Albany is not alone. In States across the nation from California to Massachusetts, state revenues are dropping and state expenses for social services are rising (Albany Idles As State Nears Its Last Dollar, New York Times, November 27, 2009: A1, A27).
What we need is another federal stimulus. This should have two major thrusts. First each State should receive funding equivalent to about 20% of its 2007 budget. This would enable states to meet their responsibilities with minimal cuts in vital social programs and would also enable them to maintain state aid to the cities and towns in their jurisdictions.
The second thrust would be to help homeowners. Current efforts to avert foreclosures are not working. A powerful alternative would be for the Federal Government to partner with distressed homeowners by entering in to a Shared Appreciation Mortgage with the homeowner. The homeowner would pay what she/he could; the government would pick up the rest. Both homeowner and government would, over time, build up equity in the property and share, in proportion to their contributions, when the housed was sold. That would be a win-win-win: for the government as it would underpin the mortgage derivative market; for the homeowners as they could stay in their houses; for communities as the blight of foreclosure would recede.
Sent to New York Times