The biggest political story of 2011 is at the state level, where new Republican governors like Scott Walker and Rick Snyder have followed in the footsteps of Mitch Daniels and Chris Christie by seeking not only to cut short-term spending to address their states’ immediate budget crises while resisting tax hikes, but to attack the #1 source of their states’ long-term fiscal problems: excessive long-term commitments to pay and benefits for (mostly unionized) state and local public employees. Local Democrats in many states have responded with apoplexy, reflecting their political and financial dependence on those same unions. In other states, where the Democrats still hold the statehouses, they’ve had to swallow some spending cuts, but are nonetheless in denial – Jerry Brown in California has tried to close his budget gap with a 50/50 mix of spending cuts and tax hikes, Mark Dayton in Minnesota has pandered to the DailyKos crowd by proposing to double the state’s top income tax bracket, Connecticut’s Dan Malloy – elected by the slimmest of margins – blasted Walker’s collective bargaining reforms as “Un-American” and proposed a battery of tax hikes, and Maryland’s Martin O’Malley even went to the Corzine-esque extreme of giving the keynote speech at a union protest against his own budget, swearing to avoid “Midwestern oppression.”

But oddly, at least one newly-elected Democratic governor seems to have come to grips thus far with reality, and it’s maybe the unlikeliest of all: New York’s Andrew Cuomo. The son of liberal icon Mario Cuomo, the Clinton-era HUD Secretary, the successor to Eliot Spitzer as the state’s crusading Attorney General; nothing in Cuomo’s history before the 2010 election suggests he’s anything but a standard-issue liberal. Nor did he take office under any urgent need to court swing voters; while New York’s usually liberal electorate gave the state Senate back to the GOP and swung more House seats from D to R than any other state in the Union, Cuomo himself cruised to victory by almost 30 points over his clownish self-funded challenger, Carl Paladino, and the state GOP boasts a depressingly shallow bench of prospective challengers.

Nonetheless, Governor Cuomo’s agenda sounds like it could come straight out of the Christie-Walker playbook. The NY Daily News’ Bill Hammond has an overview of Cuomo’s promises and the obstacles he’s faced, mainly from his own party. Some highlights:

-Negotiating for concessions on existing contracts from the public employee unions.

-Cutting health care, Medicaid and education spending. (see here; a quarter of the state’s residents are on Medicaid).

-Capping property taxes to “limit the growth of these levies to 2% a year or the inflation rate, whichever is less,” similar to the cap passed by Christie in New Jersey. (see here on how the cap would work to restrain school spending; the cap easily passed the GOP-controlled State Senate but faces stiff resistance from the Democrat-controlled Assembly and has provoked outrage from the teachers’ union).

-Opposing all new tax hikes, especially a “millionaire’s tax” on incomes above $200,000 promoted by the Assembly Democrats and supported by $1.5 million in ads run by the teachers’ union (see here).

-Touting reform of the LIFO (last in, first out) rules that require teacher layoffs to be done by seniority rather than performance. (see here; Cuomo has backed down on doing anything about the LIFO rules but claims to be willing to replace them if a new system is installed for evaluating public school teachers).

As Hammond notes, Cuomo’s progress – and even the sincerity of his commitment, as on the LIFO issue – has been uneven; he’s yet to get real concessions from the Assembly or the unions (other than getting buy-in from hospitals and health-care unions on his health care cuts) and still faces a battle with Senate Republicans over ethics and gerrymandering bills. But if Cuomo has made some of the right enemies, he’s made some strange bedfellows, too. His approval/disapproval ratings among Republicans are the same as among Democrats, and Rudy Giuliani has noticed that Cuomo is facing New York’s fiscal realities by working from the GOP playbook:

Giuliani said in an interview Wednesday that the Democratic governor “has gotten off to a very good start.”

“I don’t know how Democrats feel about him but he’s doing everything that a Republican governor would be doing in a similar situation,” said the former mayor and one-time presidential candidate.

And while Cuomo has to navigate public-sector union opposition, he’s actually getting backing for his budget and tax proposals from what may be as much as $10 million in outside ads by the Committee to Save New York, a post-Citizens United alliance of business and real estate interests with private sector construction unions and the public support of Democratic former comptroller and onetime bitter Cuomo foe Carl McCall. Here is a taste of the Committee’s ads:

The question is why Governor Cuomo is trying to govern like a Republican, at least on fiscal issues. Certainly, after a life in liberal-Democratic circles, he’s hardly had a road-to-Damascus conversion of principle, and he faces no real threat from the state GOP. The obvious reason is simple realism: even David Paterson tried to get a property tax cap passed. The state’s finances are such a garish illustration of the failure of big-government liberalism that only a complete fool could deny the need for a change of course. A second reason is that Cuomo is, whatever his other faults, a guy who believes in doing things. He doesn’t want to end up as the same impotent failure, hog-tied by dysfunctional Albany, as his three predecessors (George Pataki, like many moderate Republicans, had a good first year in office but followed it by not really accomplishing squat for the next 11 years; Spitzer was flailing even before “Client #9,” and the functionally illiterate Paterson never had a prayer). The money’s just not there for more liberal experiments; unless the state changes its ways, Cuomo will leave office with nothing accomplished, and he knows it. A third may be that Cuomo’s investigations of the corruption in state pension funds – including targeting former Democrat comptroller Alan Hevesi and Obama Administration ‘car czar’ Steve Rattner – opened his eyes to the depth of corruption in business-as-usual Albany. And national ambition may be another driver – if Barack Obama wins a second term solely by virtue of a weak GOP field in 2012, four more years of Obama will almost certainly leave the Democrats looking for a new national leader unencumbered by Obama’s fiscal profligacy if they hope to survive. Cuomo may be hoping to craft an image as some sort of fiscal centrist with an eye on 2016.

New York conservatives, often scorned and abandoned by the state GOP, don’t and shouldn’t trust Andrew Cuomo any further than we can throw him. But we can certainly get behind enough of his agenda to send the message far and wide that even blue-state liberal Democrats recognize the need for Daniels/Christie/Walker-style reforms to how our states do business. If even Andrew Cuomo can wake up and smell the tea, why can’t your state?