Budget gimmicks in New York State and City refer to accounting maneuvers, one-time revenue measures, and legislative actions that mask structural deficits or shift costs to future taxpayers. This page covers CBC’s work on structural budget imbalances, the use of non-recurring resources, pension contribution deferrals, opaque lump-sum appropriations, and the lack of transparency in financial planning.
This page was created with AICBC Insights uses AI to group, analyze and present data and recommendations from CBC's publications. Always reference the cited sources to verify important details..
Restrain spending growth to reduce the structural budget gap that already is $16+ billion.
Not include speculative, short-term federal money derived from a Medicaid/MCO tax to pay for ongoing costs.
Reject proposed Tier 6 retirement-plan enhancements, as these sweeteners are expensive and unnecessary.
Reject tax increases, as New York and its localities already collect more taxes per person than any other state.
Include basic financial-plan tables to give New Yorkers a clear-eyed view of how their money is being spent next year.
Key Data
In May 2026, the CBC noted that the State approved a pension gimmick that unfairly shifts some of the cost of closing near-term City budget gaps to taxpayers in fiscal years 2033 to 2037.
As of October 2025, the CBC urged the veto of 17 bills that increase costs outside the budget process, noting that 12 of these bills have fiscal notes estimating costs of at least $30.0 million immediately and $18.1 million annually thereafter.
In February 2025, the CBC reported that while the State projects an $11.0 billion budget gap in fiscal year 2029, spending growth supported temporarily by extraordinary receipts masks an $18.2 billion structural imbalance.
In August 2024, the CBC highlighted that the enacted budget included appropriations exempting section 112 of the State Finance Law totaling $368 million, and $1.5 billion in appropriations exempt from section 163 of State Finance Law, which allows spending without standard oversight.
In May 2024, the CBC noted that the enacted budget drives a $16.1 billion structural budget gap, which is masked by reliance on temporary, non-recurring resources.
The New York State fiscal year 2027 budget increases spending by at least 8 percent and leaves a structural gap exceeding $17 billion, while failing to provide transparency by omitting basic financial plan tables. Although the budget includes positive policy changes regarding housing and climate, it relies on questionable fiscal practices like a pension gimmick that defers costs to future taxpayers.
Recommendations related to Budget Gimmicks
The Governor should continue to resist calls to increase personal income and corporate taxes next year.
The State should publish basic financial plan tables with the budget agreement so that the public can understand the full impact of the budget.
The State should build feasible targets into a market-driven cap-and-invest program to cost-effectively reduce emissions.
Key Data
$17 billion
— The structural gap left by the state budget.
8 percent
— The minimum increase in State Operating Funds spending.
$30 billion
— The amount by which decade-long spending growth exceeds inflation.
$700 million
— The annual amount wasted on school aid to districts with shrinking enrollment.
$547 million
— The cost of increasing Tier 6 pension benefits.
$268 billion
— The total amount of the state budget.
The Governor is urged to veto 17 bills that would increase pension, disability, and death benefits for public employees, as these measures bypass the formal budget process and add significant, unbudgeted costs to state and local governments. These legislative actions lack offsetting savings and create long-term financial liabilities without providing additional public services.
Recommendations related to Budget Gimmicks
The Governor should veto the 17 bills that increase costs to New York State and local governments outside of the budget process without enhancing public services.
The Governor should veto the eight bills that expand eligibility and/or pension benefits for public employees.
The Governor should veto the nine bills that would enhance disability and/or death benefits for public employees.
Key Data
$30.0 million
— Minimum immediate cost of 12 bills with complete fiscal notes.
$18.1 million
— Annual cost thereafter for 12 bills with complete fiscal notes.
$5.9 million
— Annual cost of S6486/A6942, which reduces the service requirement for Tier 3 members of the Unformed Sanitation Force and Uniformed Correction Service.
$5.5 million
— First-year cost of S6671/A7360, which increases the pension benefit for certain Nassau County corrections officers.
$4.9 million
— First-year cost of S5083/A5898, which provides an in-service death benefit for retirement-eligible members of NYSLRS employed as State-paid judges.
$4.2 million
— Annual cost of S6640/A6784, which extends the 'death gamble' benefit to Tier 4 and Tier 6 Special Plan transit members of NYCERS.
New York State's fiscal foundation is being undermined by unsustainable spending growth, which is currently masked by temporary cash inflows and accounting maneuvers. To address the projected $18.2 billion structural imbalance and close future budget gaps, annual spending growth must be limited to 2.7 percent through fiscal year 2029.
Recommendations related to Budget Gimmicks
Lawmakers should find savings that restrain spending growth rather than adding more spending.
The state should limit annual spending growth to 2.7 percent starting next fiscal year to close projected budget gaps and eliminate the structural imbalance.
The state should allow temporary tax increases to sunset as part of a plan to restore fiscal balance.
Key Data
$15.5 billion
— The proposed increase in State Operating Funds spending for fiscal year 2026.
$18.2 billion
— The structural imbalance masked by spending growth supported temporarily by extraordinary receipts.
$11.0 billion
— The projected budget gap for fiscal year 2029.
$65.7 billion
— The projected growth in State Operating Funds spending over the eight years between fiscal years 2021 and 2029.
$3.1 billion
— The cost of the proposed one-time Inflation Refund checks included in fiscal year 2026 spending.
2.7 percent
— The annual spending growth rate required from fiscal year 2025 to fiscal year 2029 to close the structural imbalance.
New York State's enacted budget includes numerous exemptions to standard procurement and oversight laws, allowing hundreds of millions of dollars in spending to bypass competitive bidding and Comptroller review. To address this lack of transparency, the Governor should sign legislation requiring the publication of details for all emergency and exempt contracts while ceasing the inclusion of such exemptions in future budget bills.
Recommendations related to Budget Gimmicks
The Governor should sign A10281/S9171 to require State agencies and authorities to publish information related to contracts that are exempt from prior approval by the Office of the State Comptroller.
The Governor should no longer include exemptions to sections 112 and 163 of State Finance Law in executive budget bills.
The Governor should reject any proposed exemptions to sections 112 and 163 of State Finance Law proposed by the Legislature.
Key Data
$368 million
— Total value of enacted budget appropriations exempting section 112 of the State Finance Law.
$1.5 billion
— Total value of enacted budget appropriations exempt from section 163 of State Finance Law.
5.3 days
— Average time for the Office of the State Comptroller to complete prompt review of contracts submitted by State agencies and authorities.
$50,000
— The minimum value threshold for contracts to be subject to oversight provisions.
New York State's fiscal plan for 2025 reveals a $16.1 billion structural budget gap that is obscured by the use of temporary resources, debt prepayments, and expiring tax increases. While the state added $1.5 billion to reserves, total spending is projected to grow, with the structural imbalance remaining largely unchanged from the initial executive proposal.
Key Data
$16.1 Billion
— The total structural budget gap driven by the enacted budget.
$2.9 Billion
— The amount of the structural imbalance masked by an expiring tax increase.
$2.5 Billion
— The amount of the structural imbalance masked by prior debt service prepayments.
$3.5 Billion
— The amount of the structural imbalance masked by rolled resources.
$2 Billion
— The amount by which total All-Funds spending for fiscal year 2025 is higher than initially reported.
$1.5 Billion
— The amount added to state reserves due to strong tax receipts at the end of fiscal year 2024.
New York State must address its $16+ billion structural budget gap by restraining spending growth and avoiding the use of speculative, short-term federal funds for recurring expenses. Policymakers should prioritize long-term fiscal stability by rejecting tax increases and expensive retirement-plan enhancements while providing transparent financial-plan tables.
Recommendations related to Budget Gimmicks
Restrain spending growth to reduce the structural budget gap that already is $16+ billion.
Not include speculative, short-term federal money derived from a Medicaid/MCO tax to pay for ongoing costs.
Reject proposed Tier 6 retirement-plan enhancements, as these sweeteners are expensive and unnecessary.
Reject tax increases, as New York and its localities already collect more taxes per person than any other state.
Include basic financial-plan tables to give New Yorkers a clear-eyed view of how their money is being spent next year.
Key Data
$16+ billion
— The current structural budget gap that needs to be reduced.
3.5 percent
— The proposed increase in adjusted State Operating Funds spending for the current year.
32 percent
— The growth of adjusted State Operating Funds from FY 2020 to FY 2025.
$33.8 billion
— The dollar amount growth of adjusted State Operating Funds from FY 2020 to FY 2025.
$6.4 billion
— The inflation-adjusted increase in State Operating Funds from FY 2020 to FY 2025.
New York State's structural budget gap has grown to between $16 billion and $20 billion due to the practice of using short-term revenues to support permanent spending increases. The State is now considering a new tax on Medicaid and managed care plans to leverage $4 billion in federal funds, a move that risks repeating the pattern of relying on speculative, temporary revenue for recurring expenses.
Recommendations related to Budget Gimmicks
The State should not budget money it does not have.
Federal funds would be time-limited and should be only used to finance one-time programs.
It is never smart budgeting to spend short-term money to start or boost recurring programs.
The State should only pursue this path after it has identified and publicized the planned one-time programs.
The State needs to break its bad habit of ratcheting up spending on the back of temporary receipts.
Key Data
$16 billion to $20 billion
— The current size of New York State's structural budget gap caused by increasing spending with short-term revenues.
$4 billion
— The amount of federal money the State hopes to leverage through a new tax on Medicaid and other managed care plans.
