The New York State budget process encompasses the annual development, negotiation, and enactment of the state’s multi-billion dollar financial plan, which dictates spending priorities and revenue collection for the upcoming fiscal year. This page covers CBC’s work on structural budget gaps, spending growth and restraint, government transparency and procurement oversight, school aid reform, and the management of state reserves.
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..
The State should add energy rebate funds to recessionary reserves rather than spreading them thinly across New Yorkers.
The State should stop increasing school aid to shrinking districts as it is unwise and unfair given other needs.
The State should relieve the City from the Class-Size Reduction Mandate to help stabilize the budget.
The City should be much more ambitious in its effort to reduce inefficient spending to stabilize the budget.
The State should stabilize the budget by reducing inefficient spending rather than enacting a pied-a-terre tax or raising other taxes.
Key Data
In June 2026, the State published its Enacted Budget Financial Plan two weeks after the budget was enacted, which is an improvement over the usual 30 days but still fails to provide a clear picture of spending when decisions are made.
In March 2026, executive proposals sought to raise the threshold for Comptroller review of state contracts from $50,000 to $300,000 (a 500% increase), which would have left $1 billion in taxpayer money without independent scrutiny.
In March 2026, the Authorities Budget Office operated with just 17 full-time employees to oversee close to 600 state and local authorities holding $333.1 billion in public debt.
In April 2025, the CBC noted that New York has developed a culture over the past two decades where major policy changes are hashed out in the budget process, giving spending decisions short shrift.
New York's $277 billion state budget includes a 9.1% spending increase that drives a structural budget gap of nearly $18 billion, while failing to adequately strengthen reserves. Despite policy successes in housing and insurance, the state continues to prioritize short-term political spending, such as $1 billion in rebate checks and $700 million in school aid despite declining enrollment.
Recommendations related to State Budget Process
Albany must bring the same discipline and resolve to the state’s finances by strengthening reserves, controlling spending growth, and ensuring that today’s commitments do not become tomorrow’s crises.
The state should combine support with clear expectations for efficiency and reform when providing aid to New York City.
Albany must control spending growth to ensure that today’s commitments do not become tomorrow’s crises.
The state should prioritize long-term stability over short-term political appeal when making budget decisions.
The state should eliminate wasteful spending, such as increasing school aid when enrollment declines.
Key Data
$277 billion
— Total size of the New York state budget.
9.1%
— The rate at which state spending increased this year.
$18 billion
— The structural budget gap facing the state.
$1 billion
— Cost of broadly distributed rebate checks.
$700 million
— Amount wasted by increasing school aid despite declining enrollment.
$547 million
— Cost of enhancing pension benefits.
New York's Fiscal Year 2027 budget totals $277.0 billion, with adjusted operating funds spending reaching $174.1 billion, a 9.7 percent increase. The state's failure to stabilize its fiscal future has resulted in a structural budget gap of nearly $18.0 billion, threatening future service levels.
Recommendations related to State Budget Process
The Governor should release basic fiscal plan tables alongside the enacted budget to ensure transparency and help lawmakers make smart, future-looking decisions.
Key Data
$277.0 billion
— Total New York State budget for fiscal year 2027.
$174.1 billion
— Adjusted State Operating Funds spending for fiscal year 2027.
9.7 percent
— Increase in Adjusted State Operating Funds spending.
$40.6 billion
— Amount by which State spending has grown higher than inflation over the past decade.
$14.7 billion
— Projected budget gap for fiscal year 2030.
The New York State fiscal year 2027 enacted budget increases operating funds spending by at least 8 percent and leaves a structural gap exceeding $17 billion, while failing to publish basic financial plan tables for public review. Although the budget includes positive reforms for housing and auto insurance, it misses the opportunity to bolster rainy day reserves and relies on questionable spending choices like energy rebates and pension benefit increases.
Recommendations related to State Budget Process
The State should publish basic financial plan tables with the budget agreement so New Yorkers do not have to wait to learn how their money is being spent.
The State should continue to resist calls to increase personal income and corporate taxes next year.
The State should build feasible targets into a market-driven cap-and-invest program to cost effectively reduce emissions.
The State should avoid increasing school aid to districts with shrinking enrollment, which wastes funds and undermines funding fairness.
The State should add to the Rainy Day Reserves to shore up the State's fiscal foundation.
Key Data
$17 billion
— The structural gap left by the budget.
8 percent
— The minimum increase in State Operating Funds spending.
$30 billion
— The amount by which decade-long spending growth exceeds inflation.
$1 billion
— The amount spent on energy rebates across millions of households.
$700 million
— The amount wasted annually on school aid to districts with shrinking enrollment.
$547 million
— The cost of increasing Tier 6 pension benefits.
Sherif Soliman has more than 30 years of experience in government and currently serves as Budget Director of the New York City Mayor’s Office of Management and Budget. In this role, he oversees the city’s fiscal policy, including the development of the expense and capital budgets, the city’s bond and…
The New York State budget agreement for fiscal year 2027 increases spending by $5 billion above the executive proposal, creating potential long-term fiscal risks and budget gaps. While the agreement includes positive policy reforms like SEQR changes and auto insurance adjustments, it relies on unsustainable funding and fails to adequately bolster recessionary reserves.
Recommendations related to State Budget Process
The State should add energy rebate funds to recessionary reserves rather than spreading them thinly across New Yorkers.
The State should stop increasing school aid to shrinking districts as it is unwise and unfair given other needs.
The State should relieve the City from the Class-Size Reduction Mandate to help stabilize the budget.
The City should be much more ambitious in its effort to reduce inefficient spending to stabilize the budget.
The State should stabilize the budget by reducing inefficient spending rather than enacting a pied-a-terre tax or raising other taxes.
Key Data
$5 billion
— The amount added above the Executive proposal for fiscal year 2027, which likely grows future budget gaps.
$1 billion
— The amount allocated for energy rebate checks that would be better used for recessionary reserves.
$268 billion
— The total amount the State plans to spend in the upcoming budget.
21 is the number of days late the State budget was when this episode was recorded. Policy negotiations are proving difficult to resolve, with high-stakes debates continuing over the Governor’s proposals to overhaul auto insurance, reform environmental review for housing construction, and advance the State’s climate agenda. This week, WTDP…
For the seventh consecutive year, the New York State budget has missed its deadline, leaving the legislature on recess during a critical period. State leaders are urged to prioritize a fiscally responsible budget that curbs spending growth, maintains tax discipline, and incorporates policy reforms like streamlining SEQRA and recalibrating the CLCPA.
Recommendations related to State Budget Process
State leaders should focus on enacting a smart, future-proofing budget that focuses on affordability and program quality, curbs ballooning spending growth, and holds the line on New York’s nation-leading taxes.
The State should adopt the smart choices the Governor proposed to streamline SEQRA and reduce auto insurance costs.
The State should recalibrate the CLCPA.
Lawmakers should be on the job and enact a budget.
Key Data
7th
— The number of consecutive years the New York State budget has been late.
New York's state budget is late for the fifth consecutive year, raising concerns about short-term decision-making and fiscal stability. To ensure long-term health, the state must curb spending growth, protect reserves, and avoid unnecessary tax or pension increases.
Recommendations related to State Budget Process
The State should hold the line on spending, ensuring any additional expenditures are offset by savings elsewhere.
Lawmakers should hold the line on taxes, as New York State and its local governments already collect the most taxes per person in the country.
The State should reject costly, unnecessary Tier 6 pension enhancements that may drive property tax increases or service cuts.
The State should bolster and protect reserves, as current levels are less than half of what is needed to withstand the low-end impact of a recession.
The State should help New York City smartly by relieving the class size mandate, which would save the City $1.2 billion.
Key Data
$30 billion
— Amount by which spending has increased more than inflation in the last decade.
$5 billion
— Amount the Legislature proposes to add to the budget next year.
$3 billion
— Amount the Legislature proposes to add to the budget annually thereafter.
$12.8 billion
— Size of the Executive Budget's projected fiscal gaps in fiscal year 2030.
$14 billion
— Current amount in principle reserves, which is less than half of the projected low-end impact of a recession.
$1.2 billion
— Potential savings for New York City if the state relieves the class size mandate.
Proposed state budget changes threaten to erode government transparency by limiting the Comptroller’s pre-audit authority and exempting billions of dollars in contracts from competitive bidding requirements. Maintaining independent oversight and rigorous procurement standards is essential to preventing corruption and ensuring the integrity of public spending.
Recommendations related to State Budget Process
State lawmakers and the Governor should maintain the Comptroller’s current authority to review state contracts before they are executed.
The State should ensure contracts are competitively bid to the maximum extent.
The Assembly and Senate should stand firm in their rejection of budget changes that would result in $3 billion in unreviewed contracts.
The Governor and Legislature should strive to ensure the integrity of government contracting rather than undermining it through limiting the Comptroller’s powers.
Key Data
$3 billion
— Value of Executive budget proposals rejected by the Legislature that would have eroded the Comptroller’s pre-audit authority.
$1 billion
— Amount of taxpayer money that would go into vendors’ pockets without scrutiny due to the proposed increase in contract review thresholds.
$2 billion
— Amount of unexamined funds created by the proposal to eliminate Comptroller pre-audit review for purchases from centralized contracts.
$2.76 billion
— Total value of contracts the Executive Budget proposes to exempt from the competitive bidding process in 36 instances.
$2.8 billion
— Value of contracts that would continue to be or be newly bid uncompetitively under the proposed budgets.
New York State's fiscal year 2027 budget faces a $20 billion structural imbalance despite strong revenue growth, necessitating spending restraint to avoid future fiscal crises. The state should prioritize fiscal stability by limiting spending growth, rejecting unnecessary tax increases, and better targeting aid for schools and childcare.
Recommendations related to State Budget Process
Reduce SOF spending growth to 2.6 percent per year to close the structural budget gap by fiscal year 2030.
Hold the City accountable for developing a fiscally sustainable transition plan that includes greater savings, more transparency, and stronger reserves policy, in exchange for more aid.
Eliminate hold harmless and minimum increase provisions in school aid formulas.
Reject all benefit sweeteners including enhancements to Tier 6.
Reject proposed personal income, corporate income, unincorporated business, pass-through entity, and real property transfer tax increases.
Enact the Governor’s proposed SEQRA reforms and include the broader set of housing projects identified in the Senate one-house bill.
Identify reforms to rein in Medicaid spending growth, with a focus on home care and long-term care.
Make additional deposits to the Rainy Day Reserve.
Publish basic financial plan tables with the enacted budget.
Reject economic development spending unless it has proven effective, including the NYC Musical and Theatrical Production Tax Credit.
Key Data
$12.8 billion
— Reported out-year budget gap in fiscal year 2030.
$20 billion
— Structural budget gap after adjusting for temporary tax increases and pre-payments.
$171.1 billion
— State Operating Funds (SOF) spending, adjusted for prepayments.
$262.7 billion
— Total All Funds spending.
$589 million
— Cost of minimum increases in school aid in fiscal year 2027.
$2.9 billion
— Estimated pot of State education aid provided to districts that can self-fund a sound basic education.
Proposed enhancements to Tier 6 pension benefits threaten to cost the State, local governments, and school districts billions of dollars annually, potentially driving property tax increases or requiring service cuts. These changes would bypass the State's property tax levy cap through specific exemptions, further destabilizing the budgets of local governments and public authorities.
Recommendations related to State Budget Process
New York State should not enhance Tier 6 pension benefits.
State leaders should disclose the costs and funding sources before considering spending billions of dollars of New Yorkers’ money on pension enhancements.
Key Data
$438 million
— Annual cost to State and local governments for Tier 6 enhancements enacted in 2022 and 2024.
$700 million
— Annual cost estimate for just one of the additional proposed changes to reduce progressive employee contributions.
2 percentage points
— Threshold for pension contribution rate growth that triggers an exemption to the State’s property tax levy cap.
Advocacy groups are calling for the state to increase funding for the Authorities Budget Office to $5.13 million to ensure the successful modernization of the Public Authorities Reporting Information System. This additional support is necessary to help the office, which currently operates with only 17 staff members, effectively oversee nearly 600 authorities holding $333.1 billion in public debt.
Recommendations related to State Budget Process
The state should adopt a budget that appropriates $5.13 million for the Authorities Budget Office, matching the Assembly’s one-house budget proposal.
The enacted budget should appropriate $5.13 million for the Authorities Budget Office to ensure that the modernization of the Public Authorities Reporting Information System is executed properly and that the office can fulfill its mission.
Key Data
$5.13 million
— Proposed budget appropriation for the Authorities Budget Office.
$6 million
— Amount allocated in the Capital Projects budget for the modernization of the Public Authorities Reporting Information System.
$2.05 million
— Authorities Budget Office funding level in fiscal year 2022.
$3.83 million
— Authorities Budget Office funding level in fiscal year 2026.
30
— Originally-envisioned number of full-time staff for the Authorities Budget Office.
17
— Current number of full-time employees at the Authorities Budget Office.
New York State officials are urged to publish basic, multi-year financial plan tables alongside one-house budget proposals and the enacted budget to ensure transparency. Currently, the delayed release of detailed fiscal information prevents legislators and the public from fully understanding the long-term fiscal impact of budget decisions at the time of voting.
Recommendations related to State Budget Process
The state should publish at least one financial plan table each for All Funds, State Operating Funds, and the General Fund whenever new budget bills are introduced.
Each of the three requested financial plan tables should provide reasonably disaggregated and totaled lists of receipts, disbursements, transfers, annual bottom-line results, and allocations of fund balances for the budget year and three out-years.
The state should codify in State law the requirement to publish these financial plan tables to ensure transparency.
Key Data
30 days
— The amount of time after budget enactment that the Division of the Budget’s Enacted Budget Financial Plan is currently released.
400-page
— The length of the full financial plan report that the coalition is not suggesting be produced at the time of budget agreement.
New York faces a $20 billion structural budget gap and should prioritize fiscal stability by spending less than the executive proposal and avoiding tax hikes. Instead of issuing rebate checks, the state should preserve resources to hedge against economic uncertainty and potential federal funding cuts.
Recommendations related to State Budget Process
The State should spend less, not more, than the executive budget proposed to address the structural budget gap.
The State must ensure its own fiscal stability, and any one-time aid to the City should serve as a bridge with the condition that the City is accountable for bringing spending in line with its current revenue base.
Both houses of the Legislature should publish basic multi-year budget tables to show New Yorkers the implications of their proposals.
The State should reform New York’s auto insurance laws to rationalize the system and save residents and businesses money.
Rather than sending rebate checks to New Yorkers who may not need them, the State should be saving these resources as a hedge against the looming risks of economic uncertainty and federal cuts.
Key Data
$20 billion
— The size of the State's structural budget gap.
$2 billion
— The amount New York residents and businesses could save annually through auto insurance reform.
78 percent
— The amount by which New York State and its localities collect more taxes per capita than the national average.
$500
— The rebate check amount proposed by the Assembly for households earning below $150,000.
$200
— The savings per vehicle that a 10 percent reduction in insurance premiums would provide.
$263 billion is the size of the FY27 State budget proposed by Governor Hochul. With strong tax receipts, the State has enough to close next year's gap and put a dent in future gaps, plus fund universal childcare. But risks abound, including a structural budget gap and federal changes to…
The Fiscal Year 2027 Executive Budget includes provisions that would grant the Executive broad control over appropriations and borrowing while weakening the State Comptroller's oversight of contracts. To restore necessary checks and balances, the Legislature is urged to reject these extraordinary powers, including specific spending transfers and increased thresholds for contract reviews.
Recommendations related to State Budget Process
The Legislature should reject universal appropriation transfer and interchange authority included in the State Operations bill.
The Legislature should reject language that exempts individual appropriations from competitive bidding requirements and Comptroller pre-audit oversight.
The Legislature should reject the $1 billion transfer from the General Fund to the “Health Care Transformation Account,” unless its uses are defined in appropriations.
The Legislature should reduce the “Special Emergency Appropriation” from $2 billion to $1 billion, its level prior to the pandemic.
The Legislature should reject the permanent executive authority to issue revenue anticipation notes totaling $3 billion annually.
The Legislature should reject the proposal to increase the threshold for Comptroller review of State contracts from $50,000 to $300,000 and eliminate Comptroller pre-approval of centralized contracts purchase orders that exceed $200,000.
Key Data
$1 billion
— The proposed transfer from the General Fund to the “Health Care Transformation Account” that should be rejected unless uses are defined.
$2 billion
— The current level of the “Special Emergency Appropriation” that should be reduced.
$1 billion
— The recommended level for the “Special Emergency Appropriation” to return to pre-pandemic levels.
$3 billion
— The total amount of revenue anticipation notes the Executive seeks permanent authority to issue annually.
$50,000
— The current threshold for Comptroller review of State contracts.
$300,000
— The proposed increased threshold for Comptroller review of State contracts.
Blake G. Washington is the Budget Director for the State of New York, appointed by Governor Kathy Hochul. Mr. Washington is responsible for the development and management of the New York State budget and leads a team of public servants to administer the fiscal duties of the state, including economic…
New York State's Fiscal Year 2027 Executive Budget faces a structural gap exceeding $15.0 billion, driven by State Operating Funds spending growth of $8.6 billion. To ensure fiscal stability, the state should prioritize core programs, avoid new unaffordable spending, and reduce expenditures on wasteful economic development and aid to wealthy school districts.
Recommendations related to State Budget Process
The State should target programs to those in need and fund them by scaling back less impactful spending, including wasteful economic development programs and school aid to shrinking and wealthy districts.
The State should add to the recessionary reserves and not use the reserves to offset recurring federal cuts.
The State should take additional steps to restrain growth in CDPAP and long-term care.
The Governor and Legislature should make the smart choices—holding the line on taxes, prioritizing core programs, and not adding unaffordable spending.
Key Data
$15.0 billion
— Structural gap driven by the Fiscal Year 2027 Executive Budget.
$8.6 billion
— Growth in State Operating Funds spending.
17.44 percent
— Tax rate on business activity in New York City.
$5.1 billion
— Total spent on economic development in fiscal year 2025.
$2.6 billion
— Education aid directed to districts that self-fund a sound basic education in school year 2026.
$469 million
— Hold harmless funds for Foundation Aid to districts with declining enrollment.
1,039,069 is the number of kids under the age of five in New York who could ultimately qualify for free or subsidized childcare under the Hochul/Mamdani plan. How should the State and City design a flexible program that meets the needs of diverse families? How should it be phased? What…
The State of the State address introduces various policy proposals without accompanying price tags, necessitating a careful approach to future fiscal planning. To avoid a future fiscal reckoning, the state must prioritize sustainable funding for new programs and address the massive structural budget gap.
Recommendations related to State Budget Process
The Governor should target new programs to those in greatest need, fund them sustainably, and stabilize New York’s precarious future finances.
The State should choose forward-looking actions so it does not self-inflict a fiscal reckoning requiring future cuts to services New Yorkers need.
The State should hold the line on taxes to continue to bolster New York’s competitiveness.
New York faces a $20 billion structural budget gap and must avoid increasing taxes or unsustainable spending to prevent a future fiscal crisis. Instead, the state should prioritize high-impact programs by reallocating funds from ineffective initiatives and bolstering rainy day reserves to ensure long-term economic competitiveness.
Recommendations related to State Budget Process
State leaders should hold the line on taxes, as higher taxes risk dislocation and are unnecessary.
The state must deliver services that work by driving quality and efficiency with performance data, accountability, and targeted programs.
Albany should refocus the Future of Health Care Commission on improving quality and controlling Medicaid costs by restraining exceptionally high spending on long-term and home care.
Policymakers should stop protecting sacred cows like school aid, including ending aid increases to districts with declining enrollment to save $500 million annually.
The state should redirect $2.5 billion in state aid provided to wealthy districts that already self-fund a sound basic education.
Albany should curb the $5 billion in economic development tax breaks and programs that fail to deliver results.
State leaders must protect and build Rainy Day reserves, which are currently insufficient to weather a recession.
Key Data
$20 billion
— The state already faces a massive structural budget gap.
$8 billion
— Albany likely has this amount at its disposal for the next budget from strong tax revenues, lower spending, and a transaction risk budget cushion.
$4 billion
— The state could use this amount to close next year’s budget gap.
$4 billion
— The state could use this amount to mount additional child care, housing, and other programs.
$6.5 billion
— Spending is already slated to grow by this amount.
$9 billion
— State operating funds spending grew by this amount per year since FY2020.
New York State faces a structural budget gap of $20 billion annually, with the fiscal year 2026 All Funds budget exceeding $258 billion. To ensure long-term fiscal stability, the state must reform school aid allocations, address high Medicaid spending, and improve budget transparency and capital planning processes.
Recommendations related to State Budget Process
Reforming school aid allocations to target funds based on district need and local wealth.
Reforming Medicaid—New York State’s per-capita spending is the nation’s highest and nearly 80 percent greater than the national average—with an eye toward rapidly increasing long-term and home-care costs.
Phasing out ineffective economic development subsidies, such as the film tax and theatrical tax credits that a State study found have low return on investment.
Improve budget transparency and accountability by publishing basic financial plan tables with the enacted budget, shifting to a modified accrual basis for balancing the budget, and enshrining the State’s debt cap in the Constitution.
Prioritize state of good repair work on existing capital assets before using funds for expansion projects.
Key Data
$258 billion
— The fiscal year 2026 All Funds budget exceeds this amount.
$20 billion
— The annual structural budget gap where recurring spending exceeds recurring receipts.
$2.6 billion
— The amount of school aid currently provided to wealthy school districts that fund a sound basic education locally.
80 percent
— The amount by which New York State’s per-capita Medicaid spending exceeds the national average.
12 percent
— The decline in public school enrollment since 2021.
The proposed legislation A2747A/S2536A would mandate prevailing wages for off-site construction components, significantly increasing the costs of state and locally funded capital projects. By forcing these projects to rely on more expensive on-site fabrication, the bill threatens to eliminate the time and cost savings currently achieved through efficient modular construction methods.
Recommendations related to State Budget Process
The Governor should veto A2747A/S2536A to allow the City and State to continue to use off-site custom fabrication without prevailing wages when it would reduce the time or cost of a capital project.
Key Data
20 percent to 50 percent
— Modular building can accelerate project delivery by this amount.
20 percent
— Modular building can reduce costs by up to this amount.
$1 million
— Cost per structure for prefabricated public restrooms.
$3.5 million
— Cost for the typical park bathroom built fully on-site.
30 percent
— Public subsidies threshold for projects classified as public works or covered projects.
New York's Draft State Energy Plan lacks the necessary fiscal transparency and detailed analysis required to effectively guide state policy, failing to adequately quantify costs, benefits, and economic impacts. The plan requires significant revisions to provide realistic estimates, evaluate the cost-effectiveness of existing programs, and clearly identify the financial and regulatory actions needed to achieve energy goals without compromising economic competitiveness.
Recommendations related to State Budget Process
The State should identify specific financial and regulatory actions that would drive the energy transition for each scenario.
The State should quantify the costs and how they would be allocated to State government, other public entities, businesses, and households.
The State should evaluate existing State programs to facilitate comparison and identify the most cost-effective tools.
The State should update the analyses to account for recent federal changes.
The State should include a timetable for regular reassessment and revision of the energy plan.
Key Data
30 percent
— The expiration of Production and Investment Tax Credits for clean energy, which can cover more than 30 percent of project costs, will make future projects significantly more expensive.
5 percent
— The Draft SEP quantifies its impact only on jobs in the energy sector, which comprise just 5 percent of the State’s jobs.
$146 per MWh
— The contractual strike price for offshore wind is $146 per MWh, which is higher than the plan's assumed cost.
$155 per MWh
— The contractual strike price for offshore wind is $155 per MWh, which is higher than the plan's assumed cost.
$125 per MWh
— The Draft SEP assumes an offshore wind cost of $125 per MWh in 2025, which is unrealistic given current contract prices.
New York State's fiscal year 2026 budget features significant spending growth that outpaces inflation, driving projected annual budget gaps to exceed $14 billion by 2029. This fiscal strategy, combined with the depletion of rainy day reserves and a structural imbalance exceeding $22 billion, leaves the state ill-prepared for potential economic downturns or federal funding cuts.
Recommendations related to State Budget Process
The State should have set aside additional money to mitigate the initial impact of federal cuts rather than significantly increasing spending.
The State should have repaid the unemployment insurance debt with other funds instead of using rainy day reserves.
Key Data
$254 billion
— Total amount of money the State lawmakers passed a budget to spend in the fiscal year 2026.
12 percent
— The rate at which State spending grew, which is the most in recent years and four times the rate of inflation.
$14 billion
— The amount projected annual budget gaps will exceed by fiscal year 2029.
$22 billion
— The amount the State's structural budget imbalance exceeds.
$7 billion
— The amount taken from the State's rainy day reserves in the budget.
38 percent
— The portion of the New York State budget that is federally funded.
New York State's fiscal plan reveals a financially unsustainable approach, with spending increasing by over 12% and future annual budget gaps projected to reach $14 billion. The state's lack of transparency resulted in $49 billion being spent before the public was informed of the financial details, necessitating difficult choices to re-balance the budget and protect long-term competitiveness.
Recommendations related to State Budget Process
State leaders should preserve core programs that have the greatest impact.
State leaders should shrink other programs despite their likely popularity.
State leaders should protect recession-mitigating reserves.
State leaders should hold the line on taxes to ensure New York’s competitiveness.
Albany should continue to advocate for the federal support New York deserves.
Key Data
12%
— The increase in adjusted State Operating Funds spending.
$14 billion
— The projected future annual budget gaps.
$20 billion
— The long-run imbalance between receipts and disbursements.
$49 billion
— The amount the State spent before releasing the financial plan to the public.
The $254 billion state budget increases operating funds spending by 12 percent, creating a $20 billion structural imbalance while failing to prepare for potential federal cuts or a recession. Furthermore, the budget relies on siphoning $7 billion from reserves and grants the Governor extraordinary powers to make mid-year adjustments, bypassing the standard legislative process.
Recommendations related to State Budget Process
The State should put aside $2 billion to soften the initial blow of federal cuts.
Lawmakers should have used other resources, such as the $2 billion for rebate checks, $2 billion of school aid for very wealthy districts, or the $2 billion transaction risk reserve, to replenish the State's Unemployment Insurance Trust Fund instead of siphoning reserves.
The State should not grant the Governor extraordinary powers to make mid-year budget adjustments, as current law already provides the necessary authority.
Lawmakers should ensure that labor supports the MTA plan by agreeing with leadership to operational changes that reduce costs, increase efficiency, and preserve services.
The State must publish basic budget tables showing where New Yorkers’ dollars are going and how much future spending growth will outstrip receipts.
Key Data
$254 billion
— The total size of the State budget.
12 percent
— The rate at which State Operating Funds spending increased, which is four times the rate of inflation.
$20 billion
— The structural imbalance between future receipts and disbursements.
$7 billion
— The amount siphoned from the State’s reserves to replenish the Unemployment Insurance Trust Fund.
$3 billion
— The amount the MTA is expected to contribute to support the capital investment plan.
The $254 billion New York State budget agreement exceeds the Governor's initial proposal by $2 billion, further widening the state's $18 billion structural budget gap. This spending plan fails to prepare for potential federal budget cuts or provide transparent budget tables, while relying on specific tax increases rather than spreading costs more broadly.
Recommendations related to State Budget Process
The State should produce basic budget tables as soon as possible so all New Yorkers, including legislators, can know where their money is going and this budget’s long-term effects.
The State should put money aside to cushion at least the initial blow of likely huge federal budget cuts.
Rainy Day reserves should be saved for a recession and not used to plug recurring budget holes.
It would have been fairer and better for economic competitiveness to spread the cost more broadly among riders, drivers, and taxpayers.
Key Data
$254 billion
— The total value of the general budget agreement.
$2 billion
— The amount the budget agreement spends over the Governor’s initial proposal.
$18 billion
— The size of the State's structural budget gap.
New York's state budget process has become increasingly delayed and opaque due to the inclusion of major policy debates, while state operating funds have grown by 33% since fiscal year 2020. To ensure fiscal stability, state leaders must prioritize responsible spending growth, establish contingency funds for potential federal cuts, and separate complex policy decisions from the annual budget negotiations.
Recommendations related to State Budget Process
The State should keep spending growth close to inflation to restrain spending in the face of a recession and federal cuts.
The State should set aside at least $2 billion in a federal cut contingency fund to prevent an abrupt dislocation of services if federal aid drops.
The State should protect the $20 billion already set aside for a rainy day to ensure funds are available for an economic downturn rather than backfilling lost federal dollars.
Leaders should publish basic budget tables to increase transparency so New Yorkers understand how their money is being spent when the budget is adopted.
The State should prioritize services by making tough decisions to rein in long-term care and home care costs in Medicaid and better align education funding with student need.
Key Data
$35 billion
— Increase in State operating funds since fiscal year 2020.
