline crisis, but still existed in 1995. And in doing so, we proudly broke the old rule of government, that once a program or an agency is created, it can never be abolished.

In addition to that, we have sent a strong message to every bureaucrat and every agency of government that the days of harassing employers for the heck of it are over. We have eliminated or revised thousands of regulations imposed by the previous administration saving our people and businesses billions of dollars. We have reduced workers' compensation costs by 38 percent, privatized State-owned properties that government had no business owning in the first place, like bakeries, golf courses, and hotels. We are in the process of making Stewart Airport in the Hudson Valley the first commercial airport in the Nation to be privatized.

And as for that $5 billion deficit I mentioned before, the one I inherited, by returning economic power to the people through tax cuts and fiscal restraint, we have created a stronger economy that has allowed us to eliminate the deficit and replace it with four straight budget surpluses. The latest surplus ending our fiscal year April 1 being $1.8 billion.

I am urging our legislature to preserve that surplus and the ability to cut taxes even more in the future by keeping our budget growth this coming year to the inflation rate.

There is one other important point to make about New York's tax cutting. We have done all of this without inhibiting the ability of one single State agency to provide their important public services. And, in fact, we are operating more efficiently and more effectively than ever before.

It is also important to note that as we have limited New York State's government, we haven't shifted the burden of our services or taxation to localities. It is not just that we ended big government in New York, we have replaced it with smarter government. As you pursue your tax cut agenda at the Federal level, I would urge you to have the same consideration for the States as we at the State level have had for the localities in New York.

Let me end with what I hope is a word of encouragement. There has been a wave of newspaper articles recently citing polls which suggest Americans don't want a tax cut. It has been said that the hunger for a tax cut doesn't really exist because our economy is healthy and people are doing well for themselves financially.

But it has also been said that freedom is fragile and must be protected. To sacrifice it, even as a temporary measure, is to betray it. As Republicans, I believe we must never submit to the notion that the preservation of freedom is a part-time endeavor that can be pursued or abandoned based on the last Gallup poll.

Ronald Reagan was right when he said that the Federal Government is taking too much tax money from the people, too much authority from the States, and too much liberty with the Constitution. And we are right to stand by our principles of smaller government, lower taxes, and more freedom.

We are right to insist on policies that reward hard work and empower the individual spirit that fuels our national greatness and keeps our economy strong. We must stand by our convictions and do what is right for America, for Americans, and for the preservation of freedom. It is what we have done in New York.

And to paraphrase Frank Sinatra, if you can cut taxes in New York and cut them by more than any other State, you can cut taxes anywhere, even in Washington.

And that is precisely what Washington should commit itself to doing, following the lead of the States, cut taxes and strengthen the freedom that makes America thrive.

Thank you, Mr. Chairman. And I would be happy to respond to any questions.

(The prepared statement of Governor Pataki follows:)

Governor George E. Pataki's Prepared Remarks
House Committee on Government Reform

Washington, D.C.

April 15, 1999


Mr. Chairman, distinguished members of the committee ... it is my great honor and privilege to appear before you today.

I'm particularly pleased to have the opportunity today to address the issue of cutting taxes. For me and for the many Republican governors across this great country, who have done so much good work in this area - Governor Bush, Governor Engler, Governor Whitman, Governor Huckabee, Governor Gilmore, and many others -- it's more than just an issue of economics. For us, cutting taxes is a matter of fulfilling government's fundamental obligation to the people.

It all comes down to one simple question: whose money is it anyway?

In state capitols across our country, Republican governors are declaring without hesitation that the people's hard-fought earnings belong to the PEOPLE and not the government.

I'm proud to be able to tell you that in no state has this basic fact of life been declared more clearly and more emphatically than in New York.

I know that may come as a shock to you, given New York's history and particularly given its reputation under my predecessor, but it's true. In the four years since I took office, New York has cut taxes more than any other state. We've cut taxes 36 times, returning $19 billion to the taxpayers so far. When all the tax cuts on the books take full effect, that number will grow to over $52 billion.

Our tax cutting has sparked a new direction in New York. We were once a state in crisis. Now, our largest business organization calls New York “The Comeback State.”

I mean, New York has gotten so much better that even the First Lady is thinking of moving there.

Gov. Pataki's Remarks
House Committee on Government Reform

April 15, 1999

Page 2

But perhaps there is no greater evidence of the profound turnaround in New York than the fact that the Governor of the place that once led the nation in raising taxes is here today talking to Congress about how to cut taxes. As they used to say in Brooklyn, who woulda thunk it.

Before I talk more specifically about what we've done with taxes in New York, I want to address the broader issue of freedom, because I don't believe you can separate the two.

If ever there were two things that had an inverse relationship, it's taxes and freedom. The more you have of one, it is necessarily so that you must have less of the other.

The more money a person has seized from them by their government, the less freedom that person has to do what he or she wants with that money.

It could not be any simpler.

Now, many Americans have come to accept taxation as a "a necessary evil.” They accept the fact that they have to surrender some of their earnings -- and consequently, a degree of their financial freedom -- to sustain their government.

The point I'd like to make today is that excessive taxation does more than infringe on people's financial freedom. It drives up spending, and creates a bigger, more intrusive government that inevitably infringes on other freedoms as well.


By nature, government has an insatiable appetite – an inherent desire to grow. When politicians raise taxes beyond what is necessary to fulfill government's legitimate function, they feed that growth and produce, not just a bigger government, but a costlier government that becomes a destructive force in

Gov. Pataki's Remarks
House Committee on Government Reform

April 15, 1999

Page 3

people's lives.

It created a destructive cycle of high taxes, perpetuating more bureaucracy and more spending — which in turn perpetuated more taxes and less economic freedom for the people who pay those taxes.

But the cycle didn't end there. Excess bureaucracy created by over-taxation produced – not just more spending and further encroachments on people's economic freedom - but new encroachments on other freedoms.

Because bureaucrats without a legitimate function have to justify their existence by creating an ostensible function.

In New York, bureaucrats justified their existence by generating scores of rules and regulations — and government would use those regulations to assert itself over the people in every aspect of their daily lives.

Most of the regulations, however, were aimed at businesses, putting the men and women who create jobs under the close supervision of a government that sought to dictate their every move.

So what you had in New York was an endless cycle of high taxes leading to big bureaucracies and more regulations, which led to higher taxes and bigger bureaucracies and even more regulations.

This went on for more than a decade and the results were devastating.


Let me just give you a picture of New York in 1994 — and bear with me because, as dismal as it seems, this story does have a happy ending.

When I took office in January of 1995, New York was in crisis. The state government was too big, too bossy, and too expensive. It faced a budget deficit that totaled a record $5 billion a deficit larger than the total budgets of 31 other states. The promise of tax relief had turned into a cruel hoax. Our welfare rolls

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