New York State's Fiscal Year 2024 Executive Budget includes $14.8 billion in "lump sum" appropriations, which are discretionary funds allocated without public scrutiny or clear criteria. These opaque spending pots increase the risk of waste and corruption, and should be replaced by transparent, evidence-based budgeting practices.
Recommendations related to Budget Gimmicks
The State should not enact any new lump sum appropriations that authorize spending on a broad range of projects or purposes to be determined and allocated at a later date.
The State should omit the $6 billion Special Public Health Emergency Appropriation from the budget.
The State should reduce the Special Emergency Appropriation to $1 billion, and ensure it is subject to OSC oversight and competitive procurement rules.
The Executive should fully and completely disclose distributions from all lump sum pots currently being spent, providing information in a tabular, open data format.
The Governor and Legislature should pass a law codifying the Governor’s discretionary lump sum database to include improved requirements for disclosure.
The Governor and Legislature should provide full data for lump sum spending dating back to at least 2020.
Key Data
$14.8 billion
— Total proposed State FY 2024 discretionary lump sum spending authority.
$8 billion
— Amount of the $14.8 billion total that is allocated for COVID emergency lump sums.
$6.8 billion
— Amount of non-emergency standard lump sum appropriations in the FY 2024 Executive Budget.
$5.3 billion
— Amount of lump sum appropriations contained in just 26 programs that each exceed $100 million.
$821 million
— Amount of lump sum appropriations spread out over 117 smaller appropriations that are less than $100 million.
$685 million
— Amount of lump sum appropriations in 11 programs that are broadly defined and exempted from OSC oversight.
New York State's budget proposals rely on unsustainable spending growth and temporary revenue sources, creating significant structural deficits that could reach nearly $20 billion by fiscal year 2027. To ensure long-term fiscal stability, the state must implement spending restraint, allow temporary tax increases to expire, and improve transparency in financial planning.
Recommendations related to Budget Gimmicks
The state should restrain State Operating Funds (SOF) spending growth to 2 percent annually to bring spending trends in line with receipts and close forecast gaps.
The state should allow temporary tax increases to sunset as scheduled or earlier to improve New York’s competitiveness and reduce the costs of living and doing business.
The state should maintain or expand the Governor’s Rainy Day reserves plan by raising balance and deposit caps and automating future deposits.
The state should publish basic financial plan tables with the enacted budget to ensure New Yorkers understand the fiscal impacts of their leaders' choices.
The state should reform the State’s budgeting and fiscal management to improve services, stability, and accountability through standardized accounting and better debt management.
Key Data
$15 billion
— The projected structural deficit by fiscal year 2027 under the Governor's budget plan.
$20 billion
— The projected structural deficit by fiscal year 2027 if the Legislature's budget plans are enacted.
$23.8 billion
— The growth in State Operating Funds (SOF) from fiscal year 2020 to fiscal year 2023.
12.2%
— The increase in adjusted State Operating Funds (SOF) spending between fiscal years 2022 and 2023.
$14.9 billion
— The amount of nonrecurring resources the Fiscal Year 2024 Executive Budget relies on to balance the budget.
New York State's proposed fiscal year 2024 budget includes unnecessary and risky executive powers, such as unilateral spending and borrowing authorities, that bypass legislative input and comptroller oversight. To ensure fiscal responsibility, the legislature should reject these provisions, including multi-billion dollar emergency appropriations and transfers that lack clear definitions or competitive bidding requirements.
Recommendations related to Budget Gimmicks
The Legislature should reject universal appropriation transfer and interchange authority within the State Operations bill.
The Legislature should reject authority to issue up to $3 billion in revenue anticipation notes.
The Legislature should reject authority to utilize a $2 billion line of credit.
The Legislature should reduce the “Special Emergency Appropriation” from $2 billion to $1 billion.
The Legislature should reject the $6 billion “Special Public Health Emergency Appropriation.”
The Legislature should reject a $1 billion transfer from the General Fund to the “Health Care Transformation Account” unless its uses are more clearly defined in appropriations with oversight.
The Legislature should reject provisions added to other appropriations that remove competitive bidding requirements and the Comptroller’s oversight.
Key Data
$3 billion
— Authority to issue revenue anticipation notes that should be rejected.
$2 billion
— Authority to utilize a line of credit that should be rejected.
$2 billion
— Current amount of the 'Special Emergency Appropriation' that should be reduced to $1 billion.
$6 billion
— Amount of the 'Special Public Health Emergency Appropriation' that should be rejected.
$1 billion
— Proposed transfer from the General Fund to the 'Health Care Transformation Account' that should be rejected unless uses are clearly defined.
New York State should reform its budget process by increasing transparency and accountability, specifically by providing financial plan tables and fiscal impact statements for all bills. Additionally, the state must eliminate the use of messages of necessity to rush votes, limit extraordinary budget powers, and increase oversight funding for public authorities.
Recommendations related to Budget Gimmicks
The state should include basic financial plan tables with one-house budgets and the enacted budget to ensure the public understands the implications of budget proposals.
Legislators should include complete fiscal impact statements with all relevant bills to ensure that the costs of non-budget legislation are transparent.
The state should avoid using messages of necessity for budget bills, which currently bypass the three-day aging process and prevent adequate review.
The state should further increase funding to the Authorities Budget Office to provide a level of oversight commensurate with its responsibilities.
The state should exclude excessive budget powers and appropriations, such as lump sum appropriations, to prevent unilateral spending and maintain transparency.
Legislative committees should hold a joint legislative hearing on the budget process to examine strategies for long-term improvement.
Key Data
600
— Number of public authorities overseen by the Authorities Budget Office.
$273 billion
— Amount of public debt held by public authorities.
$80 billion
— Annual spending of public authorities overseen by the Authorities Budget Office.
$5 million
— Annual funding estimated to be required for the Authorities Budget Office to fulfill its responsibilities.
$2.1 million
— Previous annual funding level for the Authorities Budget Office.
$2.9 million
— Increased annual funding level for the Authorities Budget Office.
The New York State Legislature passed 20 bills that increase public employee benefits and costs outside the standard budget process, often without proper fiscal oversight. These measures, which include pension, disability, and death benefit expansions, should be vetoed to prevent further fiscal strain and ensure adherence to the established budget process.
Recommendations related to Budget Gimmicks
The Governor should veto the 20 bills that enhance benefits and increase costs to New York State and local governments outside of the budget process.
The Governor should veto the five bills that lack complete fiscal notes, as this is a sufficient basis for rejection regardless of other grounds.
Key Data
20
— Number of bills passed by the Legislature that enhance benefits and increase costs outside of the budget process.
$78.6 million
— Immediate costs estimated for 15 of the bills with fiscal notes attached.
$21.0 million
— Annual costs estimated for 15 of the bills with fiscal notes attached.
5
— Number of bills that lack fiscal notes, despite having a fiscal impact.
12
— Number of benefit sweeteners passed by the Legislature in 2018.
New York State's fiscal outlook has weakened due to reduced tax receipt forecasts, leading to projected budget gaps that grow to $6.2 billion by fiscal year 2027. To address this fragility and the reliance on non-recurring resources, the State must prioritize building reserves and reducing recurring spending in high-growth areas like Medicaid and school aid.
Recommendations related to Budget Gimmicks
The State should build reserves to prepare for future economic downturns.
The State should vigilantly restrain spending growth to address widening budget gaps.
The State should identify and implement long-run cost savings to improve fiscal stability.
The State should seek to reduce recurring spending, particularly in high-growth areas like Medicaid and school aid.
Key Data
$6.2 billion
— Projected budget gap by fiscal year 2027.
$15.4 billion
— Amount the State plans to deposit into reserves over four years.
$893 million
— Estimated State cost for New Yorkers remaining enrolled in Medicaid due to the public health emergency.
$801 million
— Enhanced federal Medicaid funding received for the next quarter.
$2.1 billion
— Increase in tax receipts in fiscal year 2023 based on collections to date.
$1.9 billion
— Downward re-estimate of tax receipts in fiscal year 2024.
The New York State fiscal year 2023 budget agreement adds billions in recurring spending without restraining growth elsewhere, creating future fiscal risks. Furthermore, the process relies on 'messages of necessity' to bypass public review and continues ineffective, poorly targeted programs like the gas tax holiday and film tax credits.
Recommendations related to Budget Gimmicks
The State should be bringing spending growth in line with long-run receipts to protect New Yorkers from future emergencies and to ensure last year’s tax increases expire on time or early.
The reported set aside of reserves equal to 15 percent of State operating funds is important, substantial, and welcome; these funds all should be deposited in a locked Rainy Day Fund.
A comprehensive, public performance management system to improve quality, efficiency, and accountability in New York is long overdue.
The extension of the film tax credit continues an expensive program that does not provide commensurate value for New Yorkers and should be phased out and ultimately eliminated.
The State should standardize how a job is defined in economic development programs and enlarge the Database to cover all economic development programs, not just those of ESD.
Key Data
15 percent
— The reported set aside of reserves equal to 15 percent of State operating funds.
$40 billion
— Recent recessions prior to 2020 on average reduce expected receipts by more than $40 billion over three years.
$10 billion
— The recurring spending reportedly added is on top of the Governor’s proposed $10 billion increase.
The state legislature is urged to reject or amend executive budget proposals that grant broad, unilateral spending and borrowing powers without proper oversight. These measures, originally enacted during the pandemic, are no longer necessary and create significant fiscal risk by allowing the executive to re-program funds without legislative input.