33%
— Percentage increase in State operating funds since fiscal year 2020.
11% to 14%
— Proposed spending hike by the Governor and Legislature for next year.
$18 billion
— Amount the State is on track to spend more than it takes in a few years down the road.
$2 billion
— Minimum amount to set aside in a federal cut contingency fund.
$20 billion
— Amount already set aside for a rainy day that should be protected for an economic downturn.
New York State's current budget proposals feature the largest spending increase in recent history, ranging between 10.9 percent and 13.8 percent, while leaving an $18.2 billion structural gap. Lawmakers are urged to restrain this spending growth, set aside at least $2 billion to mitigate potential federal cuts, and improve transparency by publishing multi-year financial plan tables with the enacted budget.
Recommendations related to State Budget Process
The budget should restrain exploding spending growth.
The budget should prepare for looming federal cuts.
The budget should reject tax increases that risk the State’s competitiveness.
The budget should fairly fund MTA capital investment.
The budget should set aside at least $2 billion to mitigate potential federal cuts.
The budget should not spread $3 billion so thinly among taxpayers that it won’t help affordability.
The State’s leaders should publish basic, multi-year financial plan tables with the enacted budget bills.
Key Data
10.9 percent and 13.8 percent
— The range of the largest spending increase in recent State history featured in the Governor’s and Legislature’s proposals.
$18.2 billion
— The size of the structural gap left by the Governor’s and Legislature’s budget proposals.
$2 billion
— The minimum amount the budget should set aside to mitigate potential federal cuts.
$3 billion
— The amount that should not be spread so thinly among taxpayers that it fails to help affordability.
New York State's current budget adoption process lacks transparency, failing to provide the public and press with sufficient information when bills are enacted. Lawmakers should improve accountability by publishing comprehensive, multi-year financial plan tables alongside budget legislation to ensure legislators and citizens understand how tax dollars are being allocated.
Recommendations related to State Budget Process
Lawmakers should give New Yorkers the information they deserve about how their money is being spent.
Lawmakers should publish basic, multi-year financial plan tables with the enacted budget bills.
Legislators should have the full financial picture when budget bills are voted on.
New York State's proposed fiscal year 2026 budget significantly increases spending and taxes while failing to address a structural budget gap of at least $18.2 billion. To strengthen the state's long-term financial health, the state should restrain spending growth, protect reserves, and avoid new tax increases while focusing on sustainable funding for critical infrastructure.
Recommendations related to State Budget Process
Restrain spending growth, ideally to 2.7 percent a year, to repair the State’s fiscal foundation and improve its ability to address possible federal cuts.
Reserve at least $2 billion of the projected $3.5 billion fiscal year 2025 surplus as a contingency fund if needed to mitigate the initial impact of federal cuts.
Not extend or increase personal income and business taxes.
Enact a plan that funds MTA capital investment sustainably and fairly by broadly allocating the cost across beneficiaries.
Develop and implement a Medicaid savings plan that targets high and growing cost services.
Reject new or expanded economic development subsidy programs that have not been proven effective by rigorous evaluation.
Not provide minimum school aid increases and phase out hold harmless.
Reject pension sweeteners.
Reject $1 billion “Sustainable Future Program”.
Redirect the $3 billion slated for Inflation Refund checks to more impactful uses.
Key Data
$18.2 billion
— The structural budget gap left by the current budget proposals.
10.9 percent
— The increase in State Operating Funds (SOF) spending proposed by the Governor.
13.8 percent
— The increase in State Operating Funds (SOF) spending proposed by the Legislature.
$3 billion
— The amount slated for "Inflation Refund" checks that could be redirected to more impactful uses.
$3.5 billion
— The projected fiscal year 2025 surplus.
2.7 percent
— The recommended annual cap for spending growth to repair the state's fiscal foundation.
New York's proposed one-house budgets add $4 billion in recurring spending to a fiscal plan already facing an $18.2 billion structural gap, driving year-over-year State Operating Funds growth to 13.7 percent. These proposals fail to prepare for potential federal budget cuts or provide a funding plan for the MTA 2025-2029 Capital Program, threatening the state's long-term fiscal foundation.
Recommendations related to State Budget Process
Lawmakers should hold the line on spending to ensure fiscal stability.
The state must identify the most critical services and needs to prioritize during budget negotiations.
Lawmakers should keep money aside to fund a transition path to a new, lower level of federal aid if cuts materialize.
Rainy Day reserves should be saved to weather recessions and time-limited emergencies rather than being depleted to plug recurring federal reductions.
Legislative leaders must propose a plan to fund critical state of good repair investments in the MTA 2025-2029 Capital Program.
Key Data
$18.2 billion
— The size of the structural gap in the current State budget.
$4 billion
— The amount of recurring spending added by the Assembly and Senate on top of the Governor's proposal.
13.7 percent
— The year-over-year adjusted State Operating Funds growth rate, which is more than 4 times the rate of inflation.
$11 billion
— The total increase in State Operating Funds spending in the Assembly plan.
$7 billion
— The amount allocated in the Assembly plan to pay off the State’s unemployment insurance trust liability.
New York State should publish basic, multi-year financial plan tables alongside one-house budget proposals and the enacted budget to ensure transparency and provide legislators and the public with a clear understanding of fiscal impacts. Currently, the lack of detailed, multi-year data prevents a proper assessment of the state's long-term fiscal condition during the budget voting process.
Recommendations related to State Budget Process
Publish at least one financial plan table each for All Funds, State Operating Funds, and the General Fund when new budget bills are introduced.
Ensure that each of the three financial plan tables provides reasonably disaggregated and totaled lists of receipts, disbursements, transfers, annual bottom-line results, and allocations of fund balances for the budget year and three out-years.
Codify in State law the requirement to publish these financial plan tables.
Key Data
30 days
— The amount of time after enactment that the Enacted Budget Financial Plan is currently released, leaving legislators and the public without data while bills are being voted on.
400-page
— The length of a full financial plan report, which is considered not feasible to produce at the time of the budget agreement.
New York State's government spending is growing at an unsustainable rate, with the proposed fiscal year 2026 budget marking the largest jump in recent history. To address the projected $18.2 billion structural imbalance and avoid future budget gaps, lawmakers must restrain annual spending growth to 2.7 percent through fiscal year 2029.
Recommendations related to State Budget Process
Lawmakers should find savings that restrain spending growth.
Keeping annual spending growth to 2.7 percent starting next fiscal year would close projected budget gaps, allow temporary tax increases to sunset, eliminate the structural imbalance, and still be faster than projected inflation.
Lawmakers should include savings proposals in major programs like Medicaid and school aid that make up more than half of the State budget.
Lawmakers should include a plan to fund the MTA’s capital program.
Lawmakers should include new deposits to the State’s reserves.
Key Data
10.9 percent
— Projected increase in State Operating Funds (SOF) spending for fiscal year 2026.
$15.5 billion
— The increase in fiscal year 2026 spending proposed in the Executive Budget.
$34.1 billion
— The increase in spending over the four years prior to fiscal year 2026.
$31.6 billion
— The increase in State Operating Funds spending between fiscal years 2025 and 2029.
$65.7 billion
— Projected growth in State Operating Funds spending over the eight years between fiscal years 2021 and 2029.
$11.0 billion
— The projected budget gap for fiscal year 2029.
The New York State legislature is being urged to reject several Fiscal Year 2026 Executive Budget provisions that would grant the Governor unilateral authority to spend and borrow without oversight. These proposed powers, which were originally enacted as temporary pandemic measures, are now considered unnecessary and fiscally risky.
Recommendations related to State Budget Process
Reject universal appropriation transfer and interchange authority within the State Operations bill.
Reject the Governor’s permanent authority to issue up to $4 billion in short-term revenue anticipation notes.
Reject a $1 billion transfer from the General Fund to the “Health Care Transformation Account
Reduce the “Special Emergency Appropriation” from $2 billion to $1 billion.
Key Data
$4 billion
— The Governor's requested permanent authority to issue short-term revenue anticipation notes.
$1 billion
— The proposed transfer from the General Fund to the 'Health Care Transformation Account' that lacks clearly defined uses.
$2 billion
— The current level of the 'Special Emergency Appropriation' that should be reduced.
$1 billion
— The recommended level for the 'Special Emergency Appropriation'.
$252 billion is the Governor Kathy Hochul’s New York State Executive Budget for Fiscal Year 2026. How much does it matter that New York State and its localities are already #1 in taxes and #2 in spending nationwide? On today’s episode we talk with New York State’s Budget Director, Blake…
The proposed $252 billion New York State budget for fiscal year 2026 fails to address a $18.5 billion structural imbalance and misses opportunities to bolster reserves or prioritize long-term infrastructure investments. Instead of relying on temporary revenue sources and tax rebates, the state should focus on restraining Medicaid and education spending growth to ensure long-term fiscal stability.
Recommendations related to State Budget Process
The State should restrain Medicaid spending growth to avoid creating future fiscal cliffs.
New York should eliminate 'hold harmless' provisions or redirect aid from wealthy districts that do not need it to fund a sound basic education.
The State should use tax rebate funds to pay cash for infrastructure projects like roads, bridges, and the MTA instead of borrowing.
The State should use the $3.7 billion from the MCO tax for one-time investments in health system transformation rather than building it into the Medicaid spending base.
The State should deposit a portion of the closeout surplus into rainy day reserves to better prepare for future economic downturns.
Key Data
$11.0 billion
— Projected budget gaps by fiscal year 2029.
$18.5 billion
— The State's structural imbalance masked by the budget.
$252 billion
— The total size of the proposed state budget.
$2 billion
— Aid currently sent to wealthy school districts that do not need it.
$3 billion
— The amount of the tax rebate that is spread too thinly to have a lasting impact.
$3.7 billion
— Revenue from the MCO tax that should be used for one-time health investments.
The Fiscal Year 2026 Executive Budget should exclude extraordinary powers that grant the Executive branch excessive authority and undermine the Comptroller's oversight. These measures, originally enacted during the COVID-19 pandemic, are no longer necessary and should be omitted to prevent wasteful spending and ensure proper fiscal management.
Recommendations related to State Budget Process
The budget should not propose to remove competitive bidding requirements and the Comptroller’s oversight via provisions added to individual appropriations.
The budget should not limit the scope of Comptroller review of certain bond transactions, as proposed for the first time in last year’s Executive Budget.
The budget should not allow universal appropriation transfer and interchange authority within the State Operations bill.
The budget should not authorize up to $4 billion in short-term revenue anticipation notes.
The budget should not authorize transfer of $1 billion from the General Fund to the “Health Care Transformation Account” absent more clearly defined uses in appropriations.
The budget should not increase the “Special Emergency Appropriation” from $1 billion to $2 billion.
Key Data
$4 billion
— Amount of short-term revenue anticipation notes the budget should not authorize.
$1 billion
— Amount of funds the budget should not authorize for transfer from the General Fund to the “Health Care Transformation Account.”
$1 billion
— Current level of the “Special Emergency Appropriation” that should not be increased.
$2 billion
— Proposed level of the “Special Emergency Appropriation” that should not be enacted.
New York State faces a $15.6 billion structural imbalance and must address unsustainable spending growth in areas like Medicaid and school aid to ensure long-term fiscal stability. The upcoming executive budget should prioritize sustainable funding plans for the MTA, bolster rainy day reserves, and implement structural reforms rather than relying on one-time measures.
Recommendations related to State Budget Process
The State should hold State Operating Funds (SOF) spending growth to under 3 percent annually to close the State’s structural gap over the next four years.
The Governor should transfer the full balance to the Rainy Day Reserve, as well as add $1.9 billion from the closeout surplus.
The Executive Budget should include proposals to ensure the State’s nation-leading spending on school aid is better targeted, fiscally sustainable, and accompanied by oversight changes to drive improvement in student learning.
The Governor should propose a funding plan for the MTA that is sustainable—meaning it limits the need to raise taxes every five years—and is supported fairly by those across the region and among taxpayers, riders, and drivers.
The State should use the surplus to further bolster reserves, pay cash for capital projects instead of borrowing, or invest in restructuring that reduces recurring spending.
The State should use the federal government-approved Managed Care Organization tax funds for a one-time investment in health transformation that improves quality and lowers cost.
The Executive Budget should establish an independent office of fiscal analysis to strengthen budget and management processes.
Key Data
$15.6 billion
— The estimated structural imbalance by fiscal year 2028.
7.1 percent
— The annual rate of Medicaid spending growth, which exceeds the 4.9 percent average Global Cap growth rate.
$33 billion
— The financing gap in the MTA's 2025-2029 capital program.
$2 billion
— The amount of state aid sent annually to wealthy school districts that already provide a sound basic education.
$1.5 billion
— The amount of annual revenue expected from the federal government-approved Managed Care Organization tax.
$1.9 billion
— The amount the Governor should add to the Rainy Day Reserve from the closeout surplus.
10 and 15 are the districts represented by New York Congressman Dan Goldman and Congressman Ritchie Torres. With a newly elected President and Congress, changes in federal policy, funding, and regulation will affect New York State and New York City. So, what are the opportunities and challenges ahead? Where can…
New York State faces a $15.6 billion structural budget imbalance despite improved tax receipts, with spending growing at 4.8 percent annually. To ensure fiscal stability, the state should prioritize increasing reserves to 22 percent of operating funds and use additional tax receipts to close future budget gaps.
Recommendations related to State Budget Process
The State should make additional deposits now, when receipts are strong, and should transfer the balance of the unprotected Economic Uncertainties Fund into the protected RDR to ensure these funds are saved for a true emergency.
Additional receipts recognized during the closeout this fiscal year should be deposited into the Rainy Day Reserve.
Higher receipts in the current year should be deposited to the RDR, and additional tax receipts in the out-years should be used to close gaps and reduce the structural imbalance.
The State should increase reserves to 22 percent of State Operating Funds based on prior recessions.
Key Data
$15.6 billion
— The amount of the structural imbalance remaining in New York State's budget despite increased tax receipts.
4.8 percent
— The average annual rate at which State Operating Funds spending is currently growing.
$653 million
— The average amount by which the Legislature and Comptroller's tax receipt forecasts exceed the Executive's forecast for fiscal year 2026.
$2 billion
— The average annual increase in State tax receipts resulting from an improved economic outlook.
$1.5 billion
— The amount deposited to the Rainy Day Reserve lockbox at the beginning of the current fiscal year.
The MTA's proposed $69 billion five-year capital plan faces a significant funding shortfall, exacerbated by the pause on congestion pricing, requiring state leaders to make critical decisions regarding funding sources and project prioritization. To ensure system reliability and financial stability, the state must focus on essential repairs, pursue sustainable funding, and empower the MTA to improve operational efficiency and reduce fare evasion.
Recommendations related to State Budget Process
One-third of the funding gap is congestion pricing; it should be unpaused.
State leaders should evaluate funding options rigorously, ensuring costs are fairly spread among riders, taxpayers, and drivers.
Albany should trim and hyper-focus the capital plan to a realistic level, prioritizing essential repairs over expansion projects.
Funding should be sustainable, avoiding short-sighted borrowing against taxes or excessive debt that threatens the operating budget.
State leaders should support a tightly focused and smartly financed MTA capital plan and empower the MTA to reduce fare evasion and increase efficiency.
Key Data
$69 billion
— The MTA's proposed 5-year capital plan focused on improving the system's state of good repair.
$15 billion
— The funding hole created by pausing congestion pricing.
$90 billion
— The MTA's unrealistic 5-year commitment goal when including already planned projects.
$1 billion
— The MTA's current structural operating budget gap.
39%
— The portion of transit station ventilation systems in poor and marginal condition.
90%
— The portion of Penn Station’s electrical equipment, cables, and wiring in poor and marginal condition.
97 - that's the number of days between this conversation and the release of the Governor's Fiscal Year 2026 Executive Budget. But how the State will close its $16 billion structural gap isn't the only important issue facing New York State. How will the State buttress resiliency, reduce greenhouse gas…
New York State lawmakers are increasingly enacting pension benefit enhancements outside of the collective bargaining and budget processes, leading to significant unplanned costs and undermining fiscal reforms. These legislative actions, including rollbacks to Tier 6 pension standards, add billions of dollars in long-term liabilities without providing commensurate improvements in service quality or taxpayer benefits.
Recommendations related to State Budget Process
State lawmakers should cut the sweetener habit and should stick to a healthy Tier 6 diet as enacted over a decade ago.
Governors should veto sweeteners that are passed outside of the budget process.
Lawmakers should maintain the valuable Tier 6 reforms, which continue to offer generous defined benefits for public employees.
Legislators should kick this growing habit and leave sweeteners on the shelf.
Key Data
$438 million
— First-year annual fiscal impact of enacted Tier 6 reform rollbacks.
$1.5 billion
— Annual price tag of just one proposed Tier 6 rollback.
$19.8 million
— Immediate cost of 11 bills passed by the Legislature in 2024 that the Governor should veto.
$10.3 million
— Annual cost of 11 bills passed by the Legislature in 2024 that the Governor should veto.
$4.3 billion
— Increase in the net present value of pension benefits due to enacted Tier 6 changes.
$6.6 billion
— Increase in the net present value of benefits from a 2022 proposal to reduce employee contribution rates.
Twelve bills that would increase pension, disability, and death benefits for public employees should be vetoed because they bypass the standard budget process and impose significant, unbudgeted costs on the state and local governments. These measures, which include eight bills with estimated immediate costs of at least $90.1 million, lack offsetting savings and threaten fiscal stability.
Recommendations related to State Budget Process
The Governor should veto the 12 bills that enhance benefits and increase costs to New York State and local governments outside of the budget process.
The state should reject the six bills that would enhance pension benefits for public employees, as they lack offsetting savings.
The state should reject the six bills that would expand disability or death benefits for public employees, as they impose unbudgeted costs.
Key Data
$90.1 Million
— Estimated immediate cost for eight of the twelve bills that would enhance benefits outside of the budget process.
$16.9 Million
— Estimated annual cost for eight of the twelve bills that would enhance benefits outside of the budget process.
$70.3 Million
— Estimated first-year cost for the bill establishing a 20-year retirement plan for regional state park police, environmental conservation officers, forest rangers, and university police officers.
$10.4 Million
— Estimated first-year cost for the bill extending the death gamble benefit to retirement-eligible correction officers and security hospital treatment assistants.
$5.5 Million
— Estimated first-year cost for the bill providing additional retirement benefits for Suffolk County correction officers.
$4.1 Million
— Annual cost for the bill extending the death gamble benefit to transit Tier 4 and Tier 6 Special Plan members of the NYCERS.
The state budget process currently allows for significant spending through contracts that bypass standard Comptroller oversight and competitive bidding, creating risks for waste and corruption. New legislation is proposed to mandate transparency for these exempt contracts, while advocates urge the Governor and Legislature to stop including these exemptions in future budget bills.
Recommendations related to State Budget Process
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 in executive budget bills.
The Governor should reject any proposed exemptions to sections 112 and 163 by the Legislature.
Key Data
5.3 days
— The average time it takes for the Office of the State Comptroller to complete a prompt review of submitted contracts.
$50,000
— The minimum contract value threshold at which oversight provisions apply.
$368 million
— The total value of enacted budget appropriations exempt from section 112 of the State Finance Law.
$1.5 billion
— The total value of enacted budget appropriations exempt from section 163 of the State Finance Law.
New York's school aid system requires reform to ensure funds are directed toward areas of greatest need rather than being distributed through outdated formulas that favor wealthy districts. By eliminating programs like the School Tax Relief (STAR) and adjusting Foundation Aid, the state could better manage its $38.6 billion education budget and address a $16 billion structural deficit.
Recommendations related to State Budget Process
Quickly phase out the hold harmless provision to align Foundation Aid with district enrollment and wealth.
Revise the expected local contribution to be the higher of the district’s actual contribution, or the district’s fiscal capacity.
Update district poverty estimates and regional cost measures for a more accurate assessment of need.
Reassess arbitrary floors and ceilings in formulas to ensure they are limited to extreme situations.
Allocate library, textbook, and software aids based on wealth by modifying the formula or folding the funding into Foundation Aid.
Eliminate High Tax Aid because it provides more aid per student to wealthy districts than below-average-wealth districts.
Eliminate the School Tax Relief (STAR) program to better allocate State resources to where needed most.
Key Data
$16 billion
— The size of the structural budget gap facing New York State.
$38.6 billion
— The total amount of education aid the State must use wisely and appropriately.
$2 billion
— The amount of State aid sent every year to districts that already spend enough local resources to provide a sound basic education.
$224 million
— The amount of funding for library, textbook, and software aids that should be better allocated.
$223 million
— The total funding for High Tax Aid, which should be eliminated.
$3 billion
— The annual cost of the School Tax Relief (STAR) program.
New York should avoid bypassing the formal budget process to enact fiscal schemes, as such maneuvers threaten fiscal stability and widen budget gaps. Instead, the state should implement congestion pricing to fund critical transit needs and ensure that the MTA's capital program is developed transparently and realistically.
Recommendations related to State Budget Process
New York should not vie for the triple crown of bad governing—knee jerk reaction, shortsighted fiscal maneuvers, and a backroom deal outside the budget process.
The State should not enact an eleventh-hour fiscal scheme to make up for the poor decision to delay congestion pricing.
The MTA should include these projects and develop a realistic, holistic 2025-2029 capital program that focuses on essential state of good repair and modernization needs, funds them in the smartest way possible, and transparently involves the public.
The best decision is to stay the course and implement congestion pricing.
The New York State fiscal year 2025 enacted budget financial plan reveals a $239 billion spending level, which is $2 billion higher than initially reported. This spending trajectory contributes to a structural budget gap projected to exceed $16.1 billion by fiscal year 2028, as the plan relies heavily on temporary, non-recurring resources to mask imbalances.
Key Data
$239 billion
— Total All-Funds spending for fiscal year 2025.
$16.1 billion
— The structural budget gap driven by the enacted budget.
7.8 percent
— Adjusted State Operating Funds spending increase in fiscal year 2025.
$2.4 billion
— Amount by which projected fiscal year 2028 State Operating Funds spending exceeds the Executive Budget proposal.
$21.1 billion
— Total reserves after the State added $1.5 billion at the end of fiscal year 2024.
4.1 percent
— Projected average annual State Operating Funds spending growth through fiscal year 2028.
The state government has not yet released the financial plan tables for the Fiscal Year 2025 Enacted Budget, leaving the public without essential information on how taxpayer money is being spent. Immediate publication of these multi-year financial tables is necessary to provide transparency regarding receipts, disbursements, and future fiscal implications of the enacted budget.
Recommendations related to State Budget Process
Publish at least one, multi-year financial plan table each for All Funds, State Operating Funds, and the General Fund.
Include reasonably disaggregated and totaled lists of receipts, disbursements, transfers, annual bottom-line results, and allocations of fund balances for this year and three out-years.
The New York State budget, which was finalized weeks behind schedule, totals nearly a quarter-trillion dollars. Ongoing negotiations regarding the city's budget are also currently underway.
New York State's conceptual budget agreement creates a significant structural deficit exceeding $16 billion while failing to provide necessary fiscal transparency before legislative votes. The plan includes unaffordable spending increases and rejects key proposals to restrain Medicaid costs and reform education aid, while adding an unfunded mandate through retirement plan enhancements.
Recommendations related to State Budget Process
The State should publish basic financial plans as the Legislature votes on the bills to ensure a clear view of the full budget picture.
The Legislature should restrain Medicaid spending rather than rejecting the Governor's proposals to control costs.
The State should proceed with the removal of the hold harmless provision on education aid to better align spending with actual needs.
The State should avoid the Tier 6 retirement-plan enhancement as it is unnecessary, unpaid for in the long run, and an unfunded mandate on localities.
Key Data
$16 billion
— The amount by which the future structural budget gap is likely to exceed.
$237 billion
— The total amount of public money planned for spending in the conceptual budget agreement.
New York's state budget process is currently delayed, and officials must prioritize long-term fiscal stability by restraining spending growth and avoiding reliance on speculative federal funds. To ensure a responsible budget, the state should reject tax increases and expensive retirement plan enhancements while focusing on boosting housing production and providing transparent financial planning.
Recommendations related to State Budget Process
The Governor and legislative leaders should publicly commit to this being the last budget extender.
Restrain spending growth to reduce the structural budget gap that already is $16+ billion.
Include basic financial-plan tables to give New Yorkers a clear-eyed view of how their money is being spent next year.
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 because they are expensive and unnecessary.
Reject tax increases because New York already collects more taxes per person than any other state.
Boost housing production to address the supply and affordability crisis.
Defer decisions on the Heat Act until there is a full analysis of the consumer and economic impact.
Key Data
$16+ billion
— The current structural budget gap that needs to be reduced by restraining spending growth.
3.5 percent
— The increase in adjusted State Operating Funds spending proposed in the Executive Budget.
32 percent
— The growth in adjusted State Operating Funds from FY 2020 to FY 2025.
$33.8 billion
— The total dollar growth in 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 budget agreement process currently lacks transparency, as initial announcements provide only scant details while comprehensive financial plans are released weeks later. To improve public understanding and legislative oversight, the state should publish basic, multi-year financial plan tables immediately upon reaching a budget agreement.
Recommendations related to State Budget Process
Publish at least one financial plan table each for All Funds, State Operating Funds, and the General Fund with the enacted budget.
Publish reasonably disaggregated and totaled lists of receipts, disbursements, transfers, annual bottom-line results, and allocations of fund balances for the budget year and three out-years.
Codify in State law the requirement to publish these financial plan tables for both the one-house budget bills and the enacted budget.
Key Data
four weeks
— The Division of the Budget releases a financial plan a full four weeks after the Enacted Budget.
400-pages
— The financial plan released by the Division of the Budget is approximately 400-pages long.
The proposed change to Tier 6 pension benefits in the State's Fiscal Year 2025 budget would impose a nearly $400 million annual cost on state and local governments, creating an unfunded mandate. This expansion is unnecessary and should be rejected, as the current pension plan is already more generous than most private-sector alternatives.
Recommendations related to State Budget Process
The proposed change to Tier 6 pension benefits is unnecessary, expensive, and should be rejected.
Key Data
nearly $400 million
— Annual cost to the State and local governments in New York for the proposed change to Tier 6 pension benefits.
$320 million
— Increase in pension contributions for public employees next year alone resulting from the proposed change.
$233 billion is the total NYS budget proposed by Governor Hochul for fiscal year 2025. NYS Budget Director Blake Washington spoke with CBC President Andrew Rein on the State's fiscal picture and other pressing issues facing New York.
New York's proposed state budgets rely on unsustainable spending growth and non-recurring resources, creating a structural deficit that could reach $20.3 billion by fiscal year 2029. To stabilize the state's fiscal foundation and allow temporary tax increases to expire, the state must slow spending growth and prioritize building reserves rather than funding new initiatives.
Recommendations related to State Budget Process
The State should be using closeout balances each year to build reserves, rather than to support further spending increases.
Spending growth should be slowed significantly—especially in high-cost areas such as Medicaid and school aid—in order to stabilize the State’s fiscal foundation and avoid further damage to New York’s already shaky economic competitiveness.
Restraining spending growth to 2.0 percent annually would close future gaps and eliminate the structural imbalance and allow temporary tax increases to expire.
Key Data
$20.3 billion
— The projected structural imbalance in the State budget by fiscal year 2029 based on the one-house budgets.
$27.8 billion
— The increase in Adjusted State Operating Funds spending over the past three years.
$16.8 billion
— The amount of non-recurring resources the Executive Budget relies on to achieve budget balance in fiscal year 2025.
$8 billion
— The additional amount currently required for principal reserves to cover receipts losses and spending growth of a typical recession.
$33.6 billion
— The amount spending would be above the pre-pandemic trend in fiscal year 2028 under the Executive Budget.
$42.3 billion
— The amount spending would be above the pre-pandemic trend in fiscal year 2028 under the one-house budgets.
New York State's structural budget gap has grown to between $16 billion and $20 billion due to the practice of using temporary revenues to fund permanent spending increases. The state should avoid using speculative federal funds from a proposed Medicaid tax to finance recurring programs, instead limiting such revenue to one-time expenditures.
Recommendations related to State Budget Process
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.
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.
It is never smart budgeting to spend short-term money to start or boost recurring programs.
Key Data
$16 billion to $20 billion
— The estimated size of New York State's structural budget gap.
$4 billion
— The amount of federal money the State proposes to leverage through a new tax on Medicaid and other managed care plans.
Legislative leaders are urged to reject proposals in the Executive Budget that would grant the Governor extraordinary powers, such as unchecked authority to transfer funds, issue debt, and bypass competitive bidding. These powers, originally enacted as temporary measures during the COVID-19 pandemic, are no longer necessary and should be excluded from the final enacted budget.
Recommendations related to State Budget Process
Reject the proposal to limit the scope of Comptroller review of certain bond transactions, as proposed in sections 49 and 50 of Part X of the Public Protection and General Government bill.