Recommendations related to Budget Gimmicks
The Legislature should reject the proposed $6 billion “Special Public Health Emergency Appropriation” to prevent unchecked spending.
The Legislature should reject the universal appropriation transfer and interchange authority within the State Operations bill, which allows for unlimited re-programming of funds.
The Legislature should reject the authority to issue up to $3 billion in revenue anticipation notes and the authority to utilize a $2 billion line of credit.
The Legislature should amend the $2 billion “Special Emergency Appropriation” to restore Comptroller procurement oversight and limit the amount to fiscal year 2020 levels.
The Legislature should amend the $2 billion appropriation for “Reserve For COVID-19 Public Health Response” to ensure funds are appropriated as clearly defined line items with oversight.
The Legislature should amend the transfer of $1 billion from the General Fund to the “Health Care Transformation Account” to ensure the spending is appropriated as clearly defined line items with oversight.
Key Data
$6 billion
— Proposed "Special Public Health Emergency Appropriation" that should be rejected.
$3 billion
— Proposed authority to issue revenue anticipation notes that should be rejected.
$2 billion
— Proposed authority to utilize a line of credit that should be rejected.
$2 billion
— Proposed "Special Emergency Appropriation" that should be amended to include Comptroller oversight.
$1 billion
— Pre-pandemic total of the "Special Emergency Appropriation" that should be the baseline for any continued funding.
$2 billion
— Proposed appropriation for "Reserve For COVID-19 Public Health Response" that should be amended to include defined line items.
New York State's budget process suffers from a lack of transparency and the use of fiscal gimmickry, such as shifting spending off-budget or delaying payments. To improve fiscal integrity, the state should adopt Generally Accepted Accounting Principles (GAAP) and provide more detailed financial plans when budgets are enacted.
Recommendations related to Budget Gimmicks
The State should produce a financial plan when the budget is enacted and ensure adequate time and information to evaluate proposals.
The Governor and Legislature should allow budget bills to age and should release basic financial plan information before and after the budget is enacted to improve transparency in budget negotiations.
The State should not obfuscate spending by shifting it off-budget or delaying payments, and should improve oversight by increasing funding to the Authorities Budget Office and restoring procurement powers of the Comptroller’s office.
The State should transition to budgeting and reporting in accordance with Generally Accepted Accounting Principles (GAAP), rather than using a cash basis for budgeting and reporting that leaves the door open to fiscal gimmickry.
Key Data
$3.5 billion
— Recurring program spending supported by federal aid in fiscal year 2025 that creates a fiscal cliff.
$15 billion
— Projected annual tax receipts shortfalls due to the pandemic as of last January.
$8.9 billion
— Projected increase in State Operating Funds spending in fiscal year 2022.
$3.2 billion
— Projected increase in State Operating Funds spending in fiscal year 2023.
New York State has frequently utilized accounting maneuvers, such as shifting spending off-budget and delaying payments, to obscure the true size of the budget and distort spending growth. These practices create a misleading fiscal picture and contribute to a $3.5 billion fiscal cliff as non-recurring federal aid is exhausted.
Recommendations related to Budget Gimmicks
The State should shift to budgeting and reporting using Generally Accepted Accounting Principles (GAAP) to improve transparency.
The State should present clear, timely financial reports that display the true level and growth of State spending.
The State should identify actions to reduce the existing out-year gaps, avoid the fiscal cliff, and bolster reserves needed to mitigate the inevitable next downturn.
The State should forego fiscal maneuvers that obscure the true size of the budget and distort spending increases.
The State should restrain new aid growth for wealthy districts as a means to meaningfully control spending and reduce future budget gaps.
Key Data
$3.5 billion
— The projected fiscal cliff, or gap between available funding and planned spending, in fiscal year 2025.
5.7 percent
— The decline in State Operating Funds spending in fiscal year 2021 after adjusting for fiscal maneuvers.
15.5 percent
— The projected increase in State Operating Funds spending in fiscal year 2022 after adjusting for fiscal maneuvers.
$4.5 billion
— The amount the State borrowed for short-term liquidity at the onset of the pandemic.
$1.7 billion
— The amount of Medicaid payments deferred from fiscal year 2019 into fiscal year 2020.
$12.7 billion
— The amount of American Rescue Plan federal fiscal relief received by the State in May 2021.
New York State's fiscal management suffers from a lack of transparency, including the use of budget gimmicks like moving revenue off-budget and delaying payments to artificially lower spending figures. To improve accountability and fiscal health, the state must adopt Generally Accepted Accounting Principles, publish financial reports on time, and shift recurring programs from temporary federal aid to stable state revenue sources.
Recommendations related to Budget Gimmicks
The state should move funds back on budget to improve fiscal management transparency.
The state should stop manipulating the timing of spending to avoid artificially making spending appear lower.
The state should budget and report using Generally Accepted Accounting Principles to ensure accurate financial representation.
The state should publish the financial plan when the budget is adopted and ensure other financial reports are released on time.
The state should shift priority recurring programs from federal to recurring state revenues over time to avoid future fiscal cliffs.
Key Data
$1.7 billion
— The amount of a state Medicaid payment that was delayed by three days to make spending appear lower.
$5 billion
— The amount of excess receipts collected above the budgeted amount this year, which should be used to build reserves.
$3.5 billion
— The amount of recurring programs currently supported by federal aid that will be in trouble when that funding runs out.
New York State has historically relied on accounting shifts, payment delays, and off-budget maneuvers to mask the true growth of State Operating Funds spending. To ensure long-term fiscal stability as federal aid is depleted, the state must move away from these temporary fixes and restructure its spending to be more sustainable.
Recommendations related to Budget Gimmicks
The State should use the next two years to restructure spending to be more sustainable to address future budget gaps.
Key Data
3.7 percent
— Average annual rate of SOF spending growth over the three years prior to the pandemic after adjusting for spending maneuvers.
$1.7 billion
— Medicaid payments deferred into fiscal year 2020, with a similar amount expected to be deferred to close out fiscal year 2021 and in perpetuity.
$8 billion
— Unspecified recurring spending reductions included in the fiscal year 2021 enacted budget to address projected revenue shortfalls.
$1.3 billion
— Estimated spending added in the current year if Executive Budget savings proposals are restored.
$3.2 billion
— Estimated spending added in fiscal year 2022 if Executive Budget savings proposals are restored.
$9 billion
— Additional SOF spending added by the Assembly plan in fiscal year 2022.
New York State faces significant budget gaps and should avoid relying on tax increases by instead restructuring capital financing and reducing unproductive economic development spending. By shifting capital projects to debt financing and reallocating school aid to high-need districts, the state can achieve necessary savings while maintaining fiscal stability.
Recommendations related to Budget Gimmicks
The State should focus its capital investments on the most critical projects during this period.
If the State reduces its planned capital disbursements by 10 percent and finances up to 50 percent of the remaining paygo capital spending with debt, it would save $1.6 billion in fiscal year 2022.
A 50 percent reduction in proposed economic development capital spending plus financing 50 percent of the remaining paygo spending with debt would yield another $713 million in fiscal year 2022.
The State should smooth the year-to-year fluctuations in aid to avoid a sudden drop-off.
The overall distribution approach should focus on directing aid to high need districts and reducing aid to wealthier districts.
Key Data
$1.6 billion
— Savings in fiscal year 2022 achieved by reducing planned capital disbursements by 10 percent and financing up to 50 percent of the remaining paygo capital spending with debt.
$713 million
— Additional yield in fiscal year 2022 from a 50 percent reduction in proposed economic development capital spending plus financing 50 percent of the remaining paygo spending with debt.
$2.3 billion
— Total budget savings in fiscal year 2022 from implementing alternative gap-closing strategies.
$1.6 billion
— Amount of State aid currently disbursed to high-income districts that already support a sound basic education without State funding.
$15 billion
— Level of federal aid requested by the Governor to offset the impact of the pandemic.
$6 billion
— Amount of additional unrestricted federal aid assumed in the Executive Budget.
New York State faces significant budget gaps and must avoid relying on fiscal gimmicks like shifting costs, using one-time revenue sources, or converting short-term debt into long-term obligations to balance the budget. Instead, the state should prioritize targeted spending reductions and realistic revenue projections to ensure long-term fiscal stability.
Recommendations related to Budget Gimmicks
The Executive Budget should present a plan to close the entire State budget gap if it does not receive federal aid.
The State should avoid balancing this year’s budget using cost shifts or revenue intercepts that harm local governments.
The State should not convert this short-term debt to long term debt, as borrowing to fund current operations would support unsustainable spending.
The Fiscal Year 2022 Executive Budget should increase use of debt to finance capital expenses and limit capital expenses to investments that are necessary to maintain critical infrastructure.
Spending reductions should be targeted to minimize impact rather than reduce all spending uniformly.
Key Data
$1.7 billion
— Amount of State Medicaid costs shifted from March 2019 into April 2019 to move the payment from fiscal year 2019 to fiscal year 2020.
$3.5 billion
— Amount of short-term debt the State reportedly plans to repay within this fiscal year, which it should not convert to long-term debt.
$2.6 billion
— Amount of payments to localities, school districts, nonprofits, and state vendors that the State had withheld as of the end of September.
$4.1 billion
— Amount of pay-as-you-go capital spending included in the Fiscal Year 2021 Enacted Budget.
$1.6 billion
— Amount of annual school aid going to wealthy districts that already spend enough local revenues to fund a sound basic education.
$200 million
— Amount of sales tax revenues intercepted from New York City in recent years to offset Medicaid expenses.