Reject universal appropriation transfer and interchange authority within the State Operations bill.
Reject the Governor’s permanent authority to issue up to $4 billion in short-term revenue anticipation notes.
Reject a $1 billion transfer from the General Fund to the “Health Care Transformation Account”, unless its uses are more clearly defined in appropriations.
Reject provisions added to individual appropriations that remove competitive bidding requirements and the Comptroller’s oversight.
Reduce the “Special Emergency Appropriation” from $2 billion to $1 billion.
Key Data
$4 billion
— The Governor's permanent authority to issue short-term revenue anticipation notes.
$1 billion
— The proposed transfer from the General Fund to the 'Health Care Transformation Account' that requires clearer definition.
$2 billion
— The current level of the 'Special Emergency Appropriation' that should be reduced.
$1 billion
— The recommended reduced level for the 'Special Emergency Appropriation'.
New York's legislative budget proposals threaten fiscal stability by increasing spending and taxes, potentially widening the state's structural budget gap. To achieve structural balance by 2028, the state should limit annual spending growth to 2 percent and scrutinize major expenses like school aid and Medicaid.
Recommendations related to State Budget Process
Spending growth should be limited to no more than 2 percent annually to close those gaps and get to structural balance by fiscal year 2028.
Extra scrutiny should be given to the State’s two biggest expenses—school aid and Medicaid.
Eliminating the school aid hold harmless provision, as the Governor proposed, is a particularly common-sense measure.
The Legislature would be wise to identify their top priorities and identify spending reductions to offset the added spending.
The State must ensure that the incentives and any housing-related actions are well designed to ensure development is fiscally feasible.
Key Data
$8 billion
— Amount added to State Operating Funds spending on top of the Governor’s proposal.
8.9 percent
— Year-over-year growth in State Operating Funds spending under the legislative proposals.
7.9 percent
— Successive years of spending growth prior to the current proposal.
$10 billion
— Out-year budget gaps facing the State.
$16 billion
— Structural budget gap topping this amount.
2 percent
— Recommended limit for annual spending growth to close gaps and reach structural balance.
New York State faces significant structural budget gaps, with projected imbalances reaching $16.4 billion by fiscal year 2028, necessitating disciplined spending restraint. To achieve long-term fiscal stability, the state must implement comprehensive budget process reforms, including greater transparency and the rejection of extraordinary executive budget powers.
Recommendations related to State Budget Process
Restrain SOF spending growth, ideally to 2.0 percent annually to close the $9.9 billion projected budget gap, allow temporary tax increases to expire, and accommodate the exhaustion of non-recurring resources.
Reject extraordinary Executive budget powers, as they only serve to create fiscal risk and reduce accountability and oversight in the budget process.
Publish basic financial plan tables with the one-house and enacted budgets to ensure New Yorkers have basic transparency in the spending plans put forward by the Executive and Legislature.
Pursue comprehensive budget process and fiscal management reforms, including fully funding oversight agencies, avoiding the use of messages of necessity, and including fiscal impact statements with non-budget bills.
Key Data
$16.4 billion
— The State’s structural budget imbalance in fiscal year 2028.
$9.9 billion
— The projected budget gap in fiscal year 2028.
2.0 percent
— The recommended annual rate to which State Operating Funds spending should be restrained to close projected gaps.
$4 billion
— The amount of short-term revenue anticipation notes the Executive has permanent authority to issue.
$2 billion
— The amount of the 'Special Emergency Appropriation' proposed in the Executive Budget.
$20 billion
— The current level of principal reserves.
New York State's one-house budget proposals currently lack sufficient transparency, as they are released with minimal information regarding topline spending and fiscal actions. To improve public understanding of the state's $230 billion annual budget, the legislature should be required to publish detailed financial plan tables alongside their proposals.
Recommendations related to State Budget Process
The Legislature should publish with one-house budget proposals at least one financial plan table each for All Funds, State Operating Funds, and the General Fund, including reasonably disaggregated and totaled lists of receipts, disbursements, transfers, annual bottom line results, and allocations of fund balances.
The Legislature should codify in State law the requirement to publish these financial plan tables.
Key Data
$230 billion
— Annual amount of public resources allocated in the state budget.
New York State faces a $16.4 billion structural budget imbalance, driven by rapid spending growth that requires significant restraint to achieve fiscal stability. To address this, the state must limit annual spending growth to 1.5 percent and avoid further tax or spending increases that could weaken its competitiveness.
Recommendations related to State Budget Process
The State should restrain spending to put the State on a path to budget balance.
To close the State’s structural imbalance, SOF spending growth would need to be kept to 1.5 percent annually over the life of the financial plan.
The State should avoid layering on further tax and spending increases to relieve building budget pressure and stave off a potentially harsh fiscal reckoning.
The State should avoid additional tax increases as they would weaken the State’s competitiveness.
Key Data
$16.4 billion
— The structural imbalance of the state budget when accounting for non-recurring resources.
$9.9 billion
— The projected budget gap in fiscal year 2028.
1.5 percent
— The annual rate at which SOF spending growth would need to be kept to close the structural imbalance.
$6.4 billion
— The amount of nonrecurring resources from pre-payments, rolled resources, and temporary tax increases relied upon in the fiscal year 2028 budget.
$26 billion
— The total growth in SOF spending from fiscal year 2021 to fiscal year 2024.
$51 billion
— The projected growth in SOF spending over the 8 years between fiscal years 2021 and 2028.
New York State legislators are being urged to reject proposed executive budget provisions that grant the Governor broad, unilateral spending and borrowing authority, which could create significant fiscal risk. These watchdog groups also advocate for maintaining the State Comptroller's oversight of bond transactions to prevent ballooning debt service costs and ensure intergenerational fiscal equity.
Recommendations related to State Budget Process
Reject universal appropriation transfer and interchange authority within the State Operations bill.
Reject the Governor’s permanent authority to issue up to $4 billion in short-term revenue anticipation notes.
Reject a $1 billion transfer from the General Fund to the “Health Care Transformation Account” unless its uses are more clearly defined in appropriations.
Reject provisions added to individual appropriations that remove competitive bidding requirements and the Comptroller’s oversight.
Reduce the "Special Emergency Appropriation" from $2 billion to $1 billion.
Reject the proposal to limit the scope of Comptroller review of certain bond transactions, as proposed in sections 49 and 50 of Part X of the Public Protection and General Government bill.
Key Data
$4 billion
— The amount of short-term revenue anticipation notes the Governor is seeking permanent authority to issue.
$1 billion
— The amount of the transfer from the General Fund to the “Health Care Transformation Account” that is being challenged.
$2 billion
— The current amount of the "Special Emergency Appropriation" that is proposed to be reduced.
$1 billion
— The proposed reduced amount for the "Special Emergency Appropriation."
Blake G. Washington is the Budget Director for the State of New York, appointed by Governor Kathy Hochul. Mr. Washington is responsible for the development and management of the New York State budget and leads a team of public servants to administer the fiscal duties of the state, including economic…
New York's fiscal year 2025 executive budget faces a structural gap of approximately $15 billion, with the fiscal year 2028 gap projected to reach $9.9 billion. While the proposal maintains over $19 billion in reserves, significant additional restraint is required to align future spending with ongoing revenue.
Recommendations related to State Budget Process
State lawmakers should make basic improvements to the budget process to increase transparency and accountability.
The State should publish basic financial plan tables with one-house and enacted budgets.
The State should avoid the use of lump sum appropriations in the budget.
The State should avoid the use of messages of necessity during the budget process.
The State should omit fiscal maneuvers that undercut accountability in the budget.
Key Data
$9.9 billion
— The projected fiscal year 2028 budget gap.
$5.5 billion
— The amount of the spending base supported by temporary tax increases and pre-payments.
$15 billion
— The approximate structural budget gap.
$19 billion
— The amount of record State reserves maintained in the budget.
New York faces a $16.8 billion structural budget gap by fiscal year 2028, driven by spending growth that outpaces revenue and reliance on non-recurring resources. To achieve fiscal stability and transparency, the state must restrain spending, improve reserve protections, and implement structural reforms like independent budget analysis and public performance management.
Recommendations related to State Budget Process
NYS needs to restrain SOF spending growth to 1 percent annually to close the structural gap by fiscal year 2027.
Any fiscal year 2024 surpluses should be deposited into the Rainy Day Reserve.
Provisions that allow universal appropriation transfer authority, broad lump sum appropriations, or emergency borrowing authorities should not be proposed again.
Dozens of appropriations that are explicitly exempt from Comptroller’s oversight and best-value procurement rules should not be included in the budget.
Lump sum appropriations should be omitted from the budget and transparency added to existing lump sums.
Establishment of a robust public performance measurement and management system is needed to provide the necessary sunlight and inform lawmakers on service provision.
An independent fiscal analysis office is needed to provide additional insight on the state’s fiscal condition and the fiscal impacts of policy proposals.
Key Data
$16.8 billion
— Structural budget gap in fiscal year 2028.
$4.3 billion
— Budget gap in fiscal year 2025.
$9.5 billion
— Budget gap in fiscal year 2026.
$7.7 billion
— Budget gap in fiscal year 2027.
$9.1 billion
— Expenses supported by non-recurring resources.
$20 billion
— Principal reserves under Governor Hochul’s leadership.
New York State should enact legislation requiring the publication of contracts exempt from Comptroller oversight to increase transparency in emergency spending. Additionally, the state must stop including exemptions to competitive bidding and prior approval requirements in executive and legislative budget bills to prevent wasteful or corrupt spending.
Recommendations related to State Budget Process
The Governor should sign A7404/S6941 to require State agencies and authorities to publish 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 exemptions to sections 112 and 163 of State Finance Law proposed by the Legislature.
Key Data
5 days
— Average time for the Office of the State Comptroller to complete a prompt review of contracts.
$50,000
— Minimum contract value threshold for which oversight provisions apply.
$12.8 billion
— Total value of 14 appropriations in the Executive Budget that were exempt from both sections 112 and 163 of State Finance Law.
$2.6 billion
— Total value of 17 appropriations exempt from section 163 of State Finance Law alone.
New York's proposed Cap-and-Invest program should be designed to maximize emissions reductions while minimizing economic impacts, with revenues managed transparently within the state's regular budget process. To ensure accountability and efficiency, the state must avoid diverting these funds to unrelated political priorities and instead prioritize investments in energy transition and efficiency initiatives.
Recommendations related to State Budget Process
The State should allow and pursue linkage with other cap-and-invest programs to enhance cost-effectiveness by providing a larger pool of emissions reduction opportunities.
The State should keep sectoral coverage as broad as possible, limiting exemptions to sectors that are exceedingly difficult or expensive to regulate.
The State should maintain flexibility in compliance through trading, banking, and verifiable offsets to ensure the program behaves as a true market.
The State should allocate revenue on-budget, segregating it for uses that promote cost-effective emissions reduction to ensure transparency and accountability.
The State should regularly monitor, publicly report, and evaluate program data and modify the program based on evidence.
The State should align the program with other CLCPA-related regulations to minimize overlapping regulatory costs and improve overall policy effectiveness.
The State should finalize clear and comprehensive rules with adequate time for businesses to prepare to facilitate a smooth carbon market transition.
Key Data
$112,790 Million
— Cumulative auction revenue for the European Union's emissions trading system.
$38,934 Million
— Cumulative auction revenue for California's cap-and-trade program.
$6,749 Million
— Cumulative auction revenue for the Regional Greenhouse Gas Initiative (RGGI).
$5,857 Million
— Cumulative auction revenue for Quebec's cap-and-invest system.
$1,460 Million
— Cumulative auction revenue for Washington's cap-and-invest program.
85 percent
— New York's goal to reduce greenhouse gas emissions by 2050.
New York State faces significant multi-billion-dollar budget gaps in the coming years as federal aid sunsets and tax revenues return to typical trends. To ensure fiscal stability and the ability to deliver quality services, the state must shift toward restraining spending growth and securing its reserves against potential recessions.
Recommendations related to State Budget Process
Closing these gaps will require the State to shift to restraining spending growth, rather than the recent trend of adding new spending.
The full balance of the State’s principal savings should be moved immediately into statutory lockboxes.
If receipts exceed projections this year, additional funds should be deposited in the Rainy Day Reserve.
Key Data
$16.8 billion
— The structural gap between recurring receipts and disbursements.
$19.6 billion
— The current level of the State's principal reserves.
$27 billion
— The amount the State should have in reserves to weather a recession and deliver needed services.
$19.5 billion
— The increase in State Operating Funds spending from fiscal year 2021 to fiscal year 2023.
The 'Quick Start' budget meeting process, which was formalized in 2007 and rebooted in 2021, serves as a vital mechanism for increasing transparency and reaching early consensus on revenue projections. Establishing this agreement is essential for passing a timely state budget, particularly as the upcoming fiscal year faces a projected $4.3 billion gap.
Recommendations related to State Budget Process
The State should continue holding 'Quick Start' budget meetings to increase transparency and keep the budget centered on spending priorities.
Elected leaders should prioritize achieving an early consensus on revenue projections to ensure a timely State budget.
Key Data
$4.3 billion
— The estimated gap in the FY 2024-2025 budget without increases in revenue or cuts in spending.
New York State faces a projected $9 billion budget gap next year that grows to $13 billion thereafter, leaving a $22 billion structural deficit once temporary funding expires. To achieve long-term fiscal stability, the state must restrain spending growth—particularly in education and Medicaid—rather than relying on tax increases or depleting its reserves.
Recommendations related to State Budget Process
To close gaps, the state should restrain spending growth, necessarily starting with its largest programs.
State school aid should be better targeted to districts with higher-need students, instead of funneling billions of dollars to wealthy districts with strong local funding.
In Medicaid, understanding and reversing rapid cost growth in long-term care and other areas can reduce costs.
In “economic development,” the state should curtail — not expand — programs with dubious impacts.
Another round of tax increases or drawing down reserves should not be part of the package.
To start bringing budget stability back, the state should start tightening its belt now.
Key Data
$9 Billion
— Projected state budget gap for the next fiscal year.
$13 Billion
— Projected state budget gap for the years following the next fiscal year.
The state legislature passed legislation in the final days of the session that retroactively expands the Empire State Film Production Credit, a move that should be vetoed to prevent last-minute policy changes and avoid depleting resources on productions already committed to filming in New York. Instead of engaging in a 'race to the bottom' through lucrative tax incentives, the state should prioritize economic growth by leveraging its existing comparative strengths like human capital and cultural amenities.
Recommendations related to State Budget Process
The Governor should veto S7562/A7757, which expands eligibility for the Empire State Film Production Credit.
The state should end the practice of changing policy at the last minute without providing adequate time for public evaluation or review.
New York should focus on expanding its economy based on its comparative strengths, such as human capital and cultural and natural amenities, rather than competing through tax incentives.
CBC's Ana Champeny and Patrick Orecki delivered a briefing on the New York State Fiscal Year 2024 Enacted Budget and the New York City Fiscal Year 2024 Adopted Budget. They provided basic fiscal overviews and discuss the risks facing the City and State.
New York State Budget Fiscal Year 2024 Major Actions and Fiscal Risks As of First Quarter Update New York City Fiscal Year 2024 Adopted Budget and Outlook
New York State and its localities spent $10.7 billion on economic development in 2022, yet there is insufficient evidence that these programs effectively create jobs or provide better value than alternative uses of funds. To address significant budget gaps, officials should implement a unified economic development budget, adopt performance-based incentives, and increase oversight to ensure these massive expenditures are actually effective.
Recommendations related to State Budget Process
Rigorously evaluate existing incentives and programs to determine their effectiveness.
Narrow, shrink, or eliminate programs that are not proven effective.
The New York State fiscal year 2024 budget provides necessary revenue to stabilize the Metropolitan Transportation Authority's finances in the short term, yet a significant long-term structural budget gap remains. To ensure future fiscal stability, the transit authority must implement operational reforms, including labor contract adjustments and efficiency measures, to align spending with recurring revenues.
Recommendations related to State Budget Process
The MTA should implement one-person train operation (OPTO) on subways and proof of payment on commuter rail to increase efficiency.
The MTA should reduce maintenance and operating costs by targeting peer benchmark levels to ensure operations are efficient and cost-effective.
The MTA should negotiate work rule changes with labor unions to allow the agency to adjust schedules and services to meet shifting rider needs.
Key Data
$900 million
— The estimated annual budget gap the MTA will face beyond the five-year financial plan window.
$1.1 billion
— The annual revenue generated from the increase of the Payroll Mobility Tax on New York City employers included in the state budget.
$1.6 billion
— The estimated annual savings from meeting benchmark maintenance and operations levels.
$690 million
— The cost of fare and toll evasion to the MTA in 2022.
$442 million
— The annual savings from expanding one-person train operation systemwide.
$330 million
— The amount by which the cost of the Transport Workers Union Local 100 collective bargaining agreement exceeds budgeted raises annually.
New York State has significantly increased its rainy day savings in recent years, but further structural improvements are needed to ensure the state can withstand future economic downturns. Strengthening the Rainy Day Reserve through mandatory deposits, higher balance targets, and better consolidation of funds would provide a more robust fiscal buffer against recessions.
Recommendations related to State Budget Process
Combine all principal reserves into the Rainy Day Reserve (RDR) lockbox immediately.
Deposit up to an additional $2.4 billion to the RDR this year.
Set a target for the RDR of 22 percent of SOF spending.
Increase the maximum allowed RDR balance to 30 percent of SOF spending.
Mandate automatic RDR deposits when the economy is growing.
Key Data
$19.5 billion
— Current rainy day savings held in the State's Principal Reserves.
$27.9 billion
— Recommended rainy day savings target for fiscal year 2024, equal to 22 percent of State Operating Funds.
$2.4 billion
— Additional amount recommended for deposit into the Rainy Day Reserve this year.
45 percent
— Portion of New York State's own source revenue derived from the economically sensitive personal income tax.
$24.2 billion
— Estimated two-year shortfall in tax receipts during a recession based on historical performance.
New York State has made minimal progress on structural reforms needed to improve fiscal stability, transparency, and accountability in its budgeting process, with only one of twelve recommended improvements fully adopted. The state continues to lack essential oversight mechanisms, such as an independent fiscal analyst's office and comprehensive long-term capital planning, while failing to provide basic financial plan tables with enacted budgets.
Recommendations related to State Budget Process
Manage, report, and balance the budget in accordance with Generally Accepted Accounting Principles (GAAP) on a modified accrual basis to avoid the pitfalls of current cash basis budgeting.
Strengthen the debt cap by applying it more comprehensively and codifying it in the Constitution.
Tightly tie appropriations to planned spending by reducing unfunded and undefined spending authority.
Strengthen the Rainy Day Fund by raising deposit and balance caps and tying fund size to State Operating Funds instead of the General Fund.
Require basic financial plan tables with enacted and one-house budgets to allow the public to compare proposals and evaluate the enacted budget.
Require fiscal estimates with other legislation to ensure bills with fiscal impacts are accompanied by fiscal impact statements.
Prevent the use of messages of necessity for budget bills to ensure budget bills are subject to Constitutional requirements to ‘age’ for three days before voting.
Implement comprehensive, transparent long-term capital planning processes to improve decision-making on the State’s infrastructure investments.
Fully fund the Authorities Budget Office (ABO) to provide appropriate oversight of hundreds of authorities with billions of dollars in debt and spending.
Establish an independent fiscal analyst's office to provide timely and accurate analyses of the State’s fiscal condition.
Key Data
12
— Total number of recommendations made to improve New York State’s budgeting and fiscal management.
1
— Number of recommendations adopted by the State's leaders.
9
— Number of recommendations where no progress was made.
$19 billion
— Amount that reserve balances increased to.
$220+ billion
— Annual spending by New York that requires a system to measure, monitor, and manage programs and operations.
$3.4 million
— Current funding level for the Authorities Budget Office (ABO).
New York State's enacted budget financial plan was released nearly 70 days into the fiscal year, revealing that future budget gaps have doubled to $9.1 billion next year and $13.4 billion by fiscal year 2027. While reserves have increased to over $19 billion, the state faces a $20 billion annual structural budget gap that threatens long-term fiscal stability.
Recommendations related to State Budget Process
Basic financial plans should have been released with the budget agreement.
The State should put the funds in the Rainy Day Reserve lockbox to protect reserves.
Key Data
$9.1 billion
— Future budget gap projected for the next fiscal year.
$13.4 billion
— Future budget gap projected for fiscal year 2027.
$5 billion
— Annual downward revision of tax receipt estimates.
$20 billion
— Annual structural budget gap revealed once one-time revenues disappear.
$19 billion
— Total state reserves increased under the current budget.
70+ is the number of agencies and authorities that report through New York State's Deputy Secretaries to New York's Director of State Operations and Infrastructure, Kathryn Garcia. She joined the podcast at a critical time for our State's economy, and after the $229 billion budget was passed by the Legislature…
New York State's fiscal year 2024 budget was enacted late without essential financial plan tables, while increasing the long-term structural deficit to over $15 billion and widening the projected budget gap beyond $5 billion. The budget fails to address housing production crises and relies on non-recurring resources to fund spending, while also sidestepping public review and oversight through the use of messages of necessity and lump sum spending pots.
Recommendations related to State Budget Process
State leaders should enact proven, flexible strategies to streamline environmental review, eliminate the floor area ratio cap, promote transit-oriented development, legalize accessory dwelling units and basement apartments, and extend and enact a successor to 421-a.
The Governor and Legislature should strongly support identifying and implementing productivity improvements during this round of collective bargaining between the MTA and its unions.
The State should ensure that additional deposits to the Rainy Day Fund are prioritized to protect against economic downturns.
The federal government should provide both significant fiscal resources to cover costs and provide policy solutions to the migrant crisis.
Key Data
$5 billion
— Projected budget gap in the Executive Budget.
$15 billion
— Long-term structural deficit.
$2.9 billion
— Potential efficiency improvements identified for the MTA.
$1 billion
— State funding allocated to assist New York City with asylum seeker costs.
The Fiscal Year 2024 New York State budget framework was announced four weeks late without providing essential financial details regarding new recurring spending or the impact on the structural budget gap. To ensure transparency, the State should release basic financial plan tables alongside the final agreement so the public can understand the $229 billion spending plan.
Recommendations related to State Budget Process
The State should publish basic financial plan tables with the final agreement in the next few days to provide New Yorkers the information they need to understand how the State plans to spend and afford their $229 billion.
Key Data
$229 billion
— The total amount the State plans to spend and afford in the Fiscal Year 2024 Budget.
Four weeks
— The amount of time by which the announcement of the Fiscal Year 2024 Budget framework was delayed.
New York State's failure to enact a budget 20 days into the fiscal year threatens local governments with nearly $1 billion in potential additional spending and leaves the state facing a structural budget gap between $15 billion and $20 billion. To restore public faith and ensure fiscal stability, lawmakers must prioritize a budget that restrains spending growth, sunsets temporary tax increases, and provides transparent multi-year financial plan tables.
Recommendations related to State Budget Process
We urge the State’s leaders to enact a Fiscal Year 2024 Budget that makes New York more competitive, affordable, and fiscally stable.
The enacted budget should fund programs critical to New Yorkers’ lives and the state’s economic future, while restraining spending growth and paving the path to sunsetting temporary tax increases.
The State should enact a version of the Governor’s sensible, flexible, evidence-based approach to growth targets and streamlining development, along with the other elements of the Governor’s housing plan.
Lawmakers should give the public a reason to have faith in their government by providing basic multi-year financial plan tables that reveal the fiscal impacts of the budget when there is an agreement.
Key Data
$15 billion to $20 billion
— The range of the State's massive structural budget gap, which is dependent on the choices made in the budget.
nearly $1 billion
— The amount of additional City spending that could be required due to State policies, which New York City may have to account for without knowing the details.
20 days
— The amount of time into the fiscal year that had passed without the State's leaders enacting the budget.
New York State's failure to reach a budget agreement by the start of the fiscal year threatens to destabilize state finances and increase the risk of future service cuts. To ensure a sustainable future, the final budget must prioritize fiscal responsibility, transparency, and economic stability rather than relying on unfunded programs or tax increases.
Recommendations related to State Budget Process
The final agreement should maximize reserve deposits to protect New Yorkers from economic shocks.
The final agreement should boost housing production.
The final agreement should restrain spending to stave off massive future cuts.
The final agreement should not raise taxes.
The final agreement should stabilize the MTA while improving its efficiency.
The final agreement should eschew wasteful subsidies.
The State should publish basic, multi-year financial plan tables to reveal, rather than hide, the fiscal impacts of the budget.
New York State's Fiscal Year 2024 Executive Budget includes $14.8 billion in lump sum appropriations, which are discretionary funds that lack transparency and oversight, creating significant risks for waste and corruption. To improve fiscal accountability, the state should cease enacting new lump sum appropriations and mandate full, detailed disclosure for all existing discretionary spending.
Recommendations related to State Budget Process
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 Governor and Legislature should omit the $6 billion Special Public Health Emergency Appropriation from the budget.
The Governor and Legislature should reduce the Special Emergency Appropriation to $1 billion, and ensure it is subject to OSC oversight and competitive procurement rules.
The Governor and Legislature should fully and completely disclose distributions from all lump sum pots currently being spent.
The Governor and Legislature should pass a law codifying the Governor’s discretionary lump sum database, which should 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
— Proposed State FY 2024 discretionary lump sum spending authority.
$8 billion
— Amount of lump sums for the COVID emergency included in the total proposed spending.
$6.8 billion
— Amount of non-emergency lump sum appropriations in the FY 2024 Executive Budget.
$2.8 billion
— Amount of non-emergency lump sum funding allocated for Economic Development.
$2.1 billion
— Amount of non-emergency lump sum funding allocated for the State and Municipal (SAM) Facilities program.
$15.4 billion
— Total amount of oversight and bidding exemptions present in the FY 2024 budget.
A CBC Event First Deputy Mayor Sheena Wright joined CBC to talk about the Administration's Get Stuff Done management approach, the City and State budgets, how the Mayor and Governor align on housing, and much more.
New York State should publish basic, multi-year financial plan tables at the time of the budget agreement to ensure legislators and the public have a timely understanding of the budget's size, balance, and multi-year impacts. This requirement should be codified in state law for both one-house budget bills and the enacted budget to improve transparency.
Recommendations related to State Budget Process
The Governor and legislative leaders should publish basic, multi-year financial plan tables when they agree on the Fiscal Year 2024 Enacted Budget.
These financial plan tables should include at least one table each for All Funds, State Operating Funds, and the General Fund, along with disaggregated lists of receipts, disbursements, transfers, annual bottom line results, and allocations of fund balances.
The requirement to publish these financial plan tables should be codified in State law for both the one-house budget bills and enacted budget.
The Legislature should include these financial plan tables with their one-house budget proposals to provide transparency.
Key Data
400-pages
— The approximate length of the financial plans released by the Division of the Budget.
four weeks
— The time delay between the Enacted Budget and the release of the detailed financial plan.
New York State's budget proposals for fiscal year 2024 threaten long-term fiscal stability by creating structural deficits of up to $20 billion by 2027 due to unsustainable spending growth. To mitigate these risks, the state must implement spending restraint, allow temporary tax increases to expire, and improve fiscal management transparency.
Recommendations related to State Budget Process
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 dedicating more funding to the lockbox.
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 proposal.
$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 rate of adjusted State Operating Funds (SOF) spending increase between fiscal years 2022 and 2023.
$2.4 billion
— The amount of new, recurring spending added in the Executive Budget.
$3.9 billion
— The amount of additional annual spending proposed by the Legislature on top of the Executive proposal.
The New York State legislature is urged to reject extraordinary executive budget powers that allow for unilateral spending and borrowing without proper oversight or competitive bidding. These authorities, originally granted during the COVID-19 pandemic, are now deemed unnecessary and fiscally risky, threatening to undermine the integrity of the state budget process.
Recommendations related to State Budget Process
Reject universal appropriation transfer and interchange authority within the State Operations bill.
Reject authority to issue up to $3 billion in revenue anticipation notes.
Reject authority to utilize a $2 billion line of credit.
Reduce the “Special Emergency Appropriation” from $2 billion to $1 billion.
Reject the $6 billion “Special Public Health Emergency Appropriation”.
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.
Reject provisions added to other appropriations that remove competitive bidding requirements and the Comptroller’s oversight.
Key Data
$3 billion
— The amount of revenue anticipation notes the Executive is seeking authority to issue.
$2 billion
— The amount of the line of credit the Executive is seeking authority to utilize.
$6 billion
— The value of the 'Special Public Health Emergency Appropriation' that is recommended for rejection.
$1 billion
— The amount of the transfer from the General Fund to the 'Health Care Transformation Account' that should be rejected without clearer definitions.
$2 billion
— The current value of the 'Special Emergency Appropriation' that is recommended to be reduced to $1 billion.