New York State faces a $58 billion budget gap over the next four years, necessitating difficult choices to balance the budget without relying on past fiscal maneuvers and accounting shifts. The state must implement a transparent plan that avoids obscuring spending growth, such as by reducing school aid to wealthy districts and eliminating unproductive economic development spending.
Recommendations related to Budget Gimmicks
The state must implement a timely, transparent plan that makes the hard choices needed to balance the budget without relying on fiscal maneuvers.
Policymakers should close the $8 billion gap by reducing school aid to wealthy districts, eliminating unproductive economic development spending, and walking back tax policy expenditures.
The state should finance capital projects with bond proceeds rather than on a pay-as-you-go basis to help manage the budget.
The budget plan should not rely on fiscal maneuvers and accounting shifts that have obscured spending growth and exacerbated budget pressures for three years running.
Key Data
$58 billion
— The total projected budget gap for the New York State budget over the next four years.
$8 billion
— The amount of unidentified State aid to localities reductions included in the gap-closing plan.
$1.7 billion
— The total amount of Medicaid payments deferred from fiscal year 2019 into fiscal year 2020.
$726 million
— The value of additional quarterly federal aid for Medicaid expected by the State.
$1 billion
— The amount of State agency spending reductions included in the gap-closing plan.
$650 million
— The portion of deferred Medicaid payments the State accelerated during fiscal year 2020.
CBC hosted a special panel discussion of prominent fiscal experts who helped New York overcome some of the most dire crises of the past. They provided insights and lessons from past experiences to help us understand and navigate the looming crisis. Stephen Berger Chairman, Odyssey Investment Partners; Former Executive Director,…
The proposed fiscal year 2021 budget includes several measures that would reduce transparency and oversight, such as allowing the transfer of funds without legislative approval and altering accounting classifications to mask actual spending. These changes, along with modifications to prevailing wage requirements and procurement processes, threaten to increase project costs and limit public accountability during a time of fiscal uncertainty.
Recommendations related to Budget Gimmicks
Lawmakers should reject the proposal to allow the State Budget Director to transfer certain appropriations to another department, agency, or public authority without legislative approval.
The state should reject the proposal to allow the State Division of Budget to determine whether a reimbursement or refund to the State is considered revenue or a reduction of expenses, as this obscures actual spending.
Lawmakers should oppose the expansion of prevailing wage requirements to publicly subsidized construction projects, as it increases costs and makes projects financially infeasible.
The state should reject the proposal to extend design-build authority to additional State agencies with provisions that undermine the benefits of design-build, such as subjecting them to Wicks Law requirements.
Lawmakers should reject the proposal to eliminate competitive bidding for certain Metropolitan Transportation Authority (MTA) procurement activities, as it decreases competition and transparency.
Key Data
13 to 25 percent
— The range by which prevailing wage mandates increase construction costs on public projects.
$1 billion
— The existing appropriation available for transfer by the governor to meet unanticipated emergencies.
30 percent
— The minimum level of public funding for construction projects that would trigger the proposed prevailing wage requirement expansion.
$3 million
— The project cost threshold in New York City for applying Wicks Law requirements to design-build projects.
$1.5 million
— The project cost threshold outside of New York City for applying Wicks Law requirements to design-build projects.
5
— The number of days for bid solicitation proposed for the MTA, reduced from 15 business days.
The Medicaid Redesign Team's proposals fall short of the $2.5 billion savings target, leaving a deficit of $851 million and failing to address the lack of transparency in the Medicaid Global Cap. This omission leaves the budget vulnerable to fiscal gimmicks, such as the $1.7 billion payment delay from March 2019, which obscure the true state of Medicaid spending.
Recommendations related to Budget Gimmicks
The State should implement needed improvements to transparency and the Global Cap’s accounting and design to prevent fiscal gimmicks.
The State should publicly provide critical data regularly, including spending data for all Medicaid agencies and unit costs of services, to improve transparency.
The Executive and Legislature should commit to making fiscal and statutory details available promptly to ensure transparency.
The final negotiated budget should include fundamental fixes to the Medicaid program that ensure reforms meet fiscal goals while minimizing negative impacts.
Key Data
$2.5 billion
— The savings target for Medicaid in fiscal year 2021.
$851 million
— The amount by which the Medicaid Redesign Team's proposals fall short of the savings target.
$1.7 billion
— The value of a payment delay in March 2019 that went unreported due to a lack of transparency.
$890 million
— The amount of recurring savings taken in fiscal year 2020 used to close the budget shortfall.
$1.6 billion
— The total savings identified in the Medicaid Redesign Team's proposals.
$1 billion
— The amount of funding provided to hospitals serving predominantly Medicaid and uninsured patients through the Indigent Care Pool.
Proposed changes in the Executive Budget to expand 'refunds of appropriation' and authorize the transfer of funding between agencies would obscure state spending and undermine legislative oversight. These measures conflict with generally accepted accounting principles and the Comptroller's constitutional authority to monitor state revenues and expenditures.
Recommendations related to Budget Gimmicks
The state should reject the measure in the Executive Budget which broadens so-called refunds of appropriation, as this would make actual spending for particular appropriations less clear.
The state should reject the proposal that would authorize the Director of the Division of the Budget to transfer funding from state operations to any department, agency, or public authority, as this allows the Executive to effectively override a legislatively approved funding allocation.
Key Data
100
— Number of appropriations throughout the State Operations appropriation bill that contain language authorizing the Director of the Division of the Budget to transfer funding.
New York State's budget relies on various accounting maneuvers, such as shifting disbursements and reclassifying expenses, to artificially lower reported spending growth. These practices undermine transparency and obscure the true scale of state spending, which has exceeded the 2 percent benchmark in recent years.
Key Data
$2.5 billion
— Amount of unspecified Medicaid savings required for the fiscal year 2021 budget to hold spending growth below 2 percent.
$6.2 billion
— Amount the fiscal year 2021 budget would be lower if spending growth had been held to 2 percent annually since fiscal year 2017.
$4.5 billion
— Total decrease in reported State Operating Funds spending in fiscal year 2020 due to accounting shifts and reclassifications.
$1.9 billion
— Reduction in reported State Operating Funds spending in fiscal year 2021 due to shifting Metropolitan Transportation Authority taxes off-budget.
$1.5 billion
— Reduction in State Operating Funds spending resulting from the reclassification of School Tax Relief benefits from an expense to a personal income tax credit.
$4.6 billion
— Total decrease in fiscal year 2021 State Operating Funds spending resulting from accounting shifts and reclassifications.
New York State faces a significant fiscal imbalance, with an actual four-year budget gap of $28.8 billion that is obscured by $6.7 billion in unspecified savings and the unsound practice of delaying $2.2 billion in Medicaid payments. To address this, the state must prioritize restraining spending, specifically by reforming Medicaid and education aid, rather than relying on temporary revenue increases or accounting maneuvers.
Recommendations related to Budget Gimmicks
Reconstitute the Medicaid Redesign Team to identify savings, specifically to address high long-term care costs and reform supplemental payments, rather than relying on unsound fiscal practices like delaying Medicaid bill payments.
The Executive and Legislature should exercise powers granted under the Medicaid global cap to prevent Medicaid spending from exceeding budgeted amounts in future periods.
Focus education aid on needy districts to fund fully a sound basic education rather than overspending.
Reduce unproductive economic development program spending to bring spending in line with revenues.
Consider reforms to retiree health benefits to significantly reduce post-employment benefit costs and future liabilities.
Key Data
$28.8 billion
— The actual four-year budget gap facing the state.
$6.7 billion
— The amount of savings included in the budget that are not yet specified.
$2.2 billion
— The amount of the budget 'solved' by permanently delaying annual Medicaid bill payments.
$12.5 billion
— The amount of previously unbudgeted Medicaid spending contributing to the total four-year state budget gap.
$1.6 billion
— The amount of state school aid provided to wealthy districts that already have sufficient local resources.
$4.4 billion
— The amount spent annually on economic development programs with little evidence of results.
New York State's fiscal plan addresses a growing Medicaid-driven budget gap through payment deferrals and delays in presenting savings plans, which are criticized as ineffective gimmicks. To resolve the structural deficit, the state should look beyond Medicaid and evaluate other areas of spending, such as school aid and economic development programs.
Recommendations related to Budget Gimmicks
The State should develop and implement a plan to solve the entire budget problem by considering other portions of the budget, rather than focusing solely on the Medicaid program.
The State should address the budget gap by reviewing mistargeted school aid and unproductive economic development programs instead of relying on gimmicks.
The State should avoid making permanent payment deferrals that simply perpetuate papering over structural budget problems.
Key Data
$4 billion
— Unbudgeted Medicaid spending added to the financial plan in fiscal year 2020.
$3 billion to $4 billion
— Unbudgeted Medicaid spending added to the financial plan annually after fiscal year 2020.
$14.5 billion
— The increase in the four-year budget gap resulting from recognizing unbudgeted Medicaid spending.
$2 billion
— The amount of a permanent payment deferral used to address the Medicaid-driven budget gap.
New York State uses accounting maneuvers like shifting expenses off-budget, prepaying debt, and reclassifying items to make it appear that spending growth is lower than it actually is. These practices obscure the true rate of spending growth, which is significantly higher than the reported figures when adjusted for these accounting shifts.
Key Data
$4.7 billion
— amount being shifted out of fiscal year 2020 State Operating Funds spending.
$1.4 billion
— reduction in reported State Operating Funds spending in fiscal year 2019 due to shifting the Metropolitan Commuter Transportation Mobility Tax off-budget.
$1.5 billion
— amount of debt prepayments shifted into the prior year for fiscal year 2020.
$1.24 billion
— amount by which State Operating Funds spending appears lower due to the reclassification of School Tax Relief benefits.
4.9 percent
— actual State Operating Funds spending growth in fiscal year 2020 after adjusting for accounting maneuvers.
$292 million
— amount of other taxes and fees collected on behalf of the Metropolitan Transportation Authority shifted off-budget in fiscal year 2020.
New York State's reported 1.9 percent spending growth for fiscal year 2020 masks an actual 3.4 percent increase due to various accounting maneuvers like shifting items off-budget and reclassifying expenses. These practices undermine transparency and make it difficult to accurately compare year-to-year spending, as the state continues to exceed its self-imposed 2 percent growth cap.
Recommendations related to Budget Gimmicks
As the Legislature considers the budget and its wish list, it should be mindful that spending growth is already larger than it appears.
Key Data
3.4%
— Actual State Operating Funds spending growth in fiscal year 2020.
$4.1 billion
— Amount of spending shifted out of fiscal year 2020 State Operating Funds.
$2.5 billion
— Amount of spending shifted out of fiscal year 2019 State Operating Funds.
1.9%
— Reported State Operating Funds spending growth in fiscal year 2020.
$106,154 million
— Actual State Operating Funds spending in fiscal year 2020.
$102,011 million
— Reported State Operating Funds spending in fiscal year 2020.
The FY 2020 New York State Executive Budget utilizes reclassifications and cost shifts to mask a 3.1 percent growth in operating funds spending, while failing to adequately build reserves for economic downturns. Despite some positive steps like congestion pricing, the budget extends the millionaire's tax and increases spending without sufficient restraint or targeted aid for high-need school districts.
Recommendations related to Budget Gimmicks
The best way to address potential risks is to build reserves, control spending, and make changes as needed in the budget process.
Additional reforms to program design and transparency are necessary to ensure accountability to taxpayers, including a unified economic development budget, standardized metrics, and improved program design.
The new reporting and restored oversight should be established by statute to ensure that both continue under future administrations and that needed data are reported.
Key Data
3.1 percent
— State operating funds spending growth after accounting for reclassifications and cost shifts.
1.9 percent
— Reported State operating funds spending growth.
$2.3 billion
— The State’s rainy day fund balance, which falls far short of reserves needed to withstand an economic recession.
New York State has repeatedly bypassed its self-imposed 2 percent spending growth cap by utilizing accounting shifts, reclassifications, and prepayments rather than actual fiscal restraint. These budgetary maneuvers artificially lower reported State Operating Funds spending, masking the true growth of expenditures while undermining transparency in the state's financial planning.
Key Data
$3.1 billion
— Amount shifted out of fiscal year 2019 State Operating Funds spending.
$3.107 billion
— Total decrease in fiscal year 2019 State Operating Funds spending resulting from various shifts and reclassifications.
$862 million
— Reduction in State Operating Funds spending in fiscal year 2019 achieved by reclassifying School Tax Relief (STAR) benefits.
4.5 percent
— Actual increase in the budget from fiscal year 2018 after adjusting for spending shifts, despite claims of complying with a 2 percent growth cap.
The New York State Fiscal Year 2019 budget relies on short-term measures like settlement funds and health insurance revenue to close budget gaps rather than implementing structural spending reforms. Additionally, the budget expands spending on school aid and economic development without necessary accountability measures or targeted adjustments, while extending wasteful property tax relief credits.
Recommendations related to Budget Gimmicks
The State should prioritize restraint in and reform of spending commitments instead of closing the budget gap using short-term measures like settlement funds and revenue from health insurance companies.
The State should make substantial adjustments to school aid to better target dollars to high-need school districts.
The State should implement a "database of deals" or other actions to improve the transparency, accountability, or efficacy of economic development investments.
State officials should work to design and adopt an Unincorporated Business Tax for pass-through entities during the Legislative Session.
Key Data
$1 billion
— Growth in school aid.
$600 million
— Growth in economic development spending.
$1.3 billion
— Annual cost of property tax relief credits.
$418 million
— City of New York contribution for the Subway Action Plan.
$1 billion
— Unplanned tax increase eliminated by decoupling from the federal tax code.
The state's proposal to fund recurring Medicaid expenses using speculative, one-time proceeds from nonprofit-to-for-profit health insurer conversions is fiscally imprudent and creates future budget gaps. Instead of relying on these irregular and finite revenues for ongoing operations, the state should prioritize using such funds for reserves, debt repayment, or one-time capital investments.
Recommendations related to Budget Gimmicks
The State Financial Plan should not rely on speculative conversion proceeds to balance the budget.
The State should not use nonrecurring resources to pay for ongoing activities like the Medicaid program.
Any proceeds earned by the State should be used to bolster reserves or fund one-time costs.
The State should use nonrecurring resources to repay debt or support capital investments.
Key Data
$4.6 billion
— Total revenue generated for the State from the Empire conversion between fiscal year 2006 and fiscal year 2010.
$3.75 billion
— Publicized price for the acquisition of nonprofit insurer Fidelis by for-profit Centene.
$95 million
— Actual revenue received by the State from conversion proceeds between fiscal year 2009 and fiscal year 2012, despite a projection of $2.4 billion.
$500 million
— Annual amount of conversion proceeds the Governor proposes to use to help pay for the Medicaid program.
$250 million
— Annual amount of conversion proceeds the Governor proposes to put into a reserve to offset future federal cuts.
$1.2 billion
— Amount projected in the fiscal year 2005 enacted budget to be received from the Empire conversion, which did not materialize as expected.
New York State's fiscal year 2019 executive budget claims to limit spending growth to 1.9 percent, but this figure is artificially suppressed by accounting shifts and reclassifications that mask a true growth rate of 4.1 percent. These budgetary maneuvers, including moving expenditures off-budget and prepaying debt, obscure the actual rate of state spending and mislead the public regarding fiscal policy.
Recommendations related to Budget Gimmicks
If a shift in accounting methodology is warranted to more appropriately record an item of expense, an adjustment should be made when calculating spending growth to enable the Legislature and the public to accurately assess changes from the prior year.
Legislators considering the FY2019 Executive Budget should be mindful that spending growth is twice as much as advertised due to accounting shifts.
Key Data
4.1 percent
— Adjusted FY2019 Executive Budget increase in State Operating Funds (SOF) spending.
1.9 percent
— Claimed spending growth in State Operating Funds (SOF) in the FY2019 Executive Budget.
$2.8 billion
— Amount being shifted out of fiscal year 2019 State Operating Funds (SOF) spending.
The New York State Executive Budget for Fiscal Year 2019 relies on short-term fixes and speculative revenues to close budget gaps rather than addressing long-term structural spending issues. These fiscal strategies include shifting liabilities to future years, utilizing one-time resources, and proposing excessive spending on economic development initiatives without proven success.
Recommendations related to Budget Gimmicks
The Governor and Legislature need to adopt significant reforms to the State's economic development program to address excessive spending on initiatives lacking tangible success.
The State should be conservative in its budget forecasts and include spending constraints instead of deferring difficult choices.
The State should avoid deferring business tax credits that shift liabilities out of the current fiscal year and create larger budget gaps in the future.
Key Data
$3 billion
— Revenue attributed to non-profit health insurers converting to for-profit status, which is speculative.
$82 million
— Liability shifted out of fiscal year 2019 through the deferral of business tax credits.
$2 billion
— Potential operating budget shortfall if health insurance conversion revenue assumptions are not met.
$500 million
— Threshold for state tax revenue falling short of expectations that would trigger cuts to local aid.
New York State faces a significant budget gap between $4.4 billion and $6.3 billion, raising concerns about the potential reliance on one-time revenues and spending shifts to balance the fiscal plan. Policymakers are urged to avoid these budgetary gimmicks and instead focus on structural reforms to address long-term financial challenges.
Recommendations related to Budget Gimmicks
The Governor should recognize that the time has come to end the poor use of state funds regarding Property Tax Relief rebates.
The Governor should propose a spending plan that adheres to the 2 percent growth cap.
The Governor should partner with organized labor to achieve savings during difficult financial times.
The Governor should propose substantive changes to the $17 billion Foundation Aid formula to direct limited resources to the highest needs districts.
The Governor should propose economic development reforms, including an end to project specific appropriations and the creation of a 'database of deals'.
Key Data
$4.4 billion and $6.3 billion
— The reported budget gap before accounting for potential federal policy changes.
$1.2 billion
— The projected cost of Property Tax Relief rebates in state fiscal year 2019.
$1.6 billion
— The amount surpluses were expected to exceed in fiscal year 2019 when rebates were adopted in 2015.
$236 million
— The reduction in State revenues projected from income tax cuts in fiscal year 2018.
$1.1 billion
— The reduction in State revenues projected from income tax cuts in fiscal year 2019.
$98 million
— The forecasted surplus in fiscal year 2019 when tax cuts were adopted.
New York State's reported 2 percent spending growth for fiscal year 2018 is misleading, as accounting adjustments and timing shifts reveal an actual growth rate of 3.7 percent. To maintain transparency, the state should adjust its spending growth calculations to account for these shifts rather than obscuring the true rate of expenditure.