$227 billion is the size of the NYS FY 2024 Executive Budget. The State's finances are in a precarious state, with the economy uncertain and the budget going from riches to rags. There is an $8 billion surplus this year, but outyear gaps of over $7 billion and a $12…
The New York State legislative budget proposals for fiscal year 2024 add nearly $5 billion in new, recurring spending and approximately $2 billion in additional annual taxes, while failing to provide essential financial plan tables for public transparency. These proposals also reduce deposits to reserves and support dubious economic development subsidies, undermining the state's fiscal stability and competitiveness.
Recommendations related to State Budget Process
State leaders should craft a budget that ensures fiscal stability by saving for a rainy day.
State leaders should restrain spending to stave off massive future cuts.
The state should provide essential budget transparency by including basic financial plan tables in budget proposals.
The final budget should adopt or improve upon the Governor's version of the Rainy Day Fund structure.
State leaders should craft a final budget that paves the path to reasonably competitive taxes to ensure New York's value proposition is compelling.
Key Data
$2 billion
— Additional annual taxes added by both legislative budget proposals through 2027 and permanently for business taxes.
$1 billion
— Business tax surcharge extension proposed by the Governor.
$5 billion
— New spending added by the legislative budget proposals, most of which is likely to be recurring.
New York's fiscal outlook is threatened by unsustainable spending growth and reliance on one-time budget fixes, leading to projected structural gaps of $14.4 billion by fiscal year 2028. To ensure long-term stability and competitiveness, the state must restrain spending, reject tax increases, improve budget transparency, and prioritize needs-based funding for education and Medicaid.
Recommendations related to State Budget Process
Restrain annual SOF spending growth to 2 percent to structurally balance the budget by fiscal year 2028.
Reject the corporate tax surcharge extension and future dependence on the personal income tax surcharge.
Accelerate Rainy Day Fund deposits and further improve the Fund’s structure.
Publish basic financial plan tables with the Legislative one-house budgets and the Enacted Budget to ensure basic fiscal transparency.
Reject the proposal to shift Medicaid costs onto local governments, and empower a Health System Reform task force to put Medicaid on a fiscally sustainable path.
Target all school aid based on need, reduce aid to wealthy districts that fund a sound basic education with local resources, and eliminate hold harmless provisions that ensure state aid increases year-over-year.
Shrink rather than expand the film tax credit, reject State borrowing for Belmont Park, and reject extension of New York City economic development incentives absent rigorous evaluation of their effectiveness.
Boost statewide housing production by supporting the Governor’s housing plan, including the New York State Housing Compact and transit-oriented development.
Ensure at least one-half of any plan to stabilize the MTA’s operating budget comes from labor productivity, with the remaining from the State budget, and appropriately apportioned regional support.
Establish a public, comprehensive performance measurement and management system to ensure the State’s $220 billion in spending delivers real results for New Yorkers.
Key Data
$14.4 billion
— The projected structural budget gap in fiscal year 2028.
$7.2 billion
— The projected budget gap in fiscal year 2027.
3.6 percent
— The rate at which State Operating Funds (SOF) spending is slated to grow next year after adjusting for fiscal maneuvers.
$220 billion
— The total amount of State spending that requires a comprehensive performance measurement and management system.
$85 billion
— The projected total school spending in school year 2024, excluding extraordinary COVID-19 aids.
$3.1 billion
— The amount of State aid that will go to 164 districts that self-fund a sound basic education before receiving any State aid.
New York State's Fiscal Year 2024 Executive Budget projects an $8.7 billion surplus for fiscal year 2023, which is primarily allocated to prepay debt and bolster reserves. However, the financial plan forecasts significant out-year budget gaps reaching $9.0 billion by fiscal year 2026, driven by lower revenue projections and recurring new spending.
Key Data
$8.7 billion
— Projected surplus for fiscal year 2023.
$2.4 billion
— Proposed annual recurring new spending in the budget.
3.6 percent
— State Operating Funds spending growth in fiscal year 2024.
$9.0 billion
— Projected budget gap in fiscal year 2026.
$19 billion
— Projected principal reserves by the end of fiscal year 2023.
4.3 percent
— Proposed annual spending growth from fiscal year 2024 to fiscal year 2027.
New York State faces significant fiscal risks, including a $12 billion structural budget gap and rapidly growing program costs, necessitating a disciplined approach to spending and reserves. The state should limit annual spending growth to 2 percent, avoid funding recurring costs with one-time receipts, and reform aid formulas to stop sending $3.1 billion to wealthy school districts that are already self-sufficient.
Recommendations related to State Budget Process
Keep fiscal year 2024 spending growth to 2 percent and start closing the $12 billion structural gap.
Add at least $2 billion more than already planned to the Rainy Day reserves.
Do not create new fiscal cliffs with recently identified receipts.
Omit extraordinary Executive powers.
Omit lump sum appropriations.
Publish financial plan tables with the one-house and enacted budgets.
Put Medicaid on a fiscally sustainable path.
Do not increase State school aid for districts already self-funding a sound basic education.
Identify and prioritize the most cost-effective and least disruptive strategies to reduce greenhouse gas emissions and increase resiliency.
Ensure that efficiency and productivity improvements are a significant part of any plan to address the MTA’s structural operating deficit.
Key Data
$12 billion
— The size of the structural budget gap that the state needs to start closing.
2 percent
— The recommended cap for annual State Operating Funds spending growth through fiscal year 2028.
$2 billion
— The amount of additional revenue identified in the mid-year budget update that should be added to Rainy Day reserves.
$3.1 billion
— The amount of state aid provided to wealthy school districts that already self-fund a sound basic education in school year 2022-23.
New York State's budget process requires significant reform to improve transparency and accountability, particularly by providing clearer financial data and avoiding rushed legislative votes. Implementing these changes, such as requiring fiscal impact statements and increasing oversight funding, would help ensure more stable and responsible fiscal management.
Recommendations related to State Budget Process
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.
The State should include complete fiscal impact statements with all relevant bills to ensure spending or receipts are properly estimated.
The State should avoid using messages of necessity for budget bills to prevent rushing votes before the public and legislators can review the contents.
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 to prevent ethical and fiscal risks associated with unilateral spending.
The State should hold a joint legislative hearing on the budget process to facilitate examination of strategies to improve long-term fiscal management.
Key Data
600
— The number of public authorities overseen by the Authorities Budget Office.
$273 billion
— The amount of public debt held by public authorities overseen by the Authorities Budget Office.
$80 billion
— The annual spending of public authorities overseen by the Authorities Budget Office.
$5 million
— The estimated annual funding required for the Authorities Budget Office to fulfill its responsibilities.
$2.1 million
— The previous annual funding level for the Authorities Budget Office.
$2.9 million
— The increased annual funding level for the Authorities Budget Office.
Governor Hochul's 2023 State of the State address outlines initiatives for housing and energy that require careful fiscal scrutiny in the upcoming Executive Budget. To maintain economic competitiveness, the state must prioritize spending restraint to ensure the scheduled expiration of the 2021 personal income tax increase.
Recommendations related to State Budget Process
New York’s competitiveness will be well served by restraining spending to ensure that the 2021 personal income tax increase sunsets on schedule.
The State’s leaders must use the Fiscal Year 2024 Executive Budget to scrutinize proposed initiatives, determine their price tag and affordability, and analyze their impacts on New Yorkers’ lives and New York’s fiscal future.
New York State faces a $12 billion structural budget problem due to unsustainable spending growth and the expiration of non-recurring federal resources. To ensure fiscal stability, the state must restrain spending, reform budget management practices, and prioritize cost-effective interventions across major programs like Medicaid and the MTA.
Recommendations related to State Budget Process
The State needs to bring the costs of Medicaid, education, transportation, housing, and environmental mitigation and sustainability in line with available revenues.
Reducing State Operating Funds (SOF) spending growth to 2 percent annually would eliminate the current 2027 budget gap and accommodate the loss of nonrecurring resources.
The State should reject the proposal of extraordinary budget powers that allow the Executive unilateral, near-universal spending authorities.
The State should save the $2 billion in unallocated receipts for a rainy day.
The budget should include proposals for more structural reforms, such as the establishment of an independent fiscal analyst’s office, a transition to budgeting on a modified accrual basis, and implementation of a performance management system.
Stabilizing the MTA’s operating budget should rely significantly more on efficiency savings.
Key Data
$12 billion
— The structural problem the State has in its sights for fiscal year 2027.
$6 billion
— The budget gap opened in fiscal year 2027 due to economic risks and updated projections.
$13 billion
— The amount of pandemic-related federal aid received for schools.
$10 billion
— The minimum amount of pandemic-related federal aid received for Medicaid.
$4.2 billion
— The amount of the environmental bond act approved by voters.
$2.5 billion
— The MTA's annual structural operating budget deficit.
Welcome and Introduction Andrew Rein Citizens Budget Commission, President (moderator) Robert Megna Rockefeller Institute, President; former NYS Budget Director (moderator) Presentation of Report Findings Patrick Orecki Citizens Budget Commission, Director of State Studies Panelists and Moderators* Greg David , CUNY Ravitch Fiscal Reporting Program, Director (moderator) Rachael Fauss , Reinvent…
New York State's budget and fiscal management processes are currently hindered by opaque practices, insufficient data, and inadequate oversight that obscure the state's true financial condition. Implementing comprehensive reforms, such as adopting GAAP-based accounting, strengthening reserve funds and debt caps, and establishing an independent fiscal analysis office, would improve transparency and accountability in the state's budgeting.
Recommendations related to State Budget Process
Manage, report, and balance the budget in accordance with Generally Accepted Accounting Principles (GAAP) on a modified accrual basis.
Strengthen the Rainy Day Fund by raising deposit and balance caps, combining all reserve funds, and mandating deposits when revenues are strong.
Strengthen the debt cap.
Tightly tie appropriations to planned spending by reducing unfunded and undefined spending authority.
Require financial plans to be published with the enacted and one-house budgets.
Require fiscal estimates with other legislation.
Prevent the use of Messages of Necessity on budget bills.
Implement comprehensive, transparent long-term capital planning processes.
Fully fund the Authorities Budget Office.
Establish the Independent Fiscal Analysis Office.
Key Data
$1.7 billion
— Amount of Medicaid payments delayed to shift them into the following fiscal year, obfuscating spending growth.
$27 billion
— Estimated amount needed to cover two years of average recessionary receipt shortfalls plus one percent spending growth.
$88 billion
— Projected State-supported debt by fiscal year 2027, significantly higher than the $71 billion expected prior to debt cap exemptions.
$185,000,000
— Appropriation for the Local Community Assistance Program, which demonstrates problems with lump sum appropriations.
$102.4 billion
— Value of 21,282 contract transactions received by the Office of the State Comptroller in 2019.
$220 billion
— Annual state budget spending on programs and operations.
The Governor is urged to veto 20 bills that would increase public costs by enhancing pension, disability, and death benefits outside of the standard budget process. These measures lack sufficient fiscal oversight and contribute to rising long-term financial obligations for the state and local governments.
Recommendations related to State Budget Process
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 a complete fiscal note, as this is a sufficient basis for rejection.
Key Data
20
— Total number of bills the Governor is urged to veto because they enhance benefits and increase costs outside of the budget process.
$78.6 million
— Immediate estimated costs associated with fifteen of the bills that have fiscal notes attached.
$21.0 million
— Annual estimated costs following the initial immediate costs for fifteen of the bills that have fiscal notes attached.
12
— Number of bills that would enhance pension benefits.
6
— Number of bills that would expand disability or death benefits.
20
— Annual count of benefit sweeteners passed by the Legislature in 2022, up from 12 in 2018.
Despite a currently balanced budget, New York State faces projected future budget gaps approaching $6 billion, which could expand to $12.7 billion once temporary tax surcharges expire. To secure long-term fiscal stability, state leaders must restrain spending growth to 2% annually, build up reserves, and target education and Medicaid funding more efficiently.
Recommendations related to State Budget Process
New York State leaders should stay the course on building and maintaining budget reserves to prepare for future recessions.
New York State should restrain spending growth to 2% annually through 2028 to close the projected $12 billion gap.
New York State should charge a diverse panel of stakeholders to identify ways to transform Medicaid and the health system overall to improve health and control costs.
To stabilize the budget and increase equity, New York State should better target education aid to high-need districts and reevaluate assistance to wealthy districts.
New York State should base economic development and climate investments on data, evaluation, and tradeoffs to maximize job creation and environmental benefits.
New York State should implement comprehensive performance management to deliver high-quality, efficient services and focus funds where the impact is greatest.
New York State leaders must mind the state's tax competitiveness, considering that New York already has the nation's highest combined business and top personal income tax rates.
Key Data
$6 Billion
— Approximate future budget gaps facing New York State despite a currently balanced budget.
12%
— Increase in state spending approved in the April budget agreement.
$12.7 Billion
— Estimated budget gap remaining after the expiration of the personal income tax surcharge and one-time prepayments.
$10 Billion
— Amount currently held in New York State's rainy day reserves.
50%
— Share of the state budget comprised of Medicaid and education spending.
$3 Billion
— Annual education assistance sent to wealthy school districts that already self-fund a sound basic education.
A coalition of advocacy groups is urging the Governor to issue an executive order requiring state agencies to provide annual updates to their transparency plans, including specific metrics on FOIL compliance and open data. The request also calls for the Division of the Budget to improve transparency by publishing detailed information on discretionary lump sum and capital appropriations.
Recommendations related to State Budget Process
The Governor should mandate via Executive Order annual transparency plan updates to ensure agencies identify specific actions and assess progress.
The state should require annual transparency plan updates to include a checklist showing how well agencies comply with transparency mandates like the Freedom of Information Law and Open Data.
The Governor should publish the top three deliverables from each agency transparency plan and progress made to date.
The state should have the Division of the Budget publish complete discretionary or “MOU” lump sum and capital appropriations to improve financial transparency.
The state should publish the “public facing performance website” identified in the Division of the Budget’s transparency plan to inform the public on the State’s progress.
Key Data
70
— Number of state agency transparency plans rated in Reinvent Albany’s Opening New York 2022 report.
3
— Number of top deliverables the Governor is requested to publish from each agency transparency plan.
2013
— Year of the Open Data Executive Order that agencies are expected to comply with.
New York State's fiscal year 2023 budget included $1.6 billion in late-added capital projects that were not part of initial proposals, bypassing rigorous evaluation and public scrutiny. These additions, often in the form of lump sums, lack transparency and sound planning, prompting calls for a more holistic capital budgeting process.
Recommendations related to State Budget Process
The State should utilize a comprehensive capital planning process that identifies needs, allocates funds to projects that meet the greatest needs and deliver value, reasonably specifies projects in appropriations, and provides transparency on the spending of previously appropriated lump sums.
The Governor and Legislature should stop using lump sum appropriations for capital projects or otherwise, as they pose a fiscal risk and allow for ad hoc spending with limited oversight.
The Executive should provide transparency on disbursements of existing lump sum pots by reporting details of spending, including the timing, amount, recipient, and purpose of awards.
Key Data
$1.6 billion
— The amount of capital appropriations added to the fiscal year 2023 enacted budget that were not included in the Executive’s or Legislative budget proposals.
$920 million
— The portion of the late additions appropriated in a few lump sums.
$656 million
— The portion of the late additions allocated for specific projects.
$418 million
— The amount of funding for the Buffalo Bills Stadium that will be paid for with current money, representing 70 percent of the total funding for that project.
$1.2 billion
— The amount of these projects that may be financed through bonds, consuming State debt capacity.
New York State's budget includes billions of dollars in opaque lump sum appropriations that allow for unilateral spending decisions without public notice or oversight. To improve transparency and accountability, the state should reduce these funds, specifically itemize planned spending, and restore the Comptroller's authority to review state contracts.
Recommendations related to State Budget Process
The state should avoid using lump sum pots in the state budget to prevent unilateral spending decisions without public notice.
Any remaining lump sum pots included in the budget should be limited in scope, subject to Comptroller review, and publicly disclosed in an open data format.
The state must fully disclose all details of past and future lump sum pots as promised in the Executive Chamber and Division of the Budget October 2021 Transparency Plans.
The Governor should support and sign into law A7925-A / S6809-A to restore the Comptroller’s powers to review state contracts before they are signed.
New York should vastly reduce the use of lump sum funds in the budget and instead specifically itemize planned spending to ensure greater transparency and accountability.
Key Data
$350 million
— The amount allocated for the 'Long Island Investment Fund,' which is an example of a broadly defined pot planned for currently unidentified purposes.
$8 billion
— The total amount of special emergency appropriations that are broadly defined and ostensibly for emergency response purposes.
$8 billion
— The amount of lump sum funds approved in the state operations budget alone in the final FY 2023 budget.
$6 billion
— The size of the 'public health emergency' pot included in the FY 2023 state operations budget.
$2 billion
— The size of the 'special emergency' pot that is solely for transfer by the governor and exempt from Comptroller review.
$220 billion is the reported size of the New York State fiscal year 2023 budget that the Governor and Legislature adopted on April 10. The budget includes a property tax rebate and a tax holiday, and increases State spending about $14 billion, with more money for education aid, day care,…
The Fiscal Year 2023 Enacted Budget includes legislation to create a public database of economic development deals, which improves transparency but contains loopholes regarding implementation and data scope. Additionally, the budget extends the film tax credit for 3 years, a costly program that lacks commensurate economic impact and should be eliminated.
Recommendations related to State Budget Process
The State should continue to support additional economic development reforms, including bolstering the Database of Deals, compiling a unified economic development budget, and other programmatic reforms.
The film tax credit, one of the State’s largest annual economic development tax breaks, should be phased out and ultimately eliminated.
Key Data
3 years
— Duration for which the film tax credit was extended in the Fiscal Year 2023 Enacted Budget.
New York State's fiscal year 2023 budget agreement lacks transparency and sufficient long-term fiscal planning, relying on recurring spending increases without adequate restraint. The state should prioritize building reserves in a locked fund, aligning spending growth with long-term revenue, and eliminating ineffective programs like the film tax credit.
Recommendations related to State Budget Process
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.
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.
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.
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 on top of the Governor’s proposed $10 billion increase.
The delay in finalizing the fiscal year 2023 state budget undermines public accountability and confidence in government operations. Leaders should prioritize allocating available flexible funds while ensuring new spending is offset by savings to avoid future fiscal gaps or tax increases.
Recommendations related to State Budget Process
The State’s leaders should focus on allocating the likely more than $6 billion in flexible funding the State has for the new year.
Any additional recurring spending should be offset by savings elsewhere and not by reducing the amount the Executive Budget smartly allocated to reserves or by opening budget gaps that will require future service cuts or economically damaging tax increases.
Maintaining reserve deposits proposed by the Governor will help protect future New Yorkers from the next recession or emergency.
Final negotiations should include provisions to manage State programs actively to deliver results and to report publicly metrics of State performance.
We urge the State's leaders to enact a budget soon and ensure that it addresses the priorities of New Yorkers both now and in the future.
Key Data
$6 billion
— The amount of flexible funding the State has for the new year, comprised of the Executive Budget’s proposed property tax credit and COVID relief funds plus additional tax receipts.
New York State officials are urged to increase budget transparency by publishing basic, multi-year financial plan tables immediately upon reaching a budget agreement. This requirement should be codified into law to ensure the public and legislators have a timely understanding of the budget's size, balance, and multi-year impacts.
Recommendations related to State Budget Process
Publish basic, multi-year financial plan tables when agreeing on the Fiscal Year 2024 Enacted Budget.
Include at least one financial plan table each for All Funds, State Operating Funds, and the General Fund.
Include reasonably disaggregated and totaled lists of receipts, disbursements, transfers, annual bottom line results, and allocations of fund balances.
Codify the requirement to publish these tables in State law for both the one-house budget bills and enacted budget.
Include these tables with the Legislature's one-house proposals to provide basic transparency.
New York's proposed legislative budget increases threaten long-term fiscal stability by creating significant future budget gaps and reducing necessary emergency reserves. To ensure fiscal health, the state should adhere to the Governor's spending limits, improve budget transparency, and implement rigorous performance management systems for all funded programs.
Recommendations related to State Budget Process
The Governor and the Legislature should adopt a budget that keeps to the Executive Budget’s top line on spending.
The state should focus on allocating the $5 billion available for relief and recovery rather than increasing overall spending.
The Governor and Legislature should diligently manage and provide oversight of funded programs by developing plans, identifying goals, measuring activities and results, and ensuring accountability.
The state should put funds in reserves as the Governor proposed to ensure continued fiscal stability.
The state should publish basic financial plan tables that show the receipts and disbursements with the one-house and enacted budgets to improve transparency.
The state should implement statewide performance measurement and management to ensure spending delivers results efficiently.
Key Data
$16.2 billion
— The total proposed spending increase in the Legislature's one-house budgets for fiscal year 2023.
$7.7 billion
— The estimated budget gap in fiscal year 2026 if the Legislature's spending proposals are adopted.
$15 billion
— The amount that would be added to reserves by fiscal year 2025 under the Governor's proposed budget.
$4.8 billion
— The amount that would be added to reserves under the Legislature's proposals.
$40 billion
— The potential three-year receipt shortfall the state could face when the next recession hits.
$10 billion
— The increase in State Operating Funds (SOF) spending proposed by Governor Kathy Hochul’s Executive Budget.
New York State faces pressure to provide significant public funding for a new Buffalo Bills stadium, with construction costs estimated between $1.4 billion and $1.7 billion. To ensure fiscal responsibility, the state must conduct a rigorous, transparent analysis of incremental economic benefits and costs before committing to any subsidy, rather than relying on speculative projections.
Recommendations related to State Budget Process
The State should transparently provide an analysis that identifies the benefits and full costs for any proposed subsidy.
The analysis should credibly identify the incremental economic and fiscal impacts attributable to a proposed subsidy and use them in conjunction with the length of time the subsidy would provide benefit to calculate a proposed subsidy’s value.
The State should discount the benefits by a factor that represents the benefit that would be accrued should the State use those funds for another purpose.
Any subsidy should be provided only after private investment and include clawback provisions.
The State should establish a unified economic development budget to improve its economic development spending practices.
Key Data
$1.4 billion to $1.7 billion
— Estimated cost range for a new stadium, depending on whether it is built with a roof.
$862 million
— Estimated cost to renovate the existing Highmark Stadium.
$385.8 million
— Total annual economic output generated by the Buffalo Bills franchise.
$19.5 million
— Annual personal income tax revenue generated for the State of New York by the Bills team payroll.
$27 million
— Estimated annual fiscal impacts in tax revenue generated by the presence of the Bills.
$179.7 million
— Total annual labor income generated by the Buffalo Bills franchise.
$0 is the size of the New York State budget deficit in each year of New York State’s five-year Executive Budget financial plan, as proposed by Governor Kathy Hochul. The Governor’s budget proposal balances the budget in each of the next five years, an unprecedented level of fiscal stability for…
New York State should limit spending to available non-recurring funds and prioritize building reserves to 15 percent of State Operating Funds to prepare for future economic downturns. Additionally, the state should avoid adding new recurring programs without offsetting them by reducing existing spending, such as aid to wealthy school districts.
Recommendations related to State Budget Process
State leaders should hold the top line on spending, and allocate no more than the $5 billion non-recurring funds already available for fiscal year 2023.
The State should deposit funds into reserves as proposed to ensure the State can weather the next storm and protect New Yorkers.
State leaders should not add recurring programs without reducing other recurring spending.
Any new recurring programs should be funded by reducing planned spending elsewhere, such as the more than $2 billion provided to wealthy school districts.
Key Data
$5 billion
— non-recurring funds available for fiscal year 2023
$10 billion
— proposed increase in State Operating Funds spending next year
15 percent
— target for reserves as a percentage of State Operating Funds spending
$4.6 billion
— projected annual growth of the State Operating Funds budget after fiscal year 2023
$2 billion
— funding provided to wealthy school districts that already provide sufficient local funding
New York's fiscal plan for 2023 proposes a significant $10 billion increase in spending, which requires greater accountability, transparency, and performance management to ensure funds are used effectively. The state should prioritize restraining long-term spending growth, building adequate rainy day reserves, and reforming specific programs like Medicaid and economic development to ensure fiscal stability.
Recommendations related to State Budget Process
The Legislature should hold the top line on fiscal year 2023 spending and restrain growth over time to ensure the state allows recent tax increases to sunset.
The State should reject unnecessary budget powers and lump sum appropriations that give the Executive broad, unilateral spending and borrowing authorities.
The Legislature should save for a rainy day by maintaining the planned reserve deposits and enacting improvements to the Rainy Day Fund structure.
The State should not allow the State to continue to take $250 million annually in local sales tax revenue from New York City and other counties.
The Governor and Legislature should include financial plans with the one-house budgets and enacted budget to improve transparency and public review.
The Legislature should enact a law to implement a statewide comprehensive, performance management program that sets goals for each major program and uses a robust portfolio of indicators.
The State should better target school aid to high-need districts, shifting some expense-based aids to foundation aid and eliminating the hold harmless provision.
The State should boost housing production and enact a cost-effective 421-a replacement that supports affordable and rental housing development.
The State should establish a unified economic development budget and standardize metrics to improve oversight and management of economic development programs.
The State should adopt appropriate and meaningful changes to the Medicaid global cap to improve transparency and ensure fiscal sustainability.
Key Data
$10 billion
— The adjusted year-to-year increase in State Operating Funds (SOF) spending for fiscal year 2023.
$4.2 billion
— The total amount allocated for relief and recovery, including unprogrammed funds and the property tax rebate.
$250 million
— The amount the State takes annually in local sales tax revenue from New York City and other counties.
$41 billion
— The cumulative amount of federal and State school aid flowing to schools over the next five years.
$2.7 billion
— The amount of aid received per year by wealthy districts that already self-fund a sound basic education.
$10 billion
— The annual price tag of the State’s economic development spending.
The proposed Fiscal Year 2023 Executive Budget includes unnecessary provisions that grant the Governor broad, unilateral spending and borrowing authorities without adequate legislative or Comptroller oversight. These powers, originally enacted to manage pandemic-related fiscal uncertainty, are no longer required given the state's stable financial outlook and should be rejected or amended to ensure proper accountability.
Recommendations related to State Budget Process
The Legislature should reject the proposed $6 billion “Special Public Health Emergency Appropriation”.
The Legislature should reject the universal appropriation transfer and interchange authority within the State Operations bill, as it grants the Executive unilateral power to re-program spending without legislative input.
The Legislature should reject the proposed authority to issue up to $3 billion in revenue anticipation notes.
The Legislature should reject the proposed authority to utilize a $2 billion line of credit.
The Legislature should amend the $2 billion “Special Emergency Appropriation” to match the fiscal year 2020 amount and restore Comptroller oversight.
The Legislature should amend the $2 billion appropriation for “Reserve For COVID-19 Public Health Response” by requiring that the spending be 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” by requiring that the spending be appropriated as clearly defined line items with oversight.
Key Data
$6 billion
— Proposed "Special Public Health Emergency Appropriation" in the Executive Budget.
$3 billion
— Proposed authority to issue revenue anticipation notes.
$2 billion
— Proposed authority to utilize a line of credit.
$216 billion is the size of New York State fiscal year 2023 budget proposed by Governor Kathy Hochul. The proposed spending plan is balanced over five years and makes significant deposits to reserves, but also maintains high taxes and accelerates State spending growth. At an event with CBC Trustees, Governor…
The New York State Fiscal Year 2023 Executive Budget includes proposals to increase housing production through zoning changes for transit-oriented development, accessory dwelling units, and commercial-to-residential conversions. Additionally, the state is urged to stabilize public housing by approving the Preservation Trust bill, enacting procurement reforms, and increasing financial support for public-private partnerships.
Recommendations related to State Budget Process
The State should require local governments to zone for denser transit-oriented development to increase regional housing supply.
The State should legalize accessory dwelling units to help meet the diverse housing needs of New Yorkers.
The State should lift the cap on residential floor area ratios to give New York City more tools and flexibility to stimulate housing production.
The State should encourage commercial-to-residential conversions to stimulate housing production, especially in the Manhattan core.
The State should approve the proposed Preservation Trust bill to help stabilize the future of NYCHA.
The State should enact procurement reform to reduce NYCHA’s costs by allowing it to use construction manager-build and construction manager-at risk procurement rules.
The State should increase financial support for Rental Assistance Demonstration (RAD) public-private partnerships to bring in capital and new management.
Key Data
110,000
— Number of public housing units to be renovated through the proposed Preservation Trust.
New York's Fiscal Year 2023 Executive Budget includes significant spending increases and relies on optimistic revenue projections, necessitating disciplined negotiation to avoid destabilizing future finances. To ensure long-term fiscal health, the state should prioritize building reserve funds to 17 percent of operating expenses, restrain recurring spending, and implement rigorous performance management for state programs.
Recommendations related to State Budget Process
The unallocated relief fund and overall spending in the plan should be considered the ceiling for negotiation and not the floor as precedent would indicate.
The State should increase deposits into reserve funds to at least 17 percent of state operating funds, a commonly accepted national benchmark, which would require another $2.5 billion be added over time.
The State needs to ensure Medicaid spending growth is affordable and does not increase recurring spending without offsetting savings elsewhere.
The State can restrain spending by curtailing school aid to wealthy districts, which provide enough local resources to fund a sound basic education.
The State should implement a performance management and accountability process, cascading from the Governor’s Office down throughout State government, to ensure programs deliver results.
Key Data
$5 billion
— Additional receipts expected in each of the next four years.
$2 billion
— Additional fund proposed by the Governor to be negotiated with the Legislature.
$3.6 billion
— Increase in State operating spending next year.
$25.9 billion
— Increase in State operating spending over the next five years.
15 percent
— Current level of deposits into reserve funds included in the Executive Budget.
17 percent
— Recommended level of deposits into reserve funds as a national benchmark.
New York State spends $10 billion annually on economic development programs without rigorous evaluation or a unified budget, masking the true magnitude of these investments. To improve oversight and management, the state should implement standardized metrics, create a comprehensive database of deals, and require private investment for all subsidized projects.
Recommendations related to State Budget Process
The State should present a unified economic development budget so that New Yorkers know how much is really being spent.
The State should establish standardized metrics for economic development initiatives to identify the impact of each deal and program.
The State should improve its Database of Deals to publicly and regularly report on the cost, progress, and evaluation of all economic development initiatives.
Program design should be improved by requiring private “skin in the game,” performance metrics and penalties for non-performance, and evaluation.
Oversight should be improved by restoring the Comptroller’s procurement oversight powers and increasing funding for the Authorities Budget Office.
Key Data
$10 billion
— Total annual cost of economic development programs in New York State in 2019.
8
— Number of criteria for a sound database met by the current Database of Economic Incentives.
20
— Total number of criteria for a sound database identified by watchdogs in 2018.
3
— Number of years ago the Database of Deals was funded.
New York State could significantly reduce its uninsured population by implementing strategies such as state-funded premium assistance, a state-sponsored public option, and expanded outreach and enrollment efforts. These initiatives would require state budget investments but would improve health outcomes and economic security for thousands of New Yorkers.
Recommendations related to State Budget Process
New York could replace the federal mandate penalty that was repealed in 2018 with an identical policy at the State level.
New York could provide additional subsidies to reduce the cost of individual market plans for more people.
New York could procure and offer a plan through the State Marketplace with lower premiums and less cost-sharing than plans currently available.
New York could use a similar strategy to create a State-only funded Essential Plan for low-income immigrants.
New York could provide additional funding for the State Navigator program to target areas where fewer people are insured than average.
New York could enable enrollment through tax returns similar to the Maryland Easy Enrollment Health Insurance Program.
New York could adopt similar policies to Massachusetts, such as special enrollment periods for people buying Marketplace plans for the first time.
Key Data
$803 million
— Estimated annual State cost for the deepest premium subsidy design.
$345 million
— Estimated annual net State cost for a State-funded Essential Plan for low-income immigrants.
$20 million
— Estimated total annual cost for expanding the Navigator program.
1 million
— Number of New Yorkers who remained uninsured in 2019.
5.2 percent
— New York's uninsured rate in 2019.
92,000
— Estimated number of newly insured people under the deep subsidy design.
New York State should prioritize long-term fiscal stability by addressing the looming fiscal cliff, implementing rigorous performance management, and improving budget transparency through the adoption of Generally Accepted Accounting Principles. Additionally, the state needs to better manage school aid, stabilize Medicaid, and reform economic development and infrastructure planning to ensure efficient use of resources.
Recommendations related to State Budget Process
The State should start to identify recurring savings that should grow to $3.5 billion annually by fiscal year 2025 to ensure that drastic service cuts are not required when the federal funds are exhausted.
The State should use a rigorous performance management process to oversee school aid spending.
The State’s Medicaid Redesign Team should be reconstituted as a Health System Transformation Team with a mandate to make recommendations to improve healthcare access, affordability, quality, and equity.
The State should produce a financial plan when the budget is enacted and ensure adequate time and information to evaluate proposals.
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.
New York should implement a statewide performance management system that combines managerial action and accountability with key measures of each program’s performance.
The Executive and Enacted budgets should include a Unified Economic Development Budget (UEDB) that includes the costs of all economic development programs for the coming fiscal year.
The Governor should vigorously support the MTA to improve the efficiency of its operations, including working with the leaders of its unionized workforce.
The State should improve its capital planning processes, broadly adopt benefit-cost analysis, better identify needs and resources, and plan for maintenance and improvements.
The latest tax increases should be lowered, reversed, or at least allowed to sunset to foster economic competitiveness.
Key Data
$3.5 billion
— Recurring program spending supported by federal aid in fiscal year 2025 that will not be available thereafter.
$13 billion
— One-time federal funds provided for New York’s schools.
$2 billion
— Structural imbalance in the MTA operating budget that will emerge when federal aid runs out.
$2.9 billion
— Potential annual savings the MTA could achieve by increasing operations and maintenance productivity.
$1 billion
— Expected net annual contributions from congestion pricing for the MTA capital plan.
$19.6 billion
— Estimated two-year impact of a typical recession on state revenues.
New York State should enact legislation requiring the Department of Transportation to provide detailed annual reports on capital projects, funding obligations, and infrastructure conditions to improve transparency and planning. If this legislation is vetoed due to potential costs, its provisions and additional long-term planning requirements should be incorporated into the fiscal year 2023 budget.
Recommendations related to State Budget Process
The Governor should sign S199B/A4010B to improve capital planning and reporting for transportation infrastructure in New York State.
The State should add long-term, intermodal planning provisions to the transportation capital planning process through subsequent legislation.
If S199B/A4010B is vetoed, its provisions and additional requirements for long-term, intermodal planning should be included in the fiscal year 2023 budget.
Key Data
$1 million
— Estimated unfunded cost of the 2019 bill A4880/S1673, which served as the basis for its veto.
The Authorities Budget Office requires an annual funding increase to $5 million to effectively oversee nearly 600 state and local authorities that hold $243 billion in public debt. Current staffing levels are insufficient to fulfill statutory duties, including conducting investigations and ensuring compliance with procurement and ethics guidelines.
Recommendations related to State Budget Process
The state should provide an annual allocation of $5 million to the Authorities Budget Office to ensure it has the resources to fulfill its statutory duties.
To reach the necessary funding level, the existing budget of $2.05 million for the Authorities Budget Office should be increased by $2.95 million.
Key Data
$5 million
— The recommended annual allocation for the Authorities Budget Office to fulfill its statutory duties.
$243 billion
— The amount of public debt held by the nearly 600 state and local authorities overseen by the Authorities Budget Office.
600
— The number of state and local authorities and subsidiaries that the Authorities Budget Office is charged with overseeing.
$2.95 million
— The amount by which the Authorities Budget Office's existing budget needs to be increased to reach the recommended funding level.
$2.05 million
— The current budget amount the Authorities Budget Office received in the 2021-22 budget.
$40 billion
— The minimum amount state authorities collectively spend annually.
New York State has historically used accounting maneuvers to obscure the true size and growth of its budget, masking spending increases that exceed reported figures. To ensure long-term fiscal stability, the state must improve transparency by adopting Generally Accepted Accounting Principles and avoiding fiscal gimmicks that create future budget gaps.
Recommendations related to State Budget Process
The State should shift to budgeting and reporting using Generally Accepted Accounting Principles (GAAP) to improve fiscal transparency.
The State should present clear, timely financial reports that display the true level and growth of State spending.
The State should forego fiscal maneuvers, such as shifting spending off-budget or delaying payments, to accurately reflect the budget's size.
The State should restrain new aid growth for wealthy districts as a method to meaningfully control spending and reduce future budget gaps.
The State should present timely adopted financial plans and quarterly financial plan updates to ensure accountability.
Key Data
$3.5 billion
— The projected fiscal cliff in fiscal year 2025, representing the gap between available funding and planned spending once federal aid is exhausted.
$12.7 billion
— The amount of American Rescue Plan (ARP) federal fiscal relief received by the State in May 2021 to be disbursed over four years.
$116.4 billion
— The projected State Operating Funds spending for fiscal year 2022, adjusted for fiscal maneuvers.
5.7 percent
— The decline in State Operating Funds spending in fiscal year 2021 after adjusting for fiscal maneuvers.
1.1 percent
— The true growth rate of State Operating Funds spending in fiscal year 2021 after accounting for federal aid.
Twenty-one bills passed by the Legislature would increase public employee pension and disability costs by millions of dollars annually, bypassing established budget negotiations and collective bargaining processes. These legislative actions create fiscal burdens outside of the standard financial planning framework, necessitating a veto to maintain fiscal discipline.
Recommendations related to State Budget Process
The Governor should veto the 21 bills because they enhance benefits and increase costs to New York State and local governments outside of budget negotiations and/or collective bargaining processes.
The Governor should veto the 21 bills to prevent the granting of targeted benefit enhancements that increase costs and encourage further expansions.
Key Data
$64.1 million
— Immediate cost of the 15 bills with fiscal notes attached.
$7.8 million
— Annual cost of the 15 bills with fiscal notes attached.
$48.2 million
— First-year cost of establishing a 20-year retirement plan for certain State law enforcement positions under S4523/A6457.
$1,270,000
— One-time past service cost for S6710/A7342, which expands performance of duty disability eligibility.
$930,000
— One-time past service cost for S4441/A7905, which increases the in-service death benefit for Suffolk County correction officers.
$778,000
— One-time past service cost for S4440/A6936, which increases the in-service death benefit for Nassau County correction officers.
New York State's First Quarter Financial Plan Update recognizes $2.2 billion in additional annual tax receipts, totaling $8.5 billion over four years. The state should deposit the majority of additional receipts into Rainy Day reserves and ensure future financial updates are released on time to maintain fiscal transparency.
Recommendations related to State Budget Process
The vast majority of additional tax receipts should be deposited into Rainy Day reserves.
The State should ensure that future financial plan updates are released on time to allow the public to assess the State’s fiscal condition.
Key Data
$2.2 billion
— Additional tax receipts recognized in the First Quarter Financial Plan Update for the current year.
$8.5 billion
— Additional tax receipts recognized in the First Quarter Financial Plan Update over four years.
$2.4 billion
— Amount added to the State’s Rainy Day and Economic Uncertainties reserve funds.
$3 billion
— Potential additional current year receipts based on the Comptroller’s monthly cash reports.
$7.2 billion
— Total amount of reserves after the deposits outlined in the Update.
At this time last year, New York State estimated that tax receipts would fall short of pre-pandemic estimates by $15 billion annually on average, totaling $60 billion over four years. Receipts, however, have been much stronger than expected. By April 2021, the State reduced its four-year tax receipt shortfall estimate by 80 percent, to $11.8 billion. Over the four-year period, the State also will receive at least $21.1 billion of targeted and general federal fiscal…
New York State should implement a government-wide performance management and accountability system to ensure transparency and effective delivery of relief programs. Additionally, the state must improve fiscal management by ending manipulative budget maneuvers, adopting Generally Accepted Accounting Principles, and building sufficient rainy day reserves to mitigate future economic risks.
Recommendations related to State Budget Process
The state should institute a data-driven management and accountability process to track and manage spending, outputs, and impacts.
The state should publicize specific goals for every major activity and transparently provide the core performance data.
The state should move funds back on budget and stop manipulating the timing of spending.
The state should budget and report using Generally Accepted Accounting Principles and publish the financial plan when the budget is adopted.
The state should put more funds aside for a rainy day to prepare for the next recession or severe emergency.
Key Data
$212 billion
— The total size of the state budget for the current year.
$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 this year compared to what was budgeted.
$3.5 billion
— The amount of recurring programs currently supported by federal aid that will be in trouble when that aid runs out.
$209 billion is the total spending in New York State's Enacted Budget for Fiscal Year 2022. Six months ago, New York State was staring down a four-year revenue shortfall totaling $60 billion—however, revenues have strengthened and the federal government passed a stimulus bill that includes what may be the largest…
New York's state budget has surpassed $200 billion, yet the state lacks a comprehensive performance management system to track how these funds and federal aid are utilized. Implementing a statutory framework for performance metrics and transparency is essential to ensure resources are managed effectively and outcomes are measurable.
Recommendations related to State Budget Process
The State should embrace performance management comprehensively to improve operations and accountability.
New York should enact by statute a ten-point framework to promote consistency in reporting across agencies, authorities, and administrations.
The State must implement a public performance management system to serve as both a means for reporting information to the public and a management tool for State officials.
The public should be fully and regularly informed about how federal funds are flowing, to whom, how efficiently, and their impact on the economy and the long-term state budget.
Key Data
$212 billion
— The size of the State budget for the current year.
$12 billion
— Amount of federal aid allocated for direct fiscal support.
$14 billion
— Amount of federal aid allocated for schools.
$4 billion
— Amount of new tax increases annually.
New York State's fiscal year 2022 budget agreement relies on temporary federal aid and tax increases to support recurring spending, creating long-term fiscal risks. The budget lacks systemic improvements and fails to provide a timely financial plan, leaving questions about the sustainability of increased spending on education and Medicaid.
Recommendations related to State Budget Process
The State should empanel a Health System Transformation team to reform the Global Cap, address long term Medicaid spending, and focus on health system-wide reforms to restrain cost, reduce disparities, and improve quality.
It is critical that the enacted budget report identify how the federal funds are being used, so New Yorkers can determine if those uses are wise and how they affect New Yorkers now and the State in the long-run.
New York State should produce a financial plan—the elemental fiscal representation of the budget—before the agreement is announced and bills are passed, rather than weeks after.
Key Data
$22 billion
— Additional funds available over the next two years compared to the Governor's January budget proposal.
$4.3 billion
— Annual amount by which personal income and corporate taxes were raised.
$212 billion
— Total planned All Funds spending for the fiscal year.
$5 billion
— Estimated increase in school aid, representing the largest increase in recent history.
0.75 percentage points
— Increase in corporate tax rates when combined with NYC and MTA taxes.
New York State has received significant federal aid through the American Rescue Plan, creating a projected $9.6 billion surplus over fiscal years 2021 through 2023 that allows for the restoration of spending without raising income taxes. To ensure long-term fiscal health, the state must use the next two years to restructure spending to be more sustainable before federal funds are depleted.
Recommendations related to State Budget Process
The State should use the next two years to restructure spending to be more sustainable to address the gaps that will exist and grow when the federal funds are depleted.
The State should omit the proposed personal income tax increases as the additional direct State aid and higher revenue consensus forecast provide sufficient revenue to restore spending reductions and make investments.
Key Data
$12.6 billion
— Direct federal funding provided to the State under the American Rescue Plan, which was more than double what was planned in the Executive Budget.
$9.6 billion
— Projected surplus over fiscal years 2021 through 2023 if the Governor's Executive Budget is enacted.
$1.7 billion
— Medicaid payments deferred from fiscal year 2019 into fiscal year 2020, with similar deferrals expected in perpetuity.
3.7 percent
— Average annual rate of State Operating Funds (SOF) spending growth over the three years prior to the pandemic, after adjusting for spending maneuvers.
11.8 percent
— Projected SOF spending growth in fiscal year 2022 under the Assembly's one-house budget proposal.
$9 billion
— Additional spending added to the fiscal year 2022 budget by the Assembly's one-house budget proposal.
New York's legislative budget proposals for fiscal year 2022 unnecessarily increase taxes and spending despite significant federal aid and revenue strength. Instead of raising taxes, the state should focus on restructuring school aid to prioritize high-need districts and improving Medicaid efficiency to ensure long-term fiscal stability.
Recommendations related to State Budget Process
The State should direct school aid increases toward high-need districts while holding flat or reducing support for districts that raise sufficient local resources.
The State should modernize the Foundation Aid formula to account accurately for support provided by local resources.
The State should revive the Medicaid Redesign Team (MRT) and expand its charge to identify additional Medicaid efficiencies and fix the Global Cap.
The State should curtail unproductive economic development programs to strengthen New York's future.
The State should avoid raising income and business taxes, as these are unnecessary and economically risky.
Key Data
$7 billion
— Annual new revenue generated by proposed tax increases on high income earners and businesses.
$200 billion
— Total spending level proposed by the legislative budgets, marking a doubling over 15 years.
94 percent
— Portion of the original projected four-year revenue loss offset by tax revenue strength and federal aid.
$3.7 billion
— Amount by which revenues for the current and next two fiscal years are projected to be higher than before the pandemic.
$9.6 billion
— Projected State surplus over the next 2 years if the Executive Budget is adopted as is.
16.49 percent
— Current combined State, City, and MTA tax rate for New York City businesses, which is the highest in the nation.
The state should provide full transparency regarding fiscal year 2021 budget withholdings and repayments by agency, while also omitting extraordinary executive budget powers from the fiscal year 2022 enacted budget. These powers, including midyear modifications and the creation of a COVID-19 relief fund, unnecessarily inhibit the legislature's role in the budget process.
Recommendations related to State Budget Process
The Division of the Budget should publish on its website timely and complete information about funds that were withheld and repaid as part of the fiscal year 2021 State budget midyear adjustment process.
The state should omit from the Enacted Budget three extraordinary budget powers that are unnecessary and inhibit the Legislature’s ability to exercise its appropriate role in the budget process.
State Operations spending should be managed within amounts appropriated for specific, clearly identified purposes by the Governor and Legislature in the budget.
Revenues from new taxes or fees should be treated like all other general revenues and should be the subject of standard budget negotiations and enactment.
The state should provide transparency of fiscal year 2021 withholdings and repayments by agency or recipient, broken out monthly.
Key Data
$700 million
— Subset of withholdings in calendar year 2020, representing roughly one quarter of all withholdings.
$628 million
— Total Transportation withholdings identified in the Assembly Majority’s Yellow Book analysis.
$426 million
— Amount withheld from and to be repaid to the Metropolitan Transportation Authority (MTA).
$98 million
— Amount to be cut from the Metropolitan Transportation Authority in fiscal year 2021, pending receipt of federal aid.
5%
— The amount to which most local aid payments are expected to be reduced from the Enacted Budget estimate.
New York State should leverage significant federal aid to stabilize its finances and avoid tax increases while rejecting extraordinary executive budget powers. The state must also prioritize structural reforms, such as smoothing school aid, reforming post-employment benefit financing, and reducing unproductive economic development spending to ensure long-term fiscal health.
Recommendations related to State Budget Process
The Legislature should not increase rates or delay cuts to personal income taxes to maintain economic competitiveness.
The State should use federal aid wisely to stabilize the State’s finances in both the near and long term.
The Legislature should reject extraordinary Executive budget powers that allow for unilateral spending reductions or debt issuance.
The Enacted Budget should smooth year-to-year changes and direct school aid to high-need districts rather than relying on disbursement swings.
The State should prudently budget marijuana and mobile sports wagering revenues by avoiding the dedication of these funds to specific programs.
The Legislature should reject and reverse cost shifts to local governments, including cuts to public health matching funds and the local sales tax intercept.
The State should reduce unproductive economic development spending and modify capital financing to offset harmful spending reductions.
The Legislature should reform other post-employment benefits financing to address the state's massive unfunded liability.
The State should enact the “rail-advantaged housing” proposal to improve housing supply and affordability near transit infrastructure.
The State should revive and transform the Medicaid Redesign Team into a Health System Transformation Team to improve transparency and efficiency.
Key Data
$15 billion
— The amount of unrestricted federal aid the Governor asserted would be “fair” to avoid new tax increases or spending reductions.
$50 billion
— The amount of unfunded liability the State currently carries for retiree health care benefits.
$7 billion
— The amount of potential savings over four years identified by shifting capital financing and reducing unproductive economic development spending.
$12.6 billion
— The amount of direct federal aid New York State might receive in the next aid package based on current congressional drafts.
$2.5 billion
— The amount of recurring savings the Medicaid Redesign Team was tasked to identify.
$500 million
— The amount of the local government sales tax intercept enacted last year that the Legislature should reverse.
New York State should avoid using long-term debt to fund operating expenses, instead prioritizing spending restraint and fiscal stability plans to ensure long-term financial health. Borrowing should only be considered as a last resort under strict conditions, including adherence to Generally Accepted Accounting Principles (GAAP) and oversight by the State Comptroller.
Recommendations related to State Budget Process
The State should balance this year’s budget without long-term borrowing for operating expenses.
Borrowing amounts should be limited to what is needed after the State exhausts other gap-closing strategies and uses new federal aid to reduce budget gaps.
Borrowing should not be used to increase state operating spending, inclusive of any federal stimulus aid, more than 2 percent or the inflation rate, whichever is lower.
Borrowing must be part of a comprehensive and feasible multiyear plan that leads to fiscal stability and is presented in accordance with GAAP.
The State Comptroller should assess whether the fiscal stability plan is realistic and feasible and approve each instance of borrowing for operations only if it comports with that plan.
The State should adopt fiscal integrity and transparency measures that include the transition to an annual State operating funds budget that is balanced in accordance with GAAP.
Key Data
$11 Billion
— The maximum amount of debt the State is proposed to have the authority to issue for operations.
$1.7 Billion
— The amount of Medicaid payments shifted by three days to obscure the program's fiscal outlook.
2 percent
— The maximum rate by which state operating spending should increase if borrowing is utilized.
$8 Billion
— The amount of short-term debt the Fiscal Year 2022 Executive Budget proposes re-authorization for.
$3 Billion
— The amount of a line of credit for state agencies proposed in the Fiscal Year 2022 Executive Budget.
$7.4 billion is how much NYS personal income tax was paid in 2018 by residents of other states. This revenue stream may be threatened if a lawsuit over taxation of out-of-state telecommuting residents prevails. Today's guest is E.J. McMahon, adjunct fellow of the Manhattan Institute and senior fellow of the…
New York State faces significant fiscal challenges, including a $16.7 billion budget gap for fiscal year 2022, necessitating a combination of spending cuts, federal aid, and revenue actions. To maintain fiscal stability, the state must avoid gimmicks like converting short-term debt to long-term obligations and instead focus on targeted spending reductions and prioritizing resources for districts with the greatest need.
Recommendations related to State Budget Process
The Executive Budget should present a plan to close the entire State budget gap if it does not receive federal aid.
Spending reductions should be targeted to minimize impact rather than reduce all spending uniformly.
The State should not convert this short-term debt to long term debt.
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, preserve public health and safety, and provide demonstrable economic benefits.
New York State should focus its scarce resources on those districts that lack the local resources to fund a sound basic education.
The State should avoid balancing this year’s budget using cost shifts or revenue intercepts that harm local governments.
Any proposal for marijuana legalization should be realistic about the timing of revenue, and avoid dedicating revenue to uses beyond programs related to the consequences of use.
Key Data
$16.7 billion
— The projected budget gap for fiscal year 2022.
$7 billion
— The total amount held in New York's rainy day funds, Economic Uncertainties Fund, and other reserves.
$1.6 billion
— The amount of school aid annually going to wealthy districts that already spend enough local revenues to fund a sound basic education.
$8.2 billion
— The reported budget gap for the current year in the October Mid-Year Financial Plan Update.
$1.7 billion
— The amount of State Medicaid costs shifted from March 2019 into April 2019, moving the expense from fiscal year 2019 to fiscal year 2020.
$3.5 billion
— The amount of short-term debt the State reportedly plans to repay within the fiscal year.
New York State has withheld funds and issued advanced payments without providing sufficient public transparency, making it difficult to assess the impact on agencies, local governments, and nonprofits. Watchdog groups are calling for the Division of the Budget to publish timely, detailed, and accessible reports on these financial adjustments, broken down by agency and major program.
Recommendations related to State Budget Process
The Division of the Budget should publish on its website timely and complete information about funds that have been withheld or advanced as part of the state budget adjustment process, ideally monthly and broken out by agency and major program.
Key Data
$1.5 billion
— Amount in advanced payments announced at Governor Cuomo’s December 16 press conference.
$2.4 billion
— Amount in withholdings through September in ten broad categories.
$500 million
— Subset of withholdings that were withheld beyond a statutory payment date through August.
$10 billion
— Cash shortfalls the MTA is struggling to survive over the next 4 years.
3,000
— Layoffs of adjunct professors at the City University of New York (CUNY) resulting from the lack of payment.
1,800
— Number of nonprofit social service providers reportedly at risk of closure.
Reforming the Scaffold Law within the 2021-22 Executive budget would eliminate the strict liability standard that currently inflates construction costs by an estimated 7 percent. Adopting a comparative negligence standard could allow for the creation of 12,600 additional affordable housing units without requiring new state funding.
Recommendations related to State Budget Process
The Governor should include reform of Labor Law §§ 240/241 (the “Scaffold Law”) in the 2021-22 Executive budget proposal.
The state should replace the existing strict liability standard with a more common-sense comparative negligence standard that considers the respective negligence of the property owner, employer, contractor, and/or injured party in determining compensation and damages.
Key Data
7 percent
— The Scaffold Law's strict liability standard has increased affordable housing and other development costs by an estimated 7 percent.
12,600
— If excessive costs had been invested in housing during the current 5-year housing plan, an additional 12,600 affordable housing units could have been created and preserved.
New York should approach potential recreational marijuana tax revenues with caution, as it typically takes three to four years for such markets to generate consistent income. Policymakers should ensure these funds are kept on-budget and avoid dedicating them to specific purposes, rather than relying on them to immediately close budget gaps.
Recommendations related to State Budget Process
State leaders should be cautious about relying on potential marijuana revenues to help close budget gaps.
Any proposal that advances should follow three general precepts for budgeting marijuana tax revenue.
Any future revenue should be received and spent on-budget, not through off-budget trusts or other fiscal gimmickry.
The revenue should not be committed to a specific purpose and should instead be used for recurring operating budget purposes.
Dedicating a portion to cover administrative costs and fund consequential public health and substance abuse programming may be reasonable.
Key Data
$341,691,001
— Colorado recreational marijuana revenue in the most recent year (Aug 19 to Jul 20).
$395,523,567
— Washington recreational marijuana revenue in the most recent year (Jul 18 to Jun 19).
$225,543,653
— Alaska recreational marijuana revenue in the most recent year (Sep 19 to Aug 20).
$142,517,466
— Oregon recreational marijuana revenue in the most recent year (Sep 19 to Aug 20).
$764,000,000
— California recreational marijuana revenue in the most recent year (Jul 19 to Jun 20).
$68,750,000
— Massachusetts recreational marijuana revenue in the most recent year (Jul 19 to Jun 20).
New York State faces a $9 billion budget gap for fiscal year 2020-2021, yet the state has withheld $1.7 billion in aid to localities without providing a transparent plan for how it intends to close the deficit. This lack of a detailed budget balancing plan creates significant uncertainty for schools, non-profits, and vendors, who are unable to effectively manage potential cuts of $8 billion in local aid and $1 billion in state operations.
Recommendations related to State Budget Process
The State must release a specific and detailed plan for closing New York State’s fiscal year 2020-2021 $9 billion budget gap.
It is past time for the budget balancing plan to be released so that stakeholders can appropriately plan for and manage potential cuts.
All stakeholders deserve to know the planned reductions for each affected program.
Similar transparent disclosures regarding the State’s COVID-19 response should be extended to State budget actions.
Key Data
$9 billion
— The size of the New York State fiscal year 2020-2021 budget gap.
$1.7 billion
— The amount of aid to localities payments withheld by the Division of Budget.
$8 billion
— The amount of potential cuts in local aid outlined in state budget reports.
$1 billion
— The amount of potential cuts in state operations outlined in state budget reports.
New York State's budget and tax policies often conflict with the Climate Leadership and Community Protection Act (CLCPA) goals by subsidizing fossil fuel consumption through various tax exemptions and spending programs. To align fiscal policy with environmental objectives, the state should reform these expenditures and redirect aid toward renewable energy investments, such as clean heating systems and zero-emission transportation.
Recommendations related to State Budget Process
The State should limit the residential energy sales tax exemption only to zero-emission fuels and renewable energy sources to better support CLCPA goals.
To avoid creating economic hardship, the State should provide financial support to low-income households to enable them to afford switching to clean heating sources.
The State could eliminate exemptions for fossil-fuel-based energy used for non-residential purposes, such as research and development.
The State should tailor tax credit programs to create incentives to incorporate renewable energy into projects, such as excluding heating systems that rely on fossil fuels.
When replacing aging heating systems in existing facilities, the State should transition facilities away from fossil fuels wherever cost-effective and feasible.
The State could accelerate the transition to clean fuel vehicles by purchasing electric vehicles and building vehicle charging infrastructure for its fleet.
The State should stop reimbursing the cost of installing fossil-fuel-dependent building infrastructure or vehicles through its economic development grants.
The State could use school aid to convert schools to renewable energy sources and incentivize school districts to purchase zero-emission school buses.
Key Data
$800 million
— Annual tax exemptions provided by New York State that reduce the cost of consuming fossil fuels.
$178 billion
— The size of the State budget through which funding and spending decisions influence progress toward CLCPA goals.
$200 million
— Amount the State spent on utilities for public buildings in fiscal year 2019.
$1.8 billion
— Annual amount the State provides in economic development grants to companies to subsidize expansion or relocation.
$5 billion
— Portion of the State's budget allocated for school building aid and transportation aid.
$85 million
— Approximate foregone State revenue from the sales tax exemption on gasoline.
New York State lacks a systematic, transparent performance management system that tracks metrics across agencies and authorities to inform resource allocation and accountability. Implementing such a system, supported by statutory provisions, would improve government efficiency and provide better value to the public by linking spending to measurable results.
Recommendations related to State Budget Process
The State should implement a performance management system that identifies key agency and authority programs and establishes output and outcome goals for each program.
The State should implement a performance management system that identifies metrics for each program, including input, process, output, outcome, quality, and efficiency measures.
The State should implement a performance management system that establishes performance targets for each program’s outputs, outcomes, quality, and efficiency.
The State should implement a performance management system that establishes implementation benchmarks for new initiatives.
The State should implement a performance management system that identifies risks and pressures to State programs from adverse shocks such as natural disasters or economic downturns.
The State should implement a performance management system that institutes a management and accountability process to review metrics and incorporate findings into ongoing management.
The State should implement a performance management system that allows for oversight and auditing of data.
The State should implement a performance management system that links to the budget cycle to inform budget and policy decisions for elected officials, agency administrators, and staff.
The State should implement a performance management system that provides public information about agency, authority and program performance that is accessible, readily understood, and provides quantitative measurements of service delivery efficiency, cost, and quality.
The State should implement a performance management system that is established through statutory provisions that promote consistency in reporting across agencies, authorities, and administrations.
Key Data
1,683
— Number of data files available in the Open Data NY portal catalog as of April 2020.
244
— Number of data files available when the Open Data NY portal launched.
$34 million
— Estimated savings in workforce costs at State agencies achieved by the Business Services Center in its first four years of operation.
34%
— Reduction in infant mortality rates in New York State over the past decade.
47%
— Rate of kindergarten readiness in Maryland during the 2014-15 school year.
13 minutes 14 seconds
— Current average wait time for DMV Direct services in Virginia.
New York State faces significant fiscal stress with projected budget gaps reaching $19 billion by fiscal year 2024, necessitating strategic choices to balance revenues and expenditures. By implementing measures such as modifying capital plans, adjusting tax policies, and utilizing reserves, the state can address these shortfalls while minimizing harm to essential services and preserving long-term economic competitiveness.
Recommendations related to State Budget Process
Medicaid Redesign Team efforts should continue in order to find additional savings starting in fiscal year 2022.
Executive Budget proposals to increase the fee for Certificate of Need applications that are assessed on health-care facilities construction projects, eliminate video lottery terminal (VLT) aid for cities other than Yonkers, and eliminate certain quick draw restrictions should be accepted to increase revenues between $79 million and $107 million annually.
The State should modify its capital plan for the current period of fiscal stress and eliminate unproductive economic development capital spending.
The State should freeze the implementation of middle class tax cuts at the calendar year 2020 rate.
The State should identify assets that can be sold with minimal adverse impacts for a target of $1.0 billion in fiscal year 2022 and in fiscal year 2023.
The State should use some of its reserves to close current and future gaps.
Key Data
$13 billion
— DOB expects a budget gap of $13 billion in fiscal year 2021, growing to $18 billion in fiscal year 2022 and $19 billion in fiscal years 2023 and 2024.
$1.2 billion
— The Enacted Budget reduced State school aid $1.2 billion in fiscal year 2021, growing to $2.3 billion in fiscal year 2024 compared to projections released in January.
$525 million
— The Gap-Closing Plan includes a 4.9 percent reduction in State operations spending, saving $525 million in personal service savings and $455 million in non-personal service spending in fiscal year 2021.
$1.0 billion
— The State should identify assets that can be sold with minimal adverse impacts for a target of $1.0 billion in fiscal year 2022 and in fiscal year 2023.
$3.1 billion
— If the State were to adopt recommendations and the economic forecast proved accurate, the State would need to use $3.1 billion of its reserves in fiscal year 2021.
$61 billion
— New York State has requested $61 billion in additional federal aid beyond what is needed to respond to the pandemic.
Governments facing fiscal stress should prioritize minimizing harm to vulnerable populations and maintaining long-term economic competitiveness when balancing budgets. Strategies such as utilizing rainy day funds, improving service efficiency, and avoiding long-term borrowing for operational expenses are essential to ensure intergenerational equity and fiscal stability.
Recommendations related to State Budget Process
The Citizens Budget Commission has recommended using no more than two-thirds of any rainy day fund in the first year.
New York’s large financing role for localities regarding Medicaid should be reversed rather than accelerated.
Sound public finance generally requires that capital investments be financed with bonds of a duration equal to the useful life of the asset purchased.
State and local leaders should choose among options to balance revenues and expenditures based on their impacts, with the aim of minimizing harm, particularly to New Yorkers most in need.
Wise public officials should give careful consideration to the implications of their decisions for their heirs to uphold the principle of intergenerational equity.
Key Data
$100 million
— Amount of capital spending avoided that saves about $6.5 million annually in debt service at current interest rates for 30-year bonds.
$6.5 million
— Annual savings in debt service for every $100 million of capital spending avoided at current interest rates for 30-year bonds.
The state's new mid-year budget modification process requires greater transparency to ensure the legislature and public understand the impact of spending reductions on local governments and school districts. Additionally, the Division of the Budget, Senate, and Assembly should fulfill their obligations to provide "Quick Start" revenue and spending forecasts to improve the annual budget negotiation process.
Recommendations related to State Budget Process
The notification and details of the Executive’s plan should be made publicly available as soon as practicable to ensure the Legislature and the public can reasonably understand possible reductions for each affected program and, where applicable, the impact on each local government or school district.
The notification should include a detailed description of revenue shortfalls or spending overages.
The Division of the Budget, Senate, and Assembly should fulfill their existing obligation to provide “Quick Start” revenue and spending forecasts in the fall of each year.
Providing as much advance notice as possible regarding budget cuts will allow localities and agencies to plan and manage the impact.
New York City requires a well-designed Rainy Day Fund to protect against economic downturns, but current state laws prevent its effective implementation. Legislative action is necessary to amend the Financial Emergency Act to allow for such a fund while establishing strict rules for deposits and withdrawals to prevent misuse.
Recommendations related to State Budget Process
The RDF exception should specify the only two permissible uses for an RDF are a recession or severe emergency.
State law should define a recession as two successive quarters of economic decline as indicated by private employment or gross city product.
An emergency should be defined as severe when it is accompanied by a revenue shortfall or expenditure increase equal to or greater than 1 percent of the budget.
Withdrawals from the RDF should be limited to no more than two-thirds of the fund balance in any year, to ensure funds are available for the second year of a recession or emergency.
Mandatory deposits should be equal to 75 percent of the tax revenue growth above 3 percent.
The RDF should have a target size of 17.2 percent of tax revenue, which can serve as a cap on the size of the fund.
Key Data
$1.25 billion
— Amount set aside in reserves for the upcoming year.
$6 billion
— Estimated near-term revenue loss by the Office of the New York City Comptroller.
$20 billion
— Estimated three-year shortfall if a recession occurs similar to those in the recent past.
$9 billion
— Potential reserves the City would have netted if the recommended strategy had been followed over the last 10 years.
71 percent
— Percentage of voters who approved the amendment to the New York City Charter to create an RDF.
17.2 percent
— Recommended target size of tax revenue for the RDF, which can serve as a cap.
New York State's fiscal year 2021 budget addresses significant revenue shortfalls caused by the pandemic through federal aid and spending restraint, yet relies on a new, opaque midyear modification process and short-term borrowing. While the budget avoids some tax increases, it continues to fund nonessential economic development programs and shifts costs to local governments, raising concerns about long-term fiscal sustainability.
Recommendations related to State Budget Process
To rectify these deficiencies in the budget modification process, the Executive should make its plan publicly available so that the Legislature and public can review and debate.
The Legislature should generate its own contingency plans as soon as possible, so that it can productively respond within the 10-day period if it so chooses.
Using long-term debt for operating purposes obligates future generations of New Yorkers to pay for today’s services and needs; this should only be done as a last resort.
The State still has an underlying structural Medicaid problem that should be addressed without harming the health system’s ability to respond to the pandemic.
Key Data
$7 billion
— budget gap faced by New York State even before the current economic disruption.
$15 billion
— estimated revenue loss in the current fiscal year.
$1.1 billion
— federal aid provided for education in fiscal year 2021.
$4.5 billion
— federal aid provided for Medicaid in fiscal year 2021.
$250 million
— cost for support for distressed hospitals that local governments are now responsible for.
$8 billion
— short-term borrowing authorized to cover liquidity needs due to the extension of the income tax filing deadline.
New York State should prioritize a 'bare bones' fiscal year 2021 budget focused on critical services and the COVID-19 pandemic, deferring nonessential policy changes that reduce oversight or increase costs. These controversial proposals, including changes to prevailing wage requirements and procurement transparency, should be excluded to ensure public engagement and fiscal responsibility during economic upheaval.
Recommendations related to State Budget Process
Lawmakers should reject the proposal to allow the State Budget Director to transfer certain appropriations to another department, agency, or public authority.
The budget should not allow the State Division of Budget, rather than the Office of the Comptroller, to determine whether a reimbursement or refund to the State is considered revenue or a reduction of expenses.
Lawmakers should reject the proposal to expand prevailing wage requirements to publicly subsidized construction projects.
The state should not extend design-build authority to additional State agencies with provisions that offset many of the benefits of design-build.
The budget should not eliminate competitive bidding for certain Metropolitan Transportation Authority (MTA) procurement activities.
Key Data
$3 million
— The threshold for Wicks Law requirements for construction work in New York City.
$1.5 million
— The threshold for Wicks Law requirements for construction work outside of New York City.
13 to 25 percent
— The estimated increase in construction costs on public projects caused by prevailing wage mandates.
30 percent
— The minimum level of public funding required for a private construction project to trigger prevailing wage requirements.
$1 billion
— The amount of the existing appropriation available for transfer by the governor to meet unanticipated emergencies.
$5 million
— The contract limit for 'innovative' technology projects that the MTA could award under a proposed expedited process.
New York faces significant fiscal challenges in its Medicaid program due to the COVID-19 pandemic and federal restrictions, necessitating a careful approach to budget adoption. The state should implement the Medicaid Redesign Team's proposals where legally permissible, lobby for federal flexibility, and improve transparency to ensure long-term fiscal sustainability.
Recommendations related to State Budget Process
The State should include the MRT recommendations in the budget, implementing those that do not risk federal funding immediately.
The State should lobby federal lawmakers to clarify and revise the COVID-19 response law to allow New York to implement planned cost savings.
The State should include transparency improvements to the Medicaid program to help prevent future budget blunders.
The State should omit the provision for local share growth, as its inclusion would reverse an important achievement in State Medicaid finance policy.
The State should continue collaborative redesign and reform of the health care system to address ongoing delivery challenges.
Key Data
$4 billion
— The structural gap in the Medicaid program for fiscal year 2020.
$3 billion
— The structural gap in the Medicaid program for fiscal year 2021 and beyond.
$1.7 billion
— The amount of annual Medicaid payments the state planned to defer.
$851 million
— The shortfall in the MRT's recommended savings against its $2.5 billion target.
$4.5 billion
— The annualized value of enhanced federal funding provided to the state.
$647 million
— The portion of the MRT's savings package related to long-term care.
New York State faces significant fiscal uncertainty due to the pandemic, necessitating a "bare bones" budget that prioritizes essential services and pandemic response while deferring non-essential policy issues. Leaders should avoid tax increases and instead rely on federal aid and structural Medicaid reforms to address the projected multi-billion dollar revenue shortfalls.
Recommendations related to State Budget Process
The Governor and Legislature should quickly enact a “bare bones” budget that supports the estimated pandemic response need.
State leaders should not consider tax increases at this time, as New York’s already high taxes and the federal cap on state and local tax deductions risk the state's competitiveness.
The Governor and Legislature should plan for the eventuality that this budget will have to be revised in the coming months as more information becomes available.
The state should leverage and continue as needed the work of the Medicaid Redesign Team (MRT) to address unsustainable, unbudgeted expenditure growth.
The state should appropriately use emergency federal aid to replace lost tax revenues or support the pandemic response, rather than substituting it for necessary structural Medicaid reforms.
Key Data
$4 billion
— Estimate of how much revenues are likely to be below Executive Budget projections.
$7 billion
— Potential revenue decline if a recession or sharper stock market declines occur.
$34 billion
— Potential state revenue shortfall over three years based on previous recessions.
$18 billion
— Amount of the $35 billion five-year budget gap caused by unsustainable, unbudgeted Medicaid expenditure growth.
$35 billion
— Total five-year budget gap facing the state before the pandemic.
$4.5 billion
— Potential relief provided through a temporarily increased federal share for Medicaid.
Proposed changes to the state budget would obscure spending transparency by expanding the definition of 'refunds of appropriation' and allowing the executive branch to transfer funds between agencies without legislative approval. These measures threaten the Comptroller's ability to accurately report on state finances and undermine the legislature's authority in the budget-making process.
Recommendations related to State Budget Process
The state should reject the measure in the Executive Budget which broadens so-called refunds of appropriation, as this practice 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 would allow the Executive to effectively override a legislatively approved funding allocation.
Key Data
100
— The 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's Medicaid program requires improved fiscal management, including the adoption of generally accepted accounting principles and the inclusion of all spending under the Global Cap to ensure true restraint. Additionally, the state should target supplemental payments based on need and avoid raising health care taxes, which increase insurance premiums for families.
Recommendations related to State Budget Process
Make the Global Cap global by including all spending to ensure all Medicaid costs are accounted for and managed within the limit.
Make the Global Cap a cap by following accounting principles such as modified accrual basis to prevent the use of payment deferrals.
Choose the right cap by indexing Medicaid spending to the rolling average of medical inflation to provide appropriate discipline for specific program portions.
Adhere to and improve the law requiring Medicaid spending transparency by publishing monthly reports and enhancing their content.
Focus on areas with high growth rates or extraordinary spending levels, such as long-term care and health homes, to place priority on savings.
Target supplemental payments based on need to promote equity and reduce total costs among hospitals.
The State should not raise health care taxes, as these are passed on to New Yorkers as higher health insurance premiums.
Key Data
$2.5 billion
— The ambitious goal for State-share Medicaid savings identified by the Medicaid Redesign Team.
10 percent
— The approximate reduction in the Medicaid budget represented by the $2.5 billion savings goal.
$1.7 billion
— The amount of payments deferred by the State into the next fiscal year to adhere to the Global Cap in fiscal year 2019.
$500 million
— The cost for the health homes care coordination model in its first five years after launching in 2011.
50 percent
— The amount by which daily nursing home costs in New York exceed the national average.
$1,000
— The annual increase in health insurance premiums paid by the average commercially insured family in New York due to healthcare taxes.
New York State and City face significant revenue shortfalls in the event of a recession, yet both remain underprepared with insufficient reserves. To improve fiscal emergency preparedness, leaders should restrain recurring spending, halt unnecessary school aid increases to wealthy districts, and prioritize saving surplus revenues in rainy day funds.
Recommendations related to State Budget Process
State leaders should close state budget gaps by restraining recurring spending without tax increases or fiscal gimmicks.
Any revenues coming in above current projections should be saved in the state's rainy day funds.
The state should stop increasing school aid to wealthy districts and instead save those funds to protect New Yorkers during future economic downturns.
The mayor should ask agencies to develop plans for productivity-based savings totaling 1% or more of city-funded expenditures.
The City Council should identify savings and avoid adding funds to support new or expanded programs.
The mayor and City Council should commit to putting all funds above projections into reserves.
The State must pass legislation enabling the use of a rainy day fund.
Key Data
$34 billion
— Estimated three-year revenue shortfall for New York State in the event of an average recession.
$15-20 billion
— Estimated three-year revenue shortfall for New York City in the event of an average recession.
$700 million
— Revenues already identified by the state above current projections that should be saved.
1%
— Target for productivity-based savings in city-funded expenditures that agencies should develop plans for.
New York faces significant budget gaps totaling $7.1 billion in fiscal year 2021, necessitating a focus on spending restraint rather than tax increases. The state should prioritize controlling Medicaid costs without shifting burdens to local governments, limiting education aid to high-need districts, and building rainy day reserves to prepare for economic uncertainty.
Recommendations related to State Budget Process
The State should implement Medicaid spending control that does not shift costs to local government.
The State should limit education aid increases to districts that currently lack revenues to fund a sound basic education.
The State should increase deposits to rainy day funds to prepare for economic uncertainty.
The State should maintain competitiveness by not increasing taxes.
The State should make efforts to eliminate the Medicaid deferral that was initially implemented at the end of fiscal year 2019.
The State should adopt the Governor’s proposal to expand design-build authorization to other state agencies and to information technology systems.
The State should evaluate the cost-effectiveness of the Excelsior Jobs program before granting a long-term extension.
The State should enact provisions to implement a rigorous capital planning process for the Department of Transportation.
The Legislature should reject proposals to expand Executive authority by allowing the Division of the Budget to unilaterally increase spending.
The Legislature should reject shifting costs for Temporary Assistance for Needy Families onto New York City and special education out-of-district placement costs onto school districts.
Key Data
$7.1 billion
— Budget gaps in fiscal year 2021.
$38.6 billion
— Total budget gaps over five years.
$1.9 billion
— Medicaid payments permanently delayed in the Executive Budget.
$2.5 billion
— Medicaid savings in the budget that are yet to be determined.
$75 million
— Estimated cost to support a sound basic education in every district if targeted only to underfunded districts.
$750 million
— Potential savings from limiting school aid increases to only high-need districts.
New York's fiscal year 2021 budget appears to grow by less than 2 percent, but this figure relies on $2.5 billion in yet-to-be-identified Medicaid savings and various accounting maneuvers that obscure actual spending. These shifts and reclassifications, including moving $4.5 billion in disbursements out of the fiscal year 2021 budget, make year-to-year comparisons difficult and mask the true scale of state spending.
Recommendations related to State Budget Process
As the Legislature considers the budget and its wish list, it should be mindful that spending already is larger than it appears.
Key Data
$2.5 Billion
— The amount of Medicaid savings that the fiscal year 2021 budget is dependent on to hold spending growth below 2 percent.
$6.2 Billion
— The amount the fiscal year 2021 budget would be lower if the State had actually held spending growth to 2 percent annually since fiscal year 2017.
$4.5 Billion
— The amount of disbursements being shifted out of fiscal year 2021 State Operating Funds spending.
$1.9 Billion
— The reduction in reported State Operating Funds spending due to shifting Metropolitan Transportation Authority taxes off-budget.
$1.5 Billion
— The reduction in State Operating Funds spending resulting from the reclassification of School Tax Relief benefits from an expense to a personal income tax credit.
$110.4 Billion
— The total proposed State Operating Funds spending in fiscal year 2021.
The Fiscal Year 2021 Executive Budget increases education aid by $826 million, yet fails to adequately target funds to the districts that lack the resources to provide a sound basic education. Instead of lumping various aid categories into the Foundation Aid formula without revision, the state should reform the formula to better reflect student need, relax hold-harmless provisions, and eliminate automatic minimum increases.
Recommendations related to State Budget Process
The State should fold those aids into the Foundation Aid formula and distribute them based on need.
To better distribute all Foundation Aid based on need, the formula should be fixed to more accurately reflect student need and local revenue efforts, relax hold-harmless provisions, and eliminate automatic minimum increases.
The State should move forward with controlling building and transportation aid costs while ensuring that schools have what they need to provide a sound basic education.
Rather than provide this unnecessary aid, the State should dedicate these funds to the State’s reserves in preparation for a recession.
This proposal should be improved by distributing the $1.8 billion according to a revised Foundation Aid formula that fully accounts for student need and all revenue sources.
Key Data
$750 million
— amount provided by the Executive Budget more than is needed to fund a sound basic education statewide.
$72 billion
— amount spent by school districts in New York in school year 2018 using local, State, and federal funds.
$13.6 billion
— amount more than necessary to fund a sound basic education as defined by the Foundation Aid Formula in school year 2018.
$826 million
— total increase in education aid proposed in the Fiscal Year 2021 Executive Budget.
$1.8 billion
— total of ten different education aids folded into Foundation Aid.
$5.1 billion
— annual cost of building and transportation aids.
7 days since the start of budget season, which commenced this year with the New York City Preliminary Budget released on January 16th. The State Budget, released just yesterday, may have a significant impact on the City’s finances this year: with the State facing a large budget gap, the Executive…
The New York State Fiscal Year 2021 Executive Budget addresses fiscal gaps through revenue recognition and spending restraints, including a $2.5 billion savings target for the Medicaid Redesign Team. The proposal also introduces controversial measures like unfreezing local Medicaid costs and granting the Governor unilateral authority to cut spending, while aiming to consolidate school aid formulas and increase rainy day reserves.
Recommendations related to State Budget Process
The Medicaid Redesign Team should recommend additional savings to eliminate the annual payment deferral.
Local governments should work with the State to identify and realize Medicaid savings.
The State should implement a full State takeover of the Medicaid program.
All unallocated settlement funds should be placed into the State’s rainy day funds.
The Legislature should adopt reforms to retiree health insurance benefits that will increase the progressivity of eligibility for benefits while reducing current other post-employment benefit (OPEB) costs and future liabilities.
The State should address potential risks by building reserves, controlling spending, and making changes as needed in the budget process.
Key Data
$1.7 billion
— The amount of the unsound Medicaid payment delay continued in the budget.
$2.5 billion
— The savings target the Medicaid Redesign Team is tasked to find.
$826 million
— The proposed increase in school aid.
$428 million
— The planned deposit to the rainy day fund in fiscal year 2020.
$5.6 billion
— The amount by which the State’s outstanding OPEB liability would be reduced through retiree health insurance reforms.
$1 billion
— The maximum amount of cuts to local assistance the Governor could make if a projected general fund imbalance exceeds $500 million.
New York faces significant budget gaps totaling $28.8 billion over four years, driven by structural imbalances and deferred Medicaid payments. To restore fiscal integrity, the state should improve transparency, restrain spending, build rainy day reserves, and avoid using gimmicks to balance the budget.
Recommendations related to State Budget Process
The State should include GAAP-basis financial statements in the Executive Budget, 30-day amendments, Enacted Budget, and Mid-Year Update to provide important insights into the State’s financial position.
The State should not use gimmicks that inappropriately balance the budget, such as shifting expenses onto local governments, into future fiscal years, or off-budget.
The State should reconstitute the Medicaid Redesign Team (MRT) to identify savings that can be quickly implemented and those that can significantly restrain costs over time.
Increases in State education aid should be targeted to those districts that lack the funding to provide a Sound Basic Education.
The State should make every effort to increase its rainy day reserves, starting by moving $890 million in settlement funds from an ad hoc economic uncertainty reserve to the State’s official rainy day reserves.
Key Data
$28.8 billion
— Cumulative budget gap over four years from fiscal year 2020 to fiscal year 2023.
$7.1 billion
— Budget gap for fiscal year 2021.
$1.7 billion
— Medicaid payment deferred from fiscal year 2019 into fiscal year 2020.
$2 billion
— Amount currently held in two statutorily created budget reserve funds.
48 percent
— Amount by which New York’s combined state and local tax burden exceeds the national average.
The FY 2019-2020 state budget legislation mandated the MTA to develop debarment regulations, which were implemented without public input and have created excessive risk for contractors. These regulations, which automatically debar contractors for budget or schedule overruns, have reduced competition and should be revised to allow for MTA discretion.
Recommendations related to State Budget Process
The MTA Board should work with staff to revise the regulations to not mandate automatic debarment.
The MTA Board should follow the law to allow the MTA discretion to take into consideration the circumstances of each project and the pool of vendors able to perform the particular work.
Key Data
$55B
— The size of the MTA's largest ever capital plan.
$38.8 million
— The value of a design-build contract for station accessibility upgrades that three vendors declined to bid on due to excessive risk.
New York faces a significant fiscal imbalance driven by accelerating spending in Medicaid and education, necessitating immediate action to restrain expenditures rather than increasing taxes. By identifying recurring savings and focusing aid on truly needy districts, the state can stabilize its budget and better prepare for potential economic downturns.
Recommendations related to State Budget Process
Reconstitute the Medicaid Redesign Team to identify savings.
The Executive, with the support of the 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 SBE.
Reduce unproductive economic development program spending.
Consider reforms to retiree health benefits that were proposed repeatedly in recent Executive Budgets.
Key Data
$6.1 billion
— The reported budget gap for the next fiscal year.
$28.8 billion
— The actual four-year budget gap, which is understated in official reporting.
$12.5 billion
— The amount of previously unbudgeted Medicaid spending contributing to the total four-year state budget gap.
$1.6 billion
— State school aid received by wealthy districts with sufficient local resources to provide a sound basic education.
$4.4 billion
— The amount New York spends annually on economic development programs, with little evidence of results.
$35 billion
— The potential revenue shortfall that could be added to identified gaps in the event of a recession.
New York State's financial plan obscures a significant Medicaid budget shortfall by delaying payments rather than addressing underlying cost growth. To ensure sound budgeting, the state must accurately account for these costs and implement a detailed, multi-year plan to reduce spending in Medicaid and other programs.
Recommendations related to State Budget Process
The Mid-Year Update should identify multiyear savings targets, approaches to make programmatic changes, and programs to target.
The Fiscal Year 2021 Executive Budget should not delay payments to forestall a more serious reckoning.
To realign the fiscal year 2020 budget with fiscal reality, the budget should include the cost of the delayed fiscal year 2019 payment and a full year of Medicaid payments for fiscal year 2020.
Fiscal year 2020 spending should not be 'reduced' by delaying payment until fiscal year 2021.
Absent any programmatic action to reduce spending, the financial plan should reflect increased annual spending and concurrent increases to out-year deficits over the previous financial plan.
Key Data
$9 billion
— Cumulative total by which the State financial plan understates Medicaid costs.
$1.7 billion
— Amount of Medicaid payments delayed from fiscal year 2019 into fiscal year 2020.
$3 billion to $4 billion
— Estimated State share gap in fiscal year 2020.
$2.0 billion
— Amount of savings expected to be realized from adjusting the timing of payments.
$3.5 billion
— Amount that would be added to State Operating Funds spending in fiscal year 2020 if the budget included the delayed fiscal year 2019 payment and a full year of Medicaid payments.
$9 billion
— Cumulative increase to the four-year budget gap if the financial plan accurately and fully accounted for Medicaid costs.
$81.3 billion the amount of tax revenue New York State will collect in fiscal year 2020—46 percent of all resources in the $176 billion New York State budget. Michael Schmidt, Commissioner of the New York State Department of Taxation and Finance, joined the podcast to parse the details on the…
The New York State Legislature passed 18 bills that would increase pension and disability benefits for public employees, costing at least $71 million in the first year. These measures should be vetoed to maintain fiscal discipline and protect the integrity of previous pension and health insurance reforms.
Recommendations related to State Budget Process
The Governor should veto all 18 bills passed by the Legislature that enhance pension or disability benefits without providing enhanced services or offsetting savings.
The Governor should veto A7620-A/S5903-A, which would cost $5.6 million annually to allow New York City police officers to receive retirement credit for time spent as cadets.
The Governor should send a strong message that past reforms will not be overturned by rejecting these unwarranted expansions of employee and retiree benefits.
Key Data
$71 million
— Projected first-year cost of the 18 bills passed by the Legislature.
$41 million
— First-year cost of A4431/S5207, which is the most expensive bill passed.
$15.7 million
— First-year cost of A7874-A/S5905-A requiring New York City paraprofessionals to join the Teachers Retirement System.
$5.6 million
— Annual cost of A7620-A/S5903-A allowing New York City police officers to receive retirement credit for time spent as cadets.
$2.76 million
— First-year cost of A5940/S3659 allowing Tier 6 uniformed court officers and peace officers to retire without early age reduction.
$1.4 million
— First-year cost of A6214/S3922 enhancing accidental and performance of duty disability pensions for certain law enforcement and university police officers.
New York State's financial plan obscures the true cost of the Medicaid program by deferring billions of dollars in payments to future fiscal years, resulting in significantly understated budget gaps. To restore fiscal integrity, the state must align its budget with actual costs by reducing Medicaid spending, curbing school aid growth, and cutting wasteful economic development programs.
Recommendations related to State Budget Process
The State should align the budget with actual costs to avoid obscuring financial plan spending obligations.
State leaders should reinvigorate the previously successful Medicaid Redesign Team to achieve substantial reductions in spending.
The State should slow the rapid growth in school aid by better targeting aid to needy districts.
The State should cut wasteful economic development spending to help reconcile the disconnect between reality and the budget.
The State should use one-time resources from monetary settlements to fund a transition period during which Medicaid reductions are phased-in.
Key Data
$1.7 billion
— The amount of the deferred payment that should have been made in March 2019.
$9 billion
— The cumulative total by which the State's financial plan understates Medicaid costs.
$3.5 billion
— The projected budget gap in fiscal year 2020 after adjusting for deferred payments and unaccounted costs.
$6.6 billion
— The projected budget gap in fiscal year 2023 after adjusting for deferred payments and unaccounted costs.
$800 million
— The amount by which the State increased education aid in fiscal year 2020 more than was necessary to fund a sound basic education.
$21.8 billion
— The total four-year financial plan shortfall after accounting for true Medicaid program costs.
New York State's fiscal condition is obscured by Medicaid payment delays that mask a recurring funding shortfall, which adds $7 billion in unrecognized expenses to the state's financial plan. This mismanagement increases the cumulative four-year projected budget gap from $12.8 billion to more than $20 billion, necessitating immediate spending reductions and structural reforms.
Recommendations related to State Budget Process
The State should provide a clear, accurate financial picture when releasing the midyear financial plan update.
The State should take actions to reduce spending to bring the State’s finances into balance.
The State should reinvigorate the previously successful Medicaid Redesign Team efforts to control costs.
The State should slow the rapid growth in school aid by better targeting aid to needy districts.
The State should cut wasteful economic development spending.
Key Data
$7 billion
— Amount the State will be short of what it needs to pay its budgeted obligations over the next four years.
$12.8 billion
— Cumulative budget gap already projected by the State’s most recent financial plan.
$3 billion
— Medicaid State funding shortfall in the current year.
$1.5 billion
— Medicaid State funding shortfall annually thereafter.
$20 billion
— Cumulative four-year projected State budget gaps.
New York State is nearing its statutory debt limit, which restricts its ability to finance capital projects through debt. Consequently, the state should avoid adding new debt-funded 'pork-barrel' spending and instead limit capital appropriations to significant infrastructure investments decided during the formal budget process.
Recommendations related to State Budget Process
The State should limit capital spending to investments justified on the basis of need or rate of return, particularly since it is approaching its statutory debt limit.
The State should be very cautious about adding more debt to finance capital spending.
State debt should only be issued for capital investments that are justified by need for repair or service enhancement identified through a systematic evaluation of state needs.
If the State is going to add debt-funded capital appropriations, the additional spending should be limited to significant state infrastructure investments.
Absent an emergency, State spending should be allocated during the budget process, where state leaders can adequately consider priorities and tradeoffs.
The legislature should close out session without passing any capital pork.
Key Data
$1.4 billion
— The amount of debt capacity available to the State in fiscal year 2021.
$107 million
— The remaining available debt capacity projected for fiscal year 2024.
$1.9 billion
— The amount authorized for the State and Municipal (SAM) Facilities Program to provide small grants to local governments and nonprofits.
$157 million
— The amount of the reappropriation from 2008 for the New York State Capital Assistance Program.
$475 million
— The amount of SAM funding provided in the fiscal year 2019 budget.
$829 million
— The amount of settlement funds deposited into a reserve for economic uncertainties that the state should avoid spending.
The state should finalize and publicly release the details of an agreement to restore the Comptroller's pre-audit authority over specific state contracts, which was removed in 2011. Additionally, this agreement should be formally codified into law during the current legislative session to ensure oversight of SUNY, CUNY, and other state agency contracts.
Recommendations related to State Budget Process
The offices should finalize and make public the details of the agreement restoring the Comptroller’s pre-audit authority over certain contracts.
The Governor and Comptroller should support the agreement being codified in law during the current legislative session.
The state should reinstate the Comptroller’s pre-audit authority over SUNY, CUNY, the SUNY Research Foundation, and Office of General Services centralized state contracts.
The state should grant the State Inspector General authority to investigate complaints of fraud and corruption at SUNY and CUNY nonprofit affiliates.
Contractors, vendors, and state agency grantees should certify that contracts contain no conflicts or collusion and disclose any relationships that could create or appear to be conflicts of interest.
New York State's reported State Operating Funds spending growth of 2 percent masks a true growth rate of 4.9 percent in fiscal year 2020 due to various accounting maneuvers. These shifts, including off-budget reclassifications and debt prepayments, obscure the actual fiscal picture and complicate year-to-year comparisons.
Key Data
4.9%
— The actual projected growth of State Operating Funds spending in fiscal year 2020 after adjusting for accounting maneuvers.
$4.7 billion
— The total amount of spending shifted out of fiscal year 2020 State Operating Funds.
$1.4 billion
— The 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
— The amount of fiscal year 2020 debt service payments shifted into the prior year as prepayments.
$1.24 billion
— The amount by which State Operating Funds spending appears lower due to the reclassification of School Tax Relief (STAR) benefits.
$1.7 billion
— The total decrease in reported State Operating Funds spending in fiscal year 2019 resulting from various shifts and reclassifications.
New York State's education funding formula relies on outdated measures that fail to adequately support all school districts, leaving 29 districts underfunded by nearly $83 million despite significant overall spending increases. To ensure equitable access to a sound basic education, the state should reform the Foundation Aid formula by incorporating current data and eliminating arbitrary funding limitations.
Recommendations related to State Budget Process
Poorly targeted forms of school aid, including High Tax, Library, Textbook, and Software Aids, should be folded into a reformed Foundation Aid formula that uses current data—including actual local funding and student enrollment.
The arbitrary floors, ceilings, phase-ins and add-ons to the Foundation Aid formula should be eliminated.
Key Data
$62.6 billion
— Cost for school districts in New York State to provide a sound basic education to all students in school year 2020.
$70 billion
— Amount school districts are on track to spend in the aggregate.
29
— Number of school districts that will not have sufficient funding to provide a sound basic education.
$961 million
— Increase in total formula-based school aid in the enacted Fiscal Year 2020 Budget.
$83 million
— Amount by which the 29 underfunded school districts are collectively short.
$4.0 billion
— Amount of the $27.3 billion in formula-based aid received by the four wealthiest deciles.
$175.5 billion, the size of the NYS Budget for FY 2020 enacted by the Legislature. The budget includes several notable policy changes, such as funding and new reforms at the MTA. CBC's David Friedfel and Patrick Orecki discuss the key takeaways.
The New York State fiscal year 2020 budget agreement increases spending beyond the 2 percent cap and fails to adequately bolster reserves against a potential $34 billion recessionary gap. While the plan includes positive measures like congestion pricing, it relies on extending temporary income tax surcharges and maintains wasteful spending like the $1.3 billion property tax relief credit.
Recommendations related to State Budget Process
The State should bolster reserves to a level needed to stave off the potentially damaging impacts of a recession.
State leaders should restrain spending growth and increase the State's paltry rainy day funds.
It is critical to limit fee exemptions in the congestion pricing program in order to preserve projected revenues and traffic reduction.
The State should phase out the 'temporary' personal income tax surcharge on wealthy taxpayers to soften the impact of the federal cap on state and local tax deductions.
The State should avoid mandating the use of design-build on all projects greater than $25 million, as it may be counterproductive on some projects.
Key Data
$3 billion
— The size of the Rainy Day Reserve fund, which is insufficient compared to potential recessionary gaps.
$34 billion
— The potential three-year budget gap the State could face in the event of a recession.
$1.3 billion
— The cost to taxpayers of the property tax relief credit in fiscal year 2020.
$500 million
— The imbalance threshold in the State general fund that allows the Division of the Budget to develop plans to cut local aid.
$840 million
— The amount of school aid growth that exceeds what is needed to ensure every district has resources for a sound basic education.
3 percent
— The likely growth rate of state operations spending, which exceeds the 2 percent spending cap.
Spectrum News NY1 NY1 looked at education, congestion pricing and criminal justice and taxes and the proposal for five year extension of the millionaire's tax, CBC President Andrew Rein joined to help unpack the proposed budget.
New York can ensure all school districts provide a sound basic education by targeting $164 million in aid to the 32 currently underfunded districts, rather than increasing total aid by the nearly $1 billion proposed in the Executive Budget. This approach addresses the actual resource gaps while balancing educational needs with the state's fiscal realities.
Recommendations related to State Budget Process
The State should ensure all districts have the resources to provide a sound basic education by increasing aid by $164 million and targeting it to 32 of the state’s 674 districts that are underfunded.
This allocation should be prioritized during budget negotiations and State aid above this amount should be targeted to educational needs and balanced with the State’s fiscal realities.
Key Data
$164 million
— The amount by which the State could increase aid to ensure all districts have the resources to provide a sound basic education.
$62.6 billion
— The total amount needed in 2020 to provide a sound basic education for New York’s students.
$72.0 billion
— The estimated amount school districts will spend in 2020.
$9.4 billion
— The amount by which estimated 2020 spending exceeds what is necessary to fund a sound basic education.
$956 million
— The amount the Governor’s Executive Budget proposes to increase school aid.
$20 billion
— The increase in school district revenues between school year 2006-2007 and school year 2016-2017.
New York State's economic development strategy relies heavily on costly, poorly designed tax breaks and fragmented regional council funding that often fails to align with strategic priorities. To improve outcomes, the state should eliminate ineffective expenditures like film tax credits and discretionary capital spending, while reorienting regional councils to focus on data-driven workforce training and long-term investment.
Recommendations related to State Budget Process
Capture fully and report together all state and local economic development incentives.
Standardize metrics across economic development initiatives.
Eliminate ineffective film and production tax credits.
Reduce Empire State Development discretionary capital spending by half.
Align funding with regional strategies to focus on projects in thriving industries and in large cities or counties.
Implement a stricter prioritization of projects based on potential return on investment.
Strengthen SUNY partnerships with Regional Economic Development Councils to develop and assess training programs.
Provide resources to scale up effective SUNY programs and those geared toward areas of projected job growth.
Key Data
$1.1 Billion
— The total amount available for reinvestment by eliminating ineffective expenditures.
$750 million
— The amount awarded annually to regional projects based on Regional Economic Development Council rank and State agency score.
$175 million
— The amount allocated in the NYS FY2019 budget for workforce training.
14.3%
— The poverty rate in New York, which is now greater than the national rate of 13.9%.
$382,077
— The state average for an economic development project award.
$570 million
— The potential savings from eliminating film and production tax credits.
New York State faces a $2.3 billion revenue shortfall driven by federal tax changes and economic volatility, necessitating immediate fiscal adjustments to maintain stability. To address this deficit, the state should prioritize spending restraint, repeal expiring tax credits, and bolster rainy day reserves rather than relying on short-term, counterproductive solutions.
Recommendations related to State Budget Process
The State should restrain spending growth, avoid one-shot gap-closing actions, and bolster its rainy day funds.
The State should hold spending growth to 2 percent, which would save $1.45 billion in fiscal year 2020.
Increasing education aid only to those districts that need additional State resources to fund a sound basic education as defined by the Foundation Aid formula could save more than $500 million.
The property tax relief credit set to expire after calendar year 2019 should be repealed; this would reduce the fiscal year 2020 deficit by more than $1 billion.
The State should decrease State economic development programs that have not been proven effective, including the film tax credit.
The State should adopt the Governor’s cost saving proposals on employee and retiree health care.
The State should eliminate the appropriations connected to unused settlement funds, which total approximately $2.9 billion, and dedicate them to rainy day funds.
Key Data
$2.3 billion
— Revenue shortfall in January personal income tax collections.
$1.45 billion
— Savings from holding spending growth to 2 percent in fiscal year 2020.
$500 million
— Potential savings from limiting education aid increases to districts that need additional resources.
$1 billion
— Deficit reduction from repealing the property tax relief credit.
$2.9 billion
— Total of allocated but unused settlement funds that could be dedicated to rainy day reserves.
$2.3 billion
— Total of the State’s rainy day reserves under the Governor’s budget proposal.
New York State's reported spending growth of 1.9 percent for fiscal year 2020 masks an actual growth rate of 3.4 percent due to various accounting maneuvers and reclassifications. These practices undermine budget transparency, making it essential for the Legislature to recognize that actual spending growth is significantly higher than the figures presented.
Recommendations related to State Budget Process
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 percent
— Actual State Operating Funds spending growth in fiscal year 2020, which is higher than the reported 1.9 percent.
$4.1 billion
— Total amount shifted out of fiscal year 2020 State Operating Funds spending through various accounting maneuvers.
$106,154 million
— Actual State Operating Funds spending in fiscal year 2020 after accounting for adjustments.
$1.4 billion
— Reduction in reported State Operating Funds spending in fiscal year 2019 resulting from shifting the Metropolitan Commuter Transportation Mobility Tax off-budget.
$1.24 billion
— Reduction in reported State Operating Funds spending resulting from the reclassification of School Tax Relief (STAR) benefits.
$10 billion
— Total value of the Master Settlement Agreement between various governments and the five largest tobacco companies.
$175.2 billion is the size of Governor Cuomo's proposed budget for fiscal year 2020. CBC President Andrew Rein joined the podcast to help unpack the proposed budget.
The New York State Executive Budget for Fiscal Year 2020 fails to adequately control spending or build sufficient reserves to withstand economic downturns, despite some prudent policy priorities like congestion pricing. The proposal relies on extending the millionaire's tax and lacks necessary restraint in education aid and economic development spending, while shifting costs to New York City.
Recommendations related to State Budget Process
The State should build reserves, control spending, and make changes as needed in the budget process, rather than granting unilateral authority to the Division of the Budget to cut local aid.
The State should restrain growth in education aid and reallocate substantial funds to high-need districts to fund a sound, basic education.
The State should implement additional reforms to economic development program design and transparency, including a unified economic development budget, standardized metrics, and improved program design.
The State should establish new reporting and restored oversight for economic development spending by statute to ensure that both continue under future administrations.
The State should deposit marijuana revenues into the general fund and allocate them to priorities as determined in the budget process, rather than listing specific purposes to which revenues could be dedicated.
Key Data
$175 billion
— The total size of the Executive Budget for Fiscal Year 2020.
$1.6 billion
— The amount by which the budget decreases fiscal year 2020 revenue forecasts.
3.1 percent
— The growth rate of state operating funds spending.
$2.3 billion
— The balance of the State’s rainy day funds.
$20 billion
— The amount of multiyear revenue losses from the past three recessions.
0.6 percent
— The percentage of filers that generate 40 percent of State personal income tax revenues.
Maria Doulis, the Vice President of the Citizens Budget Commission, sat down with Errol Louis to break down Gov. Andrew Cuomo's budget address and discuss whether he will be able to get it all done. Watch the original clip here .
New York State faces a $3.1 billion budget gap in fiscal year 2020 and a $16.1 billion cumulative gap through fiscal year 2022, necessitating a strategy that prioritizes fiscal responsibility and economic competitiveness. The state should build reserves, avoid using one-time revenues for recurring expenses, and better target education aid to high-need districts while addressing infrastructure and health care funding challenges.
Recommendations related to State Budget Process
The State should build reserves to prepare for economic and fiscal setbacks.
The State should avoid using one-time revenues to fund recurring spending to prevent exacerbating future deficits.
The State should maintain responsible spending growth without resorting to spending shifts or reclassifications of expense items.
The State should reallocate education aid to the highest need districts rather than increasing total aid beyond a sound, basic education level.
The State should increase transparency, focus, and effectiveness of economic development investments to ensure they produce desired results.
Key Data
$3.1 billion
— The projected budget gap for New York State in fiscal year 2020.
$16.1 billion
— The cumulative budget gap projected for New York State through fiscal year 2022.
$44 billion
— The projected increase in budget gaps over three years if a recession equivalent to the average of the last three occurs.
$1.8 billion
— The current amount held in New York State's rainy day funds.
$383 million
— One-time revenues from financial settlements used in the current budget.
$500 million
— One-time revenues from the Fidelis conversion used to fund operations.
Legalizing recreational marijuana in New York could generate nearly $700 million in annual tax revenue, but officials must exercise caution as implementation delays and market maturation often cause initial revenue to fall short of projections. To ensure fiscal stability, any potential marijuana tax income should be forecasted conservatively, managed within the standard operating budget, and kept free from specific spending commitments.
Recommendations related to State Budget Process
Recreational marijuana revenues should not be included in the State financial plan until the very complicated steps of crafting the statute and regulations have been completed; budgeting should not rely upon best guesses or optimistic assumptions.
Any future revenue should be received and spent on-budget, not through off-budget trusts or other fiscal gimmickry.
The revenue should not be committed to a specific purpose.
Marijuana revenue will be recurring and reliable when the market is mature and should be used for recurring operating budget purposes.
It is better to under-forecast revenues and have a surplus than be overly optimistic and create a deficit.
Key Data
$430 million
— Amount collected in Washington State in fiscal year 2017.
37 percent
— Marijuana sales tax rate in Washington State.
6.5 percent
— General sales tax rate in Washington State.
$82 million
— California tax revenue in the first six months of sales.
$185 million
— Projected revenues for California in the first six months of sales.
$700 million
— New York annual tax revenue estimate from marijuana legalization.
New York State's infrastructure network is failing due to a lack of comprehensive, coordinated capital planning and a reliance on ad hoc, crisis-driven project prioritization. To address these systemic issues and secure future funding, the state must establish a centralized Office of Infrastructure to institutionalize long-term planning, standardize project delivery, and explore sustainable revenue sources beyond traditional gas taxes.
Recommendations related to State Budget Process
Establish an Office of Infrastructure to lead statewide infrastructure planning.
The Office of Infrastructure should articulate a set of criteria to prioritize infrastructure investment, aligned with statewide policy objectives and needs.
Within the Office of Infrastructure, project prioritization and investment must balance often competing goals: maintaining a State of Good Repair of existing assets vs delivering transformative projects that expand capacity.
The Office of Infrastructure should be a clearinghouse for project transparency and reporting, providing a single access point for capital infrastructure projects statewide.
The Office of Infrastructure should create a Center of Excellence for state infrastructure investment with the objectives to tackle cost drivers, assess and recommend the most appropriate project delivery, and encourage and facilitate knowledge sharing across entities.
In order to appropriately fund the State’s infrastructure needs, New York will require more funding from its existing funding sources and should pursue alternate funding sources, such as congestion pricing and value capture.
Key Data
$100 billion
— Funding current New York State infrastructure requires over $100 billion in new investment.
50%
— Roughly 50% of New York State infrastructure investment is delivered through public authorities such as the Metropolitan Transportation Authority and Port Authority of New York and New Jersey.
$29.8 billion
— Total State capital spending in FY 2019 is projected to total $29.8 billion.
$14.6 billion
— Total state capital infrastructure investment in FY 2019 totaled $14.6 billion.
$0.45
— New York has one of the highest gas taxes in the US at $0.45 per gallon.
$2.5 billion
— The Clean Water Infrastructure Act invests $2.5 billion in drinking water, wastewater, and water protection infrastructure across New York State.
Watch the original segment here . Progressive, first, best are all terms have been used to describe New York’s economy. One non-partisan watchdog group took a look at how responsible the state has been with its money since Andrew Cuomo took office eight years ago. "See what has actually changed…
New York State's fiscal landscape between 2011 and 2018 was characterized by accelerated spending growth in the second term, rising capital spending, and a stabilization of state-funded debt. While total tax collections increased by 30.5 percent, the state also navigated significant shifts in Medicaid spending and personnel costs during this period.
Key Data
$170 billion
— Projected All Funds spending in fiscal year 2019.
$14.5 billion
— Projected capital spending in fiscal year 2019.
$66.7 billion
— State debt outstanding as of fiscal year 2018.
$23 billion
— Estimated total personnel expenses in fiscal year 2019.
30.5%
— Increase in total tax collections since fiscal year 2011.
$70 billion
— Medicaid spending in fiscal year 2019.
New York State's unique requirement for local governments to fund a portion of Medicaid costs creates a $7 billion annual burden that is both regressive and inequitable. To address this, the state should implement a comprehensive takeover of these costs, potentially by combining state efficiencies, sales tax adjustments, and the elimination of the School Tax Assessment Relief (STAR) program.
Recommendations related to State Budget Process
It is time for New York to adopt measures that will completely eliminate the required local share of Medicaid.
The State should design a way to eliminate the mandated local share in a reasonable time period.
Takeover proposals need to include provisions for the continued exclusion of these additional payments from the takeover.
The State will likely have to exempt local takeover costs from the Medicaid Global Cap or exempt them in a way similar to other episodic costs.
A requirement could be placed on counties to reduce their property tax levies in concert with the local takeover.
Key Data
$7 billion
— The annual cost burden placed on local governments by the state's Medicaid financing framework.
$7.6 billion
— The frozen annual local share of Medicaid statewide.
$15 billion
— The amount saved by local districts from fiscal year 2005 through fiscal year 2018 due to the cap and freeze of Medicaid local share growth.
8.6 percent
— The average portion of local districts' gross expenditures that the Medicaid local share represented in 2016.
$3.3 billion
— The annual cost of the School Tax Assessment Relief (STAR) program, which could be eliminated to help fund a state takeover.
$6,955 million
— The estimated 1-year incremental cost to the State for a full takeover of the local share of Medicaid.
New York State has received over $11 billion in litigation settlements since fiscal year 2014-2015, yet none of these funds have been used to bolster the state's rainy day reserves, which currently sit at only 2.7% of general fund tax revenues. Instead, these funds have been heavily allocated to economic development and operating budget gaps, despite approximately $5 billion remaining unspent at the end of fiscal year 2018.
Recommendations related to State Budget Process
The State should bolster the State’s rainy day funds to the recommended level of 10% of general fund tax revenues using litigation settlement funds.
Where practical, unused settlement funds should be reappropriated to the State’s reserves.
At a minimum, the recently realized $205 million, and $76 million that remains unallocated, should be deposited directly into the State’s rainy day fund.
Key Data
$11 billion
— Total amount of litigation settlements received by New York State since fiscal year 2014-2015.
2.7%
— Current level of the State’s rainy day reserves as a percentage of general fund tax revenues.
$5 billion
— Amount of settlement funds that remained unused at the end of fiscal year 2018.
$652 million
— Amount of settlement funds used to close the budget gap in the fiscal year 2019 budget.
$205 million
— Amount of the settlement with Deutsche Bank announced on June 20.
The New York State Fiscal Year 2019 Enacted Budget requires the City of New York to cover nearly $1 billion in additional operating and capital expenditures due to various state-mandated costs and funding shortfalls. These financial burdens, including requirements for the MTA Subway Action Plan and education aid gaps, necessitate significant adjustments to the city's financial plan and require fiscal restraint in other areas.
Key Data
$756 million
— Operating spending the City of New York must fund next year due to State actions.
$214 million
— Capital spending the City of New York must fund next year due to State actions.
$418 million
— City's share of the $836 million Metropolitan Transportation Authority Subway Action Plan.
$121 million
— Shortfall in education funding because the City’s Preliminary Budget forecast these revenues at $10.67 billion.
$30.5 million
— Additional City funds needed for the Close to Home program next year.
$50 million
— City funding required toward the completion of the Hudson River Park.
New York State continues to allocate billions of dollars toward economic development programs that lack transparency and measurable success, often failing to outperform national job growth rates. The state should implement a moratorium on new spending until it adopts reforms like a unified budget, standardized performance metrics, and a comprehensive database of deals.
Recommendations related to State Budget Process
The state should publish a “database of deals” that includes funds committed and disbursed to each recipient across all programs, as well as project progress and results.
New York should use a unified economic development budget, reflecting the full scope of costs including tax expenditures, agency and authority spending, and the value of discounted power, to plan for future years.
The state should standardize metrics across economic development programs, so that results can be compared.
The state should improve program design so that benefits are provided retroactively based on performance, not up front; eligibility is standardized rather than discretionary; and results are regularly evaluated.
The state should make administrative reforms to ensure transparent, competitive procurement and stronger oversight.
Key Data
$4 billion
— Amount spent on economic development programs in fiscal year 2016.
$1.7 billion
— New appropriations for economic development contained in the fiscal year 2019 budget.
$2.4 billion
— Portion of fiscal year 2016 economic development spending allocated to tax breaks.
$4.6 billion
— Amount spent by local governments and authorities on economic development in fiscal year 2016.
5 percent
— Total job growth outside of New York City between 2010 and 2016.
$168.3 billion is the size of New York State's Fiscal Year 2019 Budget. CBC's David Friedfel joined WT[D]P to discuss spending in this year's budget, as well as how the MTA, NYCHA, and New York City fared in the process.
17% is the increase in the average bonus paid by Wall Street in 2017, bringing the average bonus to more than $161,000. NYS Comptroller Tom DiNapoli discusses Wall Street, the State and City budgets, State pension funds and more in remarks to CBC and a Q & A with Ben…
New York State's current rainy day reserves are inadequate to withstand a significant economic downturn, leaving the state vulnerable to budget cuts for vital services. To better prepare for future recessions, the state should implement legislation to mandate regular deposits into its reserve funds, similar to the successful model used in California.
Recommendations related to State Budget Process
New York State should consider legislation to mandate deposits into a rainy day fund.
The level of reserves should be thoroughly analyzed with respect to tax revenue volatility, and a healthy level should be established to protect New Yorkers from the impacts of budget cuts to vital services that would result from an economic downturn or negative financial impacts resulting from the TCJA.
Key Data
$5.1 billion
— Proposed contribution to California's rainy day fund in fiscal year 2019.
$13.5 billion
— Total balance of California's rainy day fund in fiscal year 2019.
$1.8 billion
— Current balance of New York State's rainy day reserves.
$43.9 billion
— Estimated four-year impact of a recession on a financial plan that assumed economic growth.
$10.7 billion
— Monetary settlements from Wall Street financial entities from fiscal years 2015 to 2018 that were not placed into rainy day funds.
$9.2 billion and $12.0 billion
— Projected tax revenue losses in the first two years of a prospective recession.
The proposed New York State budget for fiscal year 2019 relies too heavily on speculative revenues and fails to sufficiently curb spending, necessitating legislative intervention. Key areas for reform include reallocating school aid to prioritize need, repealing the inefficient STAR program, and rejecting excessive economic development spending.
Recommendations related to State Budget Process
The state should reject new economic development proposals and impose a moratorium on new economic development projects until more transparency and documentation of results are achieved.
The Enacted Budget should reform the Foundation Aid formula to direct aid where it is needed most and reprogram expense-based aid into it.
The state should repeal the STAR program entirely to stop providing excessive benefits to wealthy property owners.
The state should repeal business tax credit deferrals if they are deemed unnecessary, or otherwise pay them as scheduled.
The Legislature should accept the Governor's Medicaid proposals, including the repeal of spousal refusal, to help contain Medicaid costs.
Key Data
$3.4 billion
— Annual savings if the STAR program were repealed entirely.
$87.3 billion
— Total state postemployment benefits liabilities for which no assets are reserved.
$26.4 billion
— Total school aid amount following a 3.0 percent growth.
$702 million
— Amount of one-time financial settlements available to the state.
$4.0 billion
— Amount spent by New York State on economic development in fiscal year 2016.
Gov. Andrew Cuomo this week gave Republican lawmakers in the state Senate a choice: Back his proposed tax and fee increases or face potential cuts to schools and health care. Watch the original segment here .
New York's executive budget increases school aid by $769 million to $26.4 billion, exceeding the state's established school aid cap for the first time. The proposal includes changes to Foundation Aid distribution and caps on expense-based aid growth, though it fails to fully address enrollment-based funding disparities and structural formula flaws.
Recommendations related to State Budget Process
The Governor should limit school aid growth and make reforms to the distribution of aid to better direct it to the neediest districts.
The State should reform the formula to address the flaws that distort the total distribution of $17.5 billion in Foundation Aid.
The State should distribute those funds through a revised Foundation Aid formula to encourage districts to allocate funds to the highest priority needs.
The State should reform the Foundation Aid formula to ensure the highest needs districts are properly funded without unnecessarily sending aid to the wealthiest districts.
Key Data
$769 million
— Increase in school aid in the New York State Fiscal Year 2018-2019 Executive Budget.
$26.4 billion
— Total school aid proposed in the New York State Fiscal Year 2018-2019 Executive Budget.
$119 million
— Potential state savings if the Building Aid growth limit were imposed in school year 2018-2019.
$132 million
— Potential state savings if the BOCES and Transportation Aids growth limit were imposed in school year 2018-2019.
$338 million
— Increase in Foundation Aid in the proposed budget.
$17.5 billion
— Total Foundation Aid in the proposed budget.
New York is facing one of its largest budget shortfalls in nearly a decade this year, and deficits in coming years will get larger and larger -- making life more challenging for lawmakers and Governor Andrew Cuomo. Watch the original segment here .
New York State Budget Director Robert Mujica reviewed the New York State Executive Budget for Fiscal Year 2019, as well as the Governor's proposals to respond to recently enacted federal tax law changes.
New York's response to federal tax law changes involves complex adjustments to the state tax system, including potential uncoupling from federal definitions and new employer compensation taxes. These proposals require careful analysis, transparency, and legislative oversight to ensure they effectively address the projected $1 billion tax increase without creating unintended negative consequences.
Recommendations related to State Budget Process
The proposed legislation must assure the funds are governed by the same transparency, accountability, and legislative oversight requirements as apply to other governmental spending.
Since the proposal would not go into effect until 2019, it is appropriate to continue refining it beyond and outside the budget adoption process.
An alternative to consider is to uncouple from specific federal changes that would have the most undesired effects, such as the personal exemptions and child tax credits, and allow conformity with others.
The proposal will need to be fully analyzed and informed by the continued input of experts and stakeholders.
Caution is needed to ensure this is the right version of the right solution to address the problems without adverse countervailing implications.
Key Data
$1 billion
— The amount of the unplanned net state tax increase on New Yorkers if no action is taken regarding federal tax law changes.
The New York State Fiscal Year 2019 Executive Budget claims to limit State Operating Funds spending growth to 1.9 percent, but accounting shifts and reclassifications mask a true growth rate of 4.1 percent. These budgetary maneuvers, including moving tax collections and debt service payments off-budget, obscure the actual rate of state spending growth from the public and the Legislature.
Recommendations related to State Budget Process
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.
Key Data
4.1 percent
— The adjusted increase in State Operating Funds spending in the FY2019 Executive Budget.
$2.8 billion
— The amount shifted out of fiscal year 2019 State Operating Funds spending.
$1.5 billion
— The amount of the Metropolitan Commuter Transportation Mobility tax shifted off budget.
$938 million
— The amount of the School Tax Relief program excluded from State Operating Funds spending in fiscal year 2019.
$274 million
— The net impact of shifting agency costs and other expenses between capital funds and State Operating Funds.
The Authorities Budget Office requires a funding increase to $3.105 million to effectively oversee 578 state and local authorities that manage $51 billion in annual spending and $270 billion in public debt. Because the agency is funded by assessments on these authorities rather than the General Fund, this budget adjustment would not impact the state's broader fiscal deficit.
Recommendations related to State Budget Process
We therefore recommend an allocation of $3.105 million to the Authorities Budget Office in keeping with the legislature’s recommendation in 2009 of $2.7 million, or $1.169 million more than the current allocation in the Executive Budget.
Key Data
$3.105 million
— Proposed annual funding allocation for the Authorities Budget Office
$51 billion
— Annual spending by the 578 state and local authorities overseen by the ABO
$270 billion
— Public debt held by the state and local authorities overseen by the ABO
11
— Current number of full-time employees at the Authorities Budget Office
40 percent
— Current staffing level of the ABO compared to the level envisioned in 2010
The federal tax overhaul passed last month may have enormous impacts in New York and could upend the relationship between the federal government and the states. CBC and the CUNY Graduate School of Journalism gathered experts to assess the impact and potential city and state responses in a special half-day…
$168.2 billion is the NYS Executive Budget for Fiscal Year 2018-2019. Dave Friedfel joins WT[D]P to discuss budget growth, school aid, medicaid, economic development, and proposals to deal with the impact of federal tax law changes.
New York State should freeze over $3.2 Billion in proposed economic development and business subsidy spending in the Executive Budget until significant anti-corruption and transparency reforms are enacted. These reforms include requiring competitive contracting, empowering the Comptroller to oversee large contracts, and creating a public database to track subsidy deals and clawback provisions.
Recommendations related to State Budget Process
Reject the over $3.2 Billion in new proposed spending in the Executive Budget on economic development and business subsidies until major anti-corruption and transparency reforms are put in place.
Require competitive and transparent contracting for the award of state funds including authorities and affiliates.
Have the Empire State Development Authority (ESD) award all state economic development grants and contracts, rather than using SUNY or state-controlled non-profits.
Empower the Comptroller to pre-approve all SUNY and OGS central contracts over $250k.
Prohibit all state-affiliated entities from doing business with their boards of directors.
Create a Database of Deals that shows the total value of subsidies awarded to a business, including job targets and “clawback” provisions.
Limit campaign contributions from anyone seeking a state contract to reduce potential conflicts of interest.
Key Data
$3.2 Billion
— New proposed spending in the Executive Budget on economic development and business subsidies.
$250k
— Threshold for the Comptroller to pre-approve all SUNY and OGS central contracts.
$1 Billion
— Amount of state economic development contracts involved in alleged rigging centered on federal trials.
New York allocates over $4 billion annually to economic development projects that often lack clear criteria or accountability, resulting in high costs per job created. Implementing a unified economic development budget and standardizing reporting requirements would ensure taxpayer funds are used effectively and transparently.
Recommendations related to State Budget Process
The state should establish a unified economic development budget to improve transparency and oversight.
The state should standardize metrics across all economic development initiatives to allow for better comparisons.
The state should establish a database of deals outlining every economic development incentive to track beneficiaries and commitments.
The state should improve program design so that incentives are only provided after an employer has fulfilled its promises to protect taxpayer funds.
The state should adopt administrative reforms to ensure procurement integrity within economic development spending.
Key Data
$4 billion
— New York state allocates more than $4 billion annually, including tax benefits, to economic development.
$1 billion
— More than $1 billion of taxpayer money was allocated to these projects before a single new job was created.
$83 million
— The state invested $83 million in a factory for the business.
$15 million
— It will cost taxpayers an additional $15 million to properly equip the building for the new tenant.
290
— The new company has promised to create 290 jobs.
$337,931
— New York will have spent $337,931 per job.
The fiscal year 2019 New York State Executive Budget relies on short-term fixes and speculative revenues rather than addressing long-term structural spending issues. The proposal includes concerning economic development spending and shifts in MTA costs to New York City, while failing to implement necessary reforms to the Foundation Aid Formula.
Recommendations related to State Budget Process
The Governor and Legislature need to adopt significant reforms to the State's economic development program.
The budget should be conservative in its forecasts and include spending constraints to address potential threats to federal revenue.
The State should implement fundamental reforms to the Foundation Aid Formula rather than relying on the existing flawed distribution.
The State should grant New York City the authority to use design-build tools to match the expansion granted to state agencies.
Key Data
$3 billion
— Revenue attributed to non-profit health insurers converting to for-profit status included in the financial plan.
72 percent
— Portion of MTA dedicated taxes and subsidies currently paid by New York City residents and businesses.
$850 million
— Threshold for federal Medicaid revenue decline that would trigger state spending cuts.
$300 million
— Cost of the High Technology Innovation and Economic Development Infrastructure Program.
$600 million
— Cost for a life sciences laboratory in the Capital District.
$17 billion
— Total amount of the existing flawed Foundation Aid distribution.
374 is the number of pages in Governor Cuomo's State of the State policy book. Laura Nahmias of Politico NY joins the podcast to discuss what the new year has in store for State and City politics.
New York State faces a budget gap between $4.4 billion and $6.3 billion, necessitating careful decisions regarding tax cuts, agency spending, and potential federal funding losses. The legislature should enhance oversight by adding a comprehensive hearing on the financial plan to its existing budget review process.
Recommendations related to State Budget Process
The Legislature should add one more hearing pursuant to their constitutional and legal authority to hear and inquire about the state budget overall.
The Governor should propose substantive changes to the 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'.
The Governor should recognize the time has come to end the poor use of state funds regarding Property Tax Relief rebates.
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.
$1.1 billion
— The projected reduction in State revenues from middle income tax cuts in fiscal year 2019.
$411 million
— The forecasted cuts to Disproportionate Share Hospital (DSH) funding.
$1.1 billion
— The amount of funding at risk for Children's Health Plus in fiscal year 2019 absent federal reauthorization.
$4 billion
— The amount of uncommitted federal funding remaining for the State's Essential Plan.
New York State currently spends $5 billion annually on economic development programs, and any new spending or tax initiatives should be evaluated within the context of the overall budget and financial plan. Before approving additional programs, the state should implement reforms to improve evaluation, procurement, and disclosure requirements to ensure existing spending is effective.
Recommendations related to State Budget Process
The Governor should veto the three bills that would expand the State’s economic development programs.
New spending or tax programs should be considered in the context of an overall budget and financial plan.
No new programs should be approved until reforms are put in place to improve evaluation, procurement, and disclosure requirements and existing spending is effectively evaluated.
Narrowly focused economic development incentives should be curtailed.
Key Data
$5 billion
— The amount the State already spends on economic development programs.
$100,000
— The maximum grant amount for small businesses supporting commercialization of innovative energy and environmental technology.
$5 million
— The annual cap for the new refundable tax credit for companies that hire female and minority writers and directors.
$25 million
— The original annual cap for the Film Tax Credit Program when it was first adopted.
$420 million
— The current annual cost of the Film Tax Credit Program.
New York State's annual $4 billion in economic development spending lacks transparency and standardized evaluation, with nearly $1.4 billion allocated to programs lacking clear parameters in the 2017-2018 budget. To improve accountability, the state should implement a unified economic development budget, establish a public database of deals, and subject all contracts over $250,000 to Comptroller review.
Recommendations related to State Budget Process
The state should establish a unified economic development budget to list and quantify all state economic development spending, including tax expenditures and subsidies.
New York should use standardized metrics across economic development initiatives to ensure comparability regarding job creation, retention, and capital investments.
The state should establish a 'Database of Deals' to bring together all state funds disbursed or committed for economic development along with appropriate measures of results.
Project-specific economic development subsidies should only be provided after a private entity has made an investment to reduce risk for taxpayers.
The Office of the State Comptroller should have authority to review and approve all contracts more than $250,000 to ensure proper oversight.
Key Data
$4 billion
— Total amount of state economic development spending each year.
$1.4 billion
— Amount in the fiscal year 2017-2018 budget allocated for programs that lack clear parameters.
$250,000
— Threshold for contracts that the State Comptroller should have the authority to review and approve.
$2 million
— Annual appropriation for Technology Development Organizations.
$10 million
— Annual appropriation for the Manufacturing Extension Partnership.
$11 million
— Annual appropriation for Centers of Excellence.
New York State's system of Industrial Development Agencies and Local Development Corporations is fragmented and lacks sufficient accountability, with nearly 350 entities controlling billions in economic development investments. These entities often make poorly justified investment choices, necessitating consolidation and improved oversight to ensure public resources are used effectively.
Recommendations related to State Budget Process
IDAs in each of the state’s 10 REDC regions should be consolidated into a single multicounty IDA per region to better support strategic plans.
The Authorities Budget Office should be granted the ability to assess fines, suspend directors, or curtail certain activities of authorities that remain out of compliance with state law.
The State Comptroller’s audit authority should be extended to apply to Local Development Corporations directly, rather than only through their relationships with local governments.
Oversight of the data being input into the Public Authority Reporting Information System should be increased, with data for large projects verified individually and smaller projects subject to spot-checking.
Standardized metrics for measuring economic development outcomes, such as job creation, should be collected and made available on the state’s open data website as part of a comprehensive database of deals.
Key Data
$16.2 billion
— Total investments made by IDAs and LDCs from 2011 through 2015.
$1.9 billion
— Total spending and tax expenditures by IDAs and LDCs in 2015.
350
— Number of IDAs and LDCs across New York State in 2015.
55.7%
— Percentage of IDA procurement costs that were for non-competitively bid contracts during the 2016 reporting year.
$24,747
— Average tax exemption per planned job for IDA projects outside New York City that reported planned job creation.
$23,885
— Total debt outstanding in millions for IDAs and LDCs in 2015.
New York State's Medicaid supplemental payments, which provide $5 billion annually to hospitals, face significant reductions due to federal policy changes and shifting state priorities. To mitigate the severe impact on municipal hospitals, the state must reevaluate its distribution methods and consider reducing payments to voluntary hospitals that rely less heavily on these funds.
Recommendations related to State Budget Process
The State should reconsider its priorities in distributing Medicaid supplemental payments.
The State can revise the distribution of reduced federal funding for supplemental payments to make the impact of future federal cuts more equitable.
Pending cuts should not fall only on H+H, and adjustments, such as reduced payments to voluntary hospitals with limited reliance on supplementary payments, may be needed.
Key Data
$5 billion
— Total annual supplemental payments provided by four separate programs.
$659 million
— Projected loss to New York State due to federal DSH payment cuts.
$370 million
— Net annual cuts in 2018 for New York City municipal hospitals.
$697 million
— Total projected reduction in supplemental payments based on steady funding assumptions.
$2.2 billion
— H+H receipts from supplemental payments in fiscal year 2016.
$1.4 billion
— Projected H+H receipts from supplemental payments in fiscal year 2020.
New York State's transportation capital planning process lacks a holistic, data-driven strategy, often relying on disjointed documents and political negotiations rather than objective needs assessments. To improve transparency and accountability, the state should codify a formal, multi-year planning process that links asset conditions to specific funding and project lists.
Recommendations related to State Budget Process
State officials should codify in statute a process to formally set forth appropriate capital planning procedures for DOT assets.
The State should produce an update of the DOT’s capital program’s strategies and goals to outline the system's vision and priorities.
The State should conduct a needs assessment highlighting the condition of the assets and the projected costs associated with maintaining them.
The State should provide a proposed project list, with funding identified, to accompany the Governor’s proposed budget.
The State should publish an enacted capital plan and project list that includes all costs contained in the State’s enacted Financial Plan.
The DOT should reproduce its list of projects annually with each Executive Budget to enable the Legislature and public to track progress.
The State should issue a status report on projects included in the enacted five-year capital plan to compare implementation progress against original goals.
Key Data
$4.9 billion
— Annual DOT capital expenses, representing 36 percent of projected capital spending by New York State agencies.
$21 billion
— Total funding available for the 2016 through 2020 capital program.
$3 billion
— Amount of the 2016-2020 capital program allocated ambiguously to "statewide" projects.
$6.5 billion
— Amount of the 2016-2020 capital program left out of project lists entirely.
$130 million
— Additional capital funding added in the fiscal year 2018 budget for projects outlined by legislative leaders.
$6.2 billion
— Actual remaining debt capacity at the end of fiscal year 2017.
This week's data point is $780 million - the value of contracts involved in the alleged bid-rigging and corruption scandal involving State economic development programs. Special guest New York State Comptroller Tom Dinapoli discusses his proposal for independent review and reform of state procurement practices with Ben Max and Maria…
New York State's spending on economic development programs has tripled under the current administration, yet half of these funds are allocated to projects without specific guidelines or clear performance metrics. To improve accountability and effectiveness, the state should implement a unified budget, standardize performance metrics, and increase transparency regarding economic development deals.
Recommendations related to State Budget Process
The state should establish a unified economic development budget to improve transparency and oversight.
Policymakers must use standardized metrics to evaluate the effectiveness of economic development investments.
The state should publish a database of deals to provide public access to information on economic development projects.
Officials should improve program design to ensure economic development initiatives are structured effectively.
The state should make administrative reforms to streamline and improve the management of economic development programs.
Key Data
$2,768 million
— Total appropriations for Empire State Development in the 2017-2018 fiscal year.
23%
— Growth in total appropriations to Empire State Development from the 2017 adopted budget to the 2018 adopted budget.
$1.4 billion
— Amount of appropriated funds for Empire State Development dedicated to projects without specific guidelines.
$420 million
— Annual cost of the Empire State Film Production Tax Credit.
$163 million
— Annual cost of the Excelsior Scholarship once fully phased in.
New York State's reported 2 percent growth in State Operating Funds spending for fiscal year 2018 obscures the true rate of 3.7 percent, which is revealed when accounting for shifts in payment timing and reclassifications. Transparency in the state budget process is undermined by these accounting adjustments, which are used to fit spending figures under an artificial growth cap.
Recommendations related to State Budget Process
The Governor should utilize the fairest portrayal of spending growth by adjusting for payment timing differences and accounting changes when describing the State’s financial choices.
The Governor should not undermine transparency in order to make his significant accomplishments fit an artificial spending growth cap.
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.
Key Data
3.7%
— Actual growth in State Operating Funds spending for fiscal year 2018.
$100,200
— Actual State Operating Funds spending in millions for fiscal year 2018.
$1,383
— Total spending in millions shifted out of State Operating Funds in fiscal year 2018.
$683
— Total spending in millions shifted to different years in fiscal year 2018.
2.0%
— Reported growth in State Operating Funds spending for fiscal year 2018.
$98,134
— Reported State Operating Funds spending in millions for fiscal year 2018.
CBC's Director of State Studies David Friedfel joins Liz Benjamin on Capital Tonight with Alex Camarda of Reinvent Albany and Ron Deutsch of the Fiscal Policy Institute to discuss the chances of passing "clean contracting" bills and other measures to make state procurement and contracting more transparent and accountable. This program originally…
The 2017-2018 state budget increased school aid by $1.1 billion, yet failed to reform the distribution formula, resulting in an inequitable system that continues to favor wealthier districts over those with higher needs. Comprehensive modifications to the Foundation Aid formula are necessary to ensure resources are directed toward low-wealth districts rather than providing wasteful, across-the-board increases.
Recommendations related to State Budget Process
The Foundation Aid formula should be reformed so that it can accomplish its original purpose of ensuring that students receive the resources necessary to achieve a sound basic education regardless of a district’s wealth.
The state should implement more comprehensive modifications to the Foundation Aid formula in order to adequately fund education in all districts without excessive state spending.
The state should eliminate wasteful minimum increases for all school districts that are provided regardless of need or enrollment decline.
The state should remove the 'Additional Increases' provision which provides aid to districts regardless of their actual need.
The state should reallocate funds from wealthy districts to low-wealth, high-need districts to better align spending with actual needs.
Key Data
$1.1 billion
— The increase in school aid in the Enacted State Budget for Fiscal Year 2017-2018.
$130 million
— The total amount of 'Additional Increases' provided to 507 of 674 school districts.
$118 million
— The total amount state taxpayers could have saved had the proposed reforms to the Foundation Aid formula been adopted.
$1.9 billion
— The additional funding that would have been directed to low-wealth, high-need districts under the proposed reform plan.
$25.8 billion
— The total amount of school aid authorized in the Enacted State Budget for Fiscal Year 2017-2018.
4.4 percent
— The percentage increase in school aid over the previous year.
New York State's FY2018 adopted budget includes excessive spending and fails to implement necessary reforms to education funding or economic development oversight. While the budget includes positive measures like rational tuition policies and a retiree health reserve fund, it relies on fiscal gimmicks to mask the true rate of spending growth.
Recommendations related to State Budget Process
The state should extend design-build authorization to New York City and for State government to yield considerable savings.
The state should implement meaningful disclosure or performance standards for economic development spending.
The state should make necessary reforms to education funding to ensure funds are not disproportionately allocated to wealthy districts.
Key Data
$25.8 billion
— Education Aid, the second largest item in the budget.
4.4%
— The growth rate of Education Aid in the adopted budget.
3.9%
— The statutory cap for Education Aid growth.
2%
— The Governor's aspirational growth cap for state operating spending.
New York State is operating under an emergency budget for the first time in 7 years, which maintains agency operations through May 31 while including $2.5 billion for water infrastructure. While this prevents a government shutdown, it creates uncertainty for local governments and school districts, highlighting the need for a more effective and accountable budget process that includes fiscal discipline and formula reforms.
Recommendations related to State Budget Process
The Legislature and Governor should promptly come to an agreement that includes needed reforms to the State’s Foundation Aid formula.
The Legislature and Governor should promptly come to an agreement that includes improved targeting and disclosure of economic development spending.
The Legislature and Governor should promptly come to an agreement that includes overall fiscal discipline.
Key Data
$2.5 billion
— Funding included in the emergency budget for water infrastructure.
May 31
— Date through which state agencies will continue to operate under the emergency budget.
CBC's Director of State Studies David Friedfel and Ron Deutsch of the Fiscal Policy Institute join Nick Reisman on Capital Tonight to discuss economic development in New York and reforms that should be part of the budget process.
New York's Foundation Aid formula for school funding is outdated and relies on arbitrary adjustments that misallocate resources, failing to effectively target aid to districts with the greatest needs. Reforming this formula to use a more equitable basis for local funding and updated poverty measures would require only a modest $569 million increase in state aid, rather than the $3.8 billion sought by advocates.
Recommendations related to State Budget Process
A single method should be used that applies a uniform local tax factor and adjusts only for one other factor – the local Medicaid financing burden.
Hold harmless provisions, phase-in percentages, caps, and other arbitrary adjustments in the current formula should be eliminated.
Increasing the weighting for poverty from 0.65 to 0.75 in the calculation of the PNI incorporated in the formula would more appropriately distribute Foundation Aid.
The current system can and should be improved in order to promote the wisest use of tax dollars by local school boards and administrators; this means promoting use of evidence-based strategies and requiring quantifiable results.
The Foundation Aid formula should be revised to better target school aid to support a 'sound basic education' in all districts.
Key Data
$569 million
— The amount of additional annual State funding required to support a sound basic education in all of New York’s school districts under a reformed formula.
$3.8 billion
— The amount of additional annual State funding advocates are calling for to increase funding distributed through the Foundation Aid program.
$2.7 billion
— The amount of funding that would be redirected to needy districts under a reformed Foundation Aid formula.
$24.3 billion
— The total amount of state school aid in school year 2016-2017, of which Foundation Aid is $16.5 billion.
$22,556
— New York’s statewide average per pupil spending, which is the highest in the nation.
$6,340
— The foundation amount per pupil for a sound basic education as determined by the New York State Education Department for the 2016-2017 school year.
New York's procurement processes require significant reform to ensure transparency and prevent conflicts of interest, including the centralization of economic development awards and enhanced oversight of state contracts. Implementing these changes, such as creating a public database of subsidies and restricting campaign contributions from vendors, would improve accountability in the state's fiscal operations.
Recommendations related to State Budget Process
Require competitive and transparent contracting for the award of state funds by all state agencies, authorities, and affiliates.
Transfer responsibility for awarding all economic development awards to the Empire State Development Corporation (ESDC), and end awards by state non-profits and SUNY.
Empower the comptroller to review and approve all state contracts over $250k.
Prohibit state authorities, state corporations, and state non-profits from doing business with their board members.
Create a ‘Database of Deals’ that allows the public to see the total value of all forms of subsidies awarded to a business.
Limit campaign contributions from anyone who has or is seeking a state contract.
Key Data
$250k
— The threshold for state contracts that the comptroller should be empowered to review and approve.
six states
— The number of states that have already implemented a 'Database of Deals' to track business subsidies.
six months
— The duration after a contract ends during which vendors should be banned from making campaign contributions.
On March 3rd, 2017, CBC's Director of State Studies David Friedfel appeared on Capital Tonight to discuss the Citizens Budget Commission's recommendations on the New York State Executive Budget for Fiscal Year 2018.
The fiscal year 2018 Executive Budget includes proposals to maintain spending discipline and reform retiree health insurance, but requires adjustments to ensure one-time financial settlements are used for long-term investments rather than operating expenses. Additionally, the budget should prioritize directing school aid to less wealthy districts and rejecting ineffective economic development spending, such as the film tax credit.
Recommendations related to State Budget Process
The final adopted budget should direct Foundation Aid where it is needed most—among less wealthy districts.
The state should reject new economic development spending and impose a moratorium on new economic development programs until more transparency and results are achieved in the existing programs.
The state should repeal or substantially decrease the Empire State Film Tax Credit, which costs state taxpayers $420 million per year.
The state should save for its OPEB liabilities by dedicating one-time settlements to this purpose to provide long-term savings for the state’s taxpayers.
The proposal to extend design-build authorization should also extend authorization to New York City, which has requested the authority in the last two legislative sessions.
Key Data
$25.6 billion
— Total school aid in the Executive Budget, representing a 3.9 percent increase.
$420 million
— Annual cost to state taxpayers for the Empire State Film Tax Credit.
$1.8 billion
— Amount of one-time financial settlements in the current year that should be used for long-term benefits.
$961 million
— Total increase in school aid on a school year basis in the Executive Budget.
$800 million
— Allocation for economic development that should be rejected.
New York's FY2018 Executive Budget relies on $1.2 billion in fiscal gimmicks—such as shifting workforce costs and delaying repayments—to artificially meet a self-imposed 2 percent spending growth cap. These accounting maneuvers obscure the true 3.2 percent growth rate of state spending and undermine budget transparency without actually reducing state costs.
Recommendations related to State Budget Process
The state should avoid shifting workforce costs to the capital budget to artificially lower operating budget spending.
Policymakers should refrain from converting tax exemptions to tax credits as a mechanism to mask spending as revenue reductions.
The budget should eliminate the use of placeholders for unspecified agency savings that lack identified measures for achievement.
The state should cease delaying repayments to the New York Power Authority, as this creates future financial burdens and risks impacting the Authority's credit rating.
The state should prioritize budget transparency over meeting arbitrary spending caps through accounting gimmicks that do not reduce actual costs.
Key Data
$1.2 billion
— Total value of the four fiscal gimmicks included in the FY2018 Executive Budget proposal.
3.2%
— Projected growth of State Operating Funds in fiscal year 2018 absent the use of fiscal gimmicks.
$500 million
— Amount of annual savings proposed for Executive agencies that currently lack identified measures for achievement.
$227 million
— Savings generated in the FY2018 Executive Budget by shifting the costs of more than 3,000 employees to Capital Projects Funds.
$277 million
— Amount of State Operating Funds spending saved by converting New York City STAR property tax exemptions to Personal Income Tax credits.
$193 million
— Savings in fiscal year 2018 achieved by amending scheduled repayments to the New York Power Authority.
The Governor's proposed executive budget for fiscal year 2017-2018 includes a $1.1 billion increase in school aid, but the accompanying changes to the Foundation Aid formula would solidify existing inequities by favoring wealthier districts. Rather than perpetuating these flaws, the state should reform the formula to ensure scarce resources are directed toward districts that need them to provide a sound basic education.
Recommendations related to State Budget Process
The Foundation Aid formula is broken and requires substantial reforms to alleviate current inequities.
The state should fix problematic features of the formula instead of making permanent features that drive unnecessary resources to wealthy districts.
The state should ensure scarce state dollars are directed to the districts that need them to provide a sound basic education.
The state should change the problematic features of the formula so that all districts could be fully funded under Foundation Aid.
Key Data
$1.1 billion
— The proposed increase in total school aid in the New York State Executive Budget.
$4.3 billion
— The amount certain advocates claim local districts are owed in Foundation Aid.
$569 million
— The additional cost to fully fund all districts under Foundation Aid if problematic features of the formula were changed.
$25.6 billion
— The total proposed school aid for school year 2017-2018.
New York's fiscal year 2018 executive budget proposal includes several questionable accounting practices, such as shifting operating expenses to the capital budget and relying on temporary tax surcharges to fund recurring costs. While the plan includes some positive reforms for retiree health insurance and education aid, it also allocates significant capital funding to dubious economic development projects and extends tax credits for profitable industries.
Recommendations related to State Budget Process
Medicaid should not pick up the bill for New Yorkers who refuse to pay for their spouses’ medical care, and it is time to end this unfair spousal refusal practice.
Instead of morphing the temporary 'Millionaires Tax' surcharge into a permanent resource, the state should restructure standing tax brackets and reserve the surcharge option for future economic downturns.
The state should expand design-build authority to New York City, as the city has repeatedly requested to avail itself of a tool that has provided savings to the State.
The Health Care Reform Act needs wholesale reform rather than a simple extension, as it no longer serves its original purpose of reforming the hospital industry.
The state should eliminate the extension of the film tax credit, as the movie industry is profitable and should not be subsidized.
Key Data
$277 million
— Amount of School Tax Relief (STAR) benefits converted to personal income tax credits to keep state 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.
$150 million
— Increase in statutory reserves.
$2 billion
— Total amount of statutory reserves.
$3 billion
— Amount of settlement funds allocated in the budget but not yet disbursed.
$500 million
— Amount available in debt management funds.
Governor Cuomo’s fiscal year 2018 executive budget proposals include $15.5 billion in spending across various capital and operating projects, yet significant questions remain regarding how the state will address a projected $3.5 billion budget gap. The budget process faces uncertainty concerning the funding of education aid, Medicaid cost-containment measures, and the potential renewal of expiring tax surcharges.
Key Data
$15.5 Billion
— Total cost of items with fiscal impact included in the Fiscal Year 2018 Executive Budget proposals.
$3.5 Billion
— Projected budget gap as of November that raises questions about how the state will close the deficit.
$10 Billion
— Cost allocated for the transformation of JFK Airport, categorized as Port Authority Capital.
$2 Billion
— Funding designated for Clean Water Infrastructure projects.
Over 60 active legislative bills threaten to increase state and local government costs by hundreds of millions of dollars annually. Approximately half of these proposed benefit sweeteners lack required fiscal impact statements, obscuring their true effect on the state budget.
Key Data
60
— bills active this session that could cost the State and local governments hundreds of millions of dollars per year
New York State's mid-year financial plan updates are