Recommendations related to Budget Gimmicks
If a shift in accounting methodology is warranted to more properly reflect spending, then an adjustment should be made when calculating spending growth to avoid giving the impression that total expenditures have decreased when they have not.
The Governor should not undermine transparency in order to make his significant accomplishments fit an artificial spending growth cap.
The fairest portrayal of spending growth should be utilized by adjusting for payment timing differences and accounting changes.
Key Data
3.7%
— The actual growth in State Operating Funds spending for fiscal year 2018 after accounting for adjustments.
2.0%
— The reported growth in State Operating Funds spending for fiscal year 2018.
$100,200
— The actual State Operating Funds spending in fiscal year 2018 in millions.
$96,666
— The actual State Operating Funds spending in fiscal year 2017 in millions.
$1.4 Billion
— The amount shifted out of State Operating Funds spending in fiscal year 2018.
$830 Million
— The amount excluded from State Operating Funds spending in fiscal year 2018 due to the School Tax Relief (STAR) program changes.
The New York State FY2018 adopted budget utilizes fiscal gimmicks like reclassifying expenses to mask spending growth that exceeds the Governor's 2% cap. Furthermore, the budget allocates billions in capital funds to ad hoc projects without meaningful planning or performance standards, while failing to reform education funding to prioritize high-need districts.
Recommendations related to Budget Gimmicks
The state should reform education funding to avoid increasing the billions allocated to wealthy districts while underfunding high-need, low-wealth districts.
The state should require meaningful disclosure or performance standards for economic development spending.
The state should allocate capital funds through a meaningful planning process rather than dedicating funds to ad hoc projects and questionable investments.
The state should extend design-build authorization to New York City and State government to yield considerable savings.
Key Data
$25.8 billion
— Education Aid, the second largest item in the budget.
4.4%
— Growth rate of Education Aid, which exceeds the statutory cap.
3.9%
— Statutory cap for Education Aid growth.
2%
— Governor's aspirational growth cap for state operating spending.
New York State's fiscal plan for 2018 uses four accounting maneuvers totaling $1.2 billion to artificially keep spending growth under a self-imposed 2 percent cap. These actions, which include shifting workforce costs and delaying repayments, obscure the true growth rate of 3.2 percent and undermine budget transparency.
Key Data
$1.2 billion
— Total value of the four fiscal gimmicks included in the Executive Budget proposal.
3.2 percent
— Actual projected growth of State Operating Funds spending in fiscal year 2018 absent the use of fiscal gimmicks.
1.9 percent
— Reported growth of State Operating Funds spending in the Executive Budget for Fiscal Year 2018.
$96.2 billion
— Total State Operating Funds spending in fiscal year 2017.
$500 million
— Annual savings proposed to be achieved by Executive agencies without identified measures.
$277 million
— Amount of State Operating Funds spending 'saved' by converting New York City STAR benefits to a Personal Income Tax credit.
The New York State Fiscal Year 2018 Executive Budget utilizes accounting maneuvers to artificially maintain a spending growth rate below 2 percent, including shifting $227 million in state employee salaries to the capital budget. These practices, such as converting School Tax Relief benefits into personal income tax credits to hide $277 million in costs, obscure the true state of government finances and impair transparency.
Key Data
$277 million
— Cost of School Tax Relief (STAR) benefits converted to personal income tax credits to keep operating funds spending below a 2 percent growth rate.
$227 million
— Amount of state employee salaries shifted from the state operating budget to the capital budget to artificially lower operating spending.
2 percent
— The growth rate threshold for state operating funds that the budget uses gimmicks to stay below.
The Governor's proposed fiscal year 2016-2017 budget faces scrutiny regarding the use of budget gimmicks, such as lump sum appropriations, and the allocation of significant funds like the $5.4 billion in windfall bank settlements. Key areas of concern include the distribution of school aid, the transparency of infrastructure spending, and the expiration of $1.2 billion in tax rebates.
Key Data
$5.4 billion
— Windfall bank settlements received by the state last year.
$2.2 billion
— Additional funds available for state officials to allocate.
$4 billion
— Increase in state funding for school districts over the last four years.
$8.3 billion
— Pledged funding for the Metropolitan Transportation Authority’s capital plan.
$1.2 billion
— Amount designated for the Family Tax Relief Credit and the Property Tax Freeze Rebate.
New York State continues to rely on pension fund borrowing, known as amortization, to balance its budget despite having access to significant unexpected revenue from bank settlements. This practice creates long-term fiscal risks and costs, including hundreds of millions in interest payments, while weakening the overall health of the state's pension funds.
Recommendations related to Budget Gimmicks
The State should end the practice of borrowing from pension funds, not extend it, and use available bank settlement funds to reduce the outstanding liability from $2.5 billion in past borrowings.
The State’s first commitment should be to do no more harm and reverse the planned $713 million pension borrowing for this year and the proposed $395 million deferral next year.
A portion of the State’s $5.4 billion windfall from bank settlements should be allocated to early repayment of prior-year amortizations.
Ending the pension borrowing and reducing the State’s liability will avert further risk to New York’s ability to fully fund its pension obligations and provide needed services in the event of a future recession.
Key Data
$5.4 billion
— Unexpected revenue from bank settlements that could be used to reduce pension liabilities.
$1.8 billion
— Amount the Executive Budget proposes to borrow from public employee pension funds in coming years.
$713 million
— Amount the State will defer in pension payments during the current fiscal year.
$780 million
— Total interest costs expected under the Executive Budget proposal for pension deferrals.
$1.6 billion
— Projected reduction in total pension fund assets by fiscal year 2030 due to deferrals.
$2.5 billion
— Outstanding liability from past pension borrowings.
New York State's financial plans rely on "savings plugs" to project surpluses that mask significant underlying budget gaps, which are expected to reach $4 billion by fiscal year 2018. To achieve actual fiscal balance, the state must move beyond aspirational accounting and implement concrete spending reductions across all agencies before committing to new programs.
Recommendations related to Budget Gimmicks
Making the surpluses a reality will require planning and hard work as agencies and state-funded programs are tasked with bringing spending growth down.
Savings in every area should be under consideration before new commitments are made.
Key Data
$1.8 billion
— The projected budget gap for fiscal year 2016 if spending continues as planned.
$4.0 billion
— The projected budget gap for fiscal year 2018 if spending continues as planned.
$2.1 billion
— The amount of spending growth reduction required in fiscal year 2016 to close the budget gap and produce a surplus.
$3.6 billion
— The amount of spending growth reduction required in fiscal year 2017 to close the budget gap.
$5.5 billion
— The amount of spending growth reduction required in fiscal year 2018 to close the budget gap.
7.5 percent
— The projected increase for school aid in the next fiscal year.
New York State has relied on accounting tricks and unspecified future savings to adhere to its self-imposed 2 percent spending cap, masking the true extent of projected budget gaps. To maintain fiscal integrity, the state must abandon these gimmicks in favor of a transparent financial plan that addresses baseline gaps through concrete, structural reforms rather than temporary adjustments.
Recommendations related to Budget Gimmicks
The State faces budget gaps that will need to be closed with concrete savings plans.
Baseline reductions in school aid could be achieved if resources were better targeted to the neediest districts and overly rich reimbursement formulas were reformed.
State officials should return to a straightforward and transparent financial plan that shows the baseline budget gaps resulting from the actions taken in this year’s budget.
Key Data
$2.1 billion
— Amount of unspecified future savings plugged into the fiscal year 2016 budget.
$4.9 billion
— Amount of unspecified future savings plugged into the fiscal year 2018 budget.
$1.8 billion
— Lower bound of the state budget gap by fiscal year 2018.
$3.4 billion
— Upper bound of the state budget gap by fiscal year 2018.
42 percent
— Portion of the state operating fund budget comprised by school aid and Medicaid.
$7.6 billion
— Amount of new bond authorizations included in the adopted budget that will increase debt service costs.
The fiscal year 2015 New York State budget increased school aid by $1.1 billion, surpassing the statutory cap linked to personal income growth of 3.1 percent. This budget included $429 million in unallocated funds, such as $42 million in "bullet aid" distributed to specific districts, which bypasses standard allocation processes.
Key Data
$1.1 billion
— Increase in school aid for school year 2014-15.
3.1 percent
— Statutory cap linked to personal income growth.
$42 million
— So-called "bullet aid" to be distributed to specific districts at a later date.
$21.8 billion
— Total aid in school year 2014-15.
$1.6 billion
— Total increase in school aid including unallocated aid.
The fiscal year 2014 budget relies on back-loaded spending commitments and temporary revenue sources, including a $1.75 billion accounting shift for workers' compensation, to cover new costs. These practices reverse recent fiscal progress by creating future budget gaps and relying on one-time financial maneuvers rather than sustainable structural changes.
Key Data
$1.75 billion
— Cash infusion provided by a shift in the accounting method for financing workers’ compensation.
$6.0 billion
— Projected budget gap for fiscal year 2017 if new ways to pay for added spending and tax breaks were not implemented.
$1.8 billion
— Added annual commitments by the final year of the financial plan.
$1.5 billion
— Projected budget gap increase in fiscal year 2015 due to increased spending.
$677 million
— New business tax breaks committed to over three years.
$410 million
— Estimated annual cost of personal income tax rebates for families earning between $40,000 and $300,000.
The proposal to allow local governments to pay a 'fixed rate' for pension contributions is a risky strategy that effectively underfunds pension obligations and shifts costs to the future. This approach undermines the state's history of fully funding its pension systems and fails to provide meaningful, long-term fiscal relief to localities.
Recommendations related to Budget Gimmicks
The Citizens Budget Commission recommends you reject the Governor's proposal to allow local governments to opt into a 'fixed rate' contribution plan to fund their public employee pension obligations.
New York should maintain its historic practice of fully funding its pension obligations on an annual basis.
Local governments should avoid additional underfunding options for pension costs, as they are not advisable.
Key Data
12 percent
— Pension payment rate for members of the Employees’ Retirement System under the proposed fixed rate plan.
12.5 percent
— Pension payment rate for members of the Teachers’ Retirement System under the proposed fixed rate plan.
18.5 percent
— Pension payment rate for members of the Police and Fire Retirement System under the proposed fixed rate plan.
94 percent
— The portion of pension liabilities covered by assets in New York in 2010.
7.5 percent
— The assumed rate of return for pension investments.
6.4 percent
— The ten-year earnings average for pension investments.
The fiscal year 2012-13 New York State budget is praised for its modest spending growth and limited reliance on one-time fiscal gimmicks, though it still contains some misguided measures. While the budget avoids new major gimmicks, it continues to utilize existing ones like deferred tax credits and amortized pension contributions, and includes new 'AIM spin-up' practices that artificially inflate revenue for certain municipalities.
Recommendations related to Budget Gimmicks
Performance metrics and evaluative analysis should be systematically employed to identify failing economic development programs for elimination or redesign before new programs are grafted onto an already fragmented governance structure.
Instead of being subjected to additional parochial constraints, the economic development power programs should be completely overhauled.
The State should avoid authorizing fiscal gimmicks like AIM spin-ups, which only push problems down the road.
Key Data
$970 million
— Amount of deferred business tax credits, a fiscal gimmick authorized before the current administration.
$782 million
— Amount of amortized pension contributions, a fiscal gimmick authorized before the current administration.
$7.85 million
— Amount of the AIM spin-up payment for the City of Albany, which increases revenue in fiscal year 2013 but decreases it in fiscal year 2033.
$6 billion
— Total annual spending on economic development in New York State, including capital grants, tax breaks, and direct subsidies.
New York State should address its remaining budget gap by implementing structural reforms to control pension, school aid, and Medicaid costs rather than relying on temporary revenue measures. To achieve long-term fiscal stability, the state must eliminate fiscal gimmicks like tax credit deferrals and pension payment amortization while avoiding new economic development spending.
Recommendations related to Budget Gimmicks
The Governor and Legislature should end the deferral of $970 million in business tax credits and the amortization of a $782 million payment to the pension system to stop masking the State’s structural deficit.
The State should take a hiatus from one-shot revenues such as sweeps from dedicated revenue funds and mandatory contributions from public authorities.
State leaders should focus on repurposing existing economic development funding to preserve scarce resources rather than continuing to award new grants.
Key Data
$3.2 billion
— Estimated budget gap in New York State’s fiscal year 2012-13 budget.
$1.9 billion
— Additional annual revenues provided by the overhaul of New York’s tax code.
$1.5 billion
— Portion of new revenue dedicated to closing the budget gap.
$400 million
— Portion of new revenue dedicated to new commitments.
$970 million
— Amount of business tax credits deferred as a fiscal gimmick.
$782 million
— Amount of pension system payment amortized as a fiscal gimmick.
New York City utilizes multiple accounting standards to define a balanced budget, often relying on unique rules that mask significant deficits by classifying operating expenses as capital investments. Adopting more comprehensive accounting standards, such as those that account for retiree health benefits and asset depreciation, reveals that the city's financial condition is far less stable than traditional General Fund reporting suggests.
Recommendations related to Budget Gimmicks
New York City should not have its own unique set of accounting rules, a version that allows what the rest of the world views as an operating expense to be labeled a capital investment and paid for with borrowed funds that our children will repay.
New Yorkers should be giving much more attention to the financial results disclosed under the new GAAP rules.
Municipal leaders should move from the current self-deluding standard for a balanced budget to a more meaningful one.
Key Data
$5 million
— The reported surplus in the City's General Fund for fiscal year 2011.
$282 million
— The deficit the City would have faced in fiscal year 2011 if GAAP were strictly applied.
$9.6 billion
— The deficit reported in fiscal year 2011 under the new GAAP standard.
$287 million
— The amount of remediation expenses funded with borrowed money in fiscal year 2011.
$53.3 billion
— The added expense recognized in fiscal year 2006 when the accumulated liability for retiree health insurance was first reported.
$11.7 billion
— The amount of red ink reported in fiscal year 2010 under the new GAAP standard.
New York State should avoid using temporary, unpredictable revenue surpluses for new spending or tax cuts, as the likelihood of a true surplus is low and existing fiscal challenges remain. Instead, any unexpected funds should be prioritized to address the state's $2 billion in current fiscal gimmicks and the projected $2.4 billion budget gap for the upcoming year.
Recommendations related to Budget Gimmicks
Talk of a surplus and using it for new initiatives should end immediately.
New York should reduce reliance on existing gimmicks, particularly ones that add to long-term costs.
Any surprise surplus should be used in ways that help lower the gap (like paying down debt or reversing deferrals), not in ways that make the gap grow.
The Governor and the Legislature should view any unexpected revenues as a temporary blessing and keep the lid on the piggy bank sealed shut.
Key Data
$2 billion
— Amount of undesirable fiscal gimmicks in the current-year budget.
$970 million
— Deferral of business tax credits used as a fiscal gimmick.
$635 million
— Amortization of a payment to the pension system used as a fiscal gimmick.
$200 million
— Revenues intercepted from the MTA to contribute to general state spending.
$150 million
— Contribution requested from public authorities to general state spending.
$2.4 billion
— Budget gap projected for the start of the next fiscal year.
New York State's recent budget includes limited gimmickry, but relies on over $1 billion in unspecified savings and includes a dangerous provision allowing school districts to borrow for pension payments. To ensure long-term fiscal stability, the state must prioritize serious pension reform and identify sustainable funding sources for the MTA and transportation infrastructure.
Recommendations related to Budget Gimmicks
The bill giving school districts the right to borrow to fund pension payments should be destined for a prompt veto as it is a dangerous practice that undermines the property tax cap.
The more than $1 billion in unspecified savings in the adopted budget need to be achieved, or the state will be faced with a serious mid-year budget deficit.
Serious pension reform, important to the fiscal stability of New York City as well as the state, should become a top priority.
It is time to figure out how to fund the pressing capital needs of the MTA and the rest of the State's transportation infrastructure.
Key Data
$1 billion
— Amount of unspecified savings in the adopted budget that must be achieved to avoid a serious mid-year budget deficit.
$2,500
— Monthly rent threshold for luxury destabilization, which slows the pace of decontrol.
2%
— Annual limit on property tax growth for local governments and school districts.
New York's proposal to defer pension contributions by "stretching" payments creates a $5.8 billion long-term liability to achieve short-term budgetary relief. This fiscal gimmick mirrors practices in other states that have led to significant debt, while simultaneously adding to future costs by enhancing public employee benefits.
Recommendations related to Budget Gimmicks
New York's political leaders should avoid the pension stretch proposal as it represents a slippery slope toward long-term fiscal instability.
Efforts to please labor unions with 'sweeteners' to public employee fringe benefits should be foresworn.
State leaders should develop more aggressive plans to provide permanent, long run savings rather than relying on short-term budgetary gimmicks.
Key Data
$5.8 billion
— The estimated long-term cost to repay the loan created by the pension contribution deferral.
$4.5 billion
— The cumulative reduction in pension fund contributions over the six-year period of the stretch proposal.
$1.5 billion
— The amount in fewer total assets the State pension funds will have by fiscal year 2025-26 under the amortization plan.
$217 million
— The amount the State's required pension fund contribution would be lowered by in fiscal year 2010-11.
$856 million
— The reduction in pension fund contributions in fiscal year 2013-14.
The 2010-11 New York State budget proposal avoids common fiscal gimmicks by limiting reliance on one-shot revenue measures and accurately labeling tax increases rather than mischaracterizing them as spending cuts. By eschewing assumptions of continued federal stimulus aid or extended temporary income tax surcharges, the plan offers a more transparent approach to addressing the state's $6.7 billion budget deficit.
Recommendations related to Budget Gimmicks
The Legislature should seize the opportunity to move the State's finances toward structural balance by embracing the Governor's proposal for real and recurring spending reductions.
The State should limit reliance on nonrecurring gap-closing measures to ensure long-term fiscal health.
Policymakers should properly identify revenue raising initiatives rather than mischaracterizing them as spending reductions.
The State should avoid papering over future problems by assuming continued increased levels of federal aid or extended temporary tax surcharges.
The State must address unsustainable growth in school aid and Medicaid spending to close the budget gap.
Key Data
$6.7 billion
— The size of the budget hole in the 2010-11 fiscal year.
$565 million
— The amount of one-shots used in the executive budget to close the budget gap.
$1.8 billion
— The amount of actions in the previous year's budget labeled as spending reductions that were actually revenue items.
$5.2 billion
— The amount of the $11.5 billion budget gap financed with one-shot borrowed funds from the tobacco settlement in fiscal year 2003-04.
$216 million
— The proposed increase in gross receipts taxes on health care institutions.
New York City's budget relies on one-shot measures, such as a $395 million drawdown from a retiree health insurance trust fund, and assumes $500 million in future labor union concessions to close a $4.1 billion gap. Instead of using additional tax revenue to avoid necessary fiscal discipline, the city should prioritize structural cost-cutting and recognize mandated expenses like $200 million in pollution-remediation costs.
Recommendations related to Budget Gimmicks
The city should avoid one-shot measures, such as the $395 million drawdown from a retiree health insurance trust fund.
The city must not let additional tax revenue be an excuse to avoid needed cost-cutting.
The budget should recognize mandated items such as the $200 million in new pollution-remediation operating expenses previously capitalized.
The city should avoid relying on assumed future concessions from labor unions, such as the $500 million included in the mayor's plan.
Key Data
$4.1 billion
— The currently projected budget gap for New York City.
$395 million
— The amount of the drawdown from a retiree health insurance trust fund, which is a one-shot measure that should be avoided.
$200 million
— The amount of new pollution-remediation operating expenses previously capitalized that the budget fails to recognize as mandated items.
$500 million
— The amount of future concessions from labor unions assumed in the mayor's plan.
The state's Deficit Reduction Program relies heavily on non-recurring items, with 59% of the $3.2 Billion current-year deficit covered by such measures, an increase from the 40% originally proposed. While the creation of a new pension tier marks a positive fiscal step, the inclusion of permanent protections for retiree health insurance benefits for teachers limits local school districts' ability to control costs.
Recommendations related to Budget Gimmicks
The Legislature must refrain from the past practice of passing various 'sweetener' bills that raise costs.
The Governor and all future Governors will need to stand firm against other employee groups that will demand the same benefits as the teachers' unions.
Key Data
$2.8 Billion
— Total value of the Deficit Reduction Program package.
$400 Million
— Amount by which the Deficit Reduction Program package fell short of the Governor’s proposed target.
$3.2 Billion
— Total current-year deficit.
40%
— Portion of the current-year deficit covered by non-recurring items in the Governor's earlier proposal.
59%
— Portion of the current-year deficit covered by non-recurring items in the final Deficit Reduction Program package.
The Governor's deficit reduction plan relies heavily on short-term budget gimmicks, increasing the use of one-shot revenue sources like federal stimulus funds to 52 percent of the $3.2 billion deficit closure. Instead of implementing recurring spending reductions, the plan delays necessary reforms in nursing home rates and school aid, while failing to address long-term employee compensation costs that are projected to rise by 23 percent.
Recommendations related to Budget Gimmicks
The State must reduce spending in meaningful ways that have recurring value to avoid a slash and burn assault on services in 24 months.
The Legislature should add a new pension tier to provide significant long-term local budget relief.
The State should implement nursing home rate reform rather than postponing planned changes in favor of a quick budget plug.
The State should prioritize school aid cuts based on ability to pay rather than applying a flat rate across all districts.
The State should reduce reliance on one-shots and short-run patches to support spending at unsustainable levels.
Key Data
$3.2 billion
— The total deficit to be closed this year.
52 percent
— The new percentage of one-shots used to close the deficit.
$19.5 billion
— The expected budget gap for fiscal year 2012-13.
$45 million
— The expected State savings from the Medicaid gross receipts tax measure.
1.58 percent
— The flat rate cut applied to school district aid allocations.
23 percent
— The expected increase in employee compensation over the next three years.
New York State's public employee pension costs are rising rapidly, with employers projected to increase annual contributions by nearly 60 percent starting in 2011. To address this funding crisis without resorting to borrowing from the future, the state should maintain full funding requirements and implement a less costly pension tier rather than deferring payments.
Recommendations related to Budget Gimmicks
New York’s full funding requirements should not be changed.
The Legislature must curb the tendency to enrich benefits.
The Legislature must immediately enact a new, less costly pension tier.
The slippery slope of pension borrowing should be avoided.
Key Data
60 percent
— Projected increase in annual contributions public employers in New York State will have to pay to meet pension obligations starting in 2011.
ten years
— Duration over which the proposed legislation would have allowed state and local governments to stretch pension payments.
New York faces significant budget gaps, reaching $14.0 billion in fiscal year 2009-10 and projected to hit $18.7 billion in the third year of the financial plan. To address these shortfalls, the state must avoid relying on fiscal gimmicks and one-time revenue measures, such as raiding public authorities, and instead pursue structural spending reforms.
Recommendations related to Budget Gimmicks
Fiscal gimmicks and one-shots in the plan should be eliminated with $1.5 billion.
Don’t raid public authorities or rely on other one-shots.
The deficit reduction program adopted several weeks ago contains about $200 million in one-shots; they should be reversed.
The Governor’s Executive Budget proposes a transaction with the Battery Park City Authority that is a thinly disguised device that would allow the Authority to borrow $500 million so that the State can take half of it to cover operating costs, which should be avoided.
Key Data
$1.5 billion
— Amount of fiscal gimmicks and one-shots that should be eliminated from the financial plan.
$200 million
— Amount of one-shots contained in the deficit reduction program that should be reversed.
$500 million
— Amount the Battery Park City Authority would borrow in a transaction that allows the State to take half for operating costs.
$14.0 billion
— Revised budget gap for fiscal year 2009-10.
New York State's budget process suffers from systemic issues including a lack of transparency, reliance on "back-door" borrowing, and the manipulation of the General Fund to obscure spending. These practices, alongside the misuse of "messages of necessity" and lump-sum appropriations, undermine fiscal accountability and prevent meaningful legislative deliberation.
Recommendations related to Budget Gimmicks
The current requirement that the General Fund budget be balanced on a cash basis at the time of adoption should be strengthened by expanding the scope of covered fiscal activity to a wider range of governmental funds or the Statement of Activities for primary government.
A more meaningful debt limit should be established that is constitutional rather than statutory to prevent legislative circumvention.
The state should combine the SRDF and the TSRF and subject the combined fund to constitutional constraints to enhance the capacity for preparing for a rainy day.
The Legislature should establish budget committees with jurisdiction over appropriation bills to expand the role of members beyond the majority leadership.
To reduce and make more accountable spending on member items, the state should not allow appropriations for any specific private entity and establish more competitive procedures for determining who receives grants.
Key Data
$11.2 billion
— Amount of long-term borrowing authorized by the State since 1991 to help support operating expenses.
$39.4 billion
— Amount of 'back-door' debt outstanding as of the end of fiscal year 2007, representing 92 percent of all State-supported debt.
$200 million
— Annual appropriation for the Community Projects Fund in recent years.
$4.7 billion
— Total spending for the STAR program in fiscal year 2008.
$2.1 billion
— Total spending for HCRA programs in fiscal year 2008.
New York State faces a recurring fiscal crisis characterized by structural deficits and a reliance on short-term borrowing and "off-budget" entities to mask financial instability. To achieve long-term stability, the state must abandon these gimmicks, adopt Generally Accepted Accounting Principles (GAAP) for budgeting, and implement a multi-year plan that aligns expenditures with recurring revenues.
Recommendations related to Budget Gimmicks
The State should be required to balance its budget based on Generally Accepted Accounting Principles (GAAP) in order to prevent the accumulation of a deficit.
The Division of Budget should be required to prepare a four-year financial plan with quarterly updates to replace the current two-year plan.
All off-budget accounts should be brought on budget to eliminate the use of entities that mask looming financial difficulties.
New York State should levy a temporary tax surcharge that would be phased out over three years instead of relying on long-term borrowing for operating expenses.
The State should pursue a long-run effort to lower total Medicaid costs and finance them more from statewide sources rather than shifting burdens to localities.
Key Data
$4.4 billion
— The deficit incurred by the State in the fiscal year that ended March 31, 2002.
$9.3 billion
— The gap identified in the Executive Budget to be closed in fiscal year 2003-04.
$4.7 billion
— The amount borrowed by the Local Government Assistance Corporation (LGAC) over three years to finance an accumulated deficit.
$7.4 billion
— The total cost of repaying the LGAC bonds over thirty years.
$2.9 billion
— The projected general fund deficit for fiscal year 2004-05.
$4.4 billion
— The projected general fund deficit for fiscal year 2005-06.
New York City's reliance on borrowing, asset sales, and other one-time fiscal maneuvers to balance its budget creates long-term financial burdens that unfairly shift costs to future taxpayers. To ensure fiscal stability, the city must prioritize structural expenditure reductions and revenue enhancements rather than continuing to use temporary, harmful budget gimmicks.
Recommendations related to Budget Gimmicks
The City should eschew borrowing and other budget gimmicks when balancing the budget to avoid imposing large, unjustifiable costs on future generations.
The City should focus on implementing expenditure reductions and revenue enhancements with recurring value rather than borrowing to close budget gaps.
Asset sales should be reinvested in new capital projects or used to pay off outstanding debt rather than being used as one-time support for operating expenses.
The City should develop a long-run strategy for limiting expenditures in addition to its historical focus on short-run measures for the current year.
The City must change the structure of its property tax to prevent tax increases from being borne disproportionately by commercial property and driving away jobs.
Key Data
$598 million
— Amount the City borrowed in fiscal year 2001-02 to pay for operating expenses.
$2 billion
— Amount the City is borrowing in the current fiscal year to meet operating expenses.
8 percent
— Interest expense added to deferred pension contributions that the City will have to pay in later years.
$1.5 billion
— Amount of Transitional Finance Authority Bonds included in the current fiscal year's borrowing to meet operating expenses.
$250 million
— Amount drawn from the Municipal Assistance Corporation in the current fiscal year to meet operating expenses.
$277 million
— Amount of a loan from municipal employee pension funds in the current fiscal year to meet operating expenses.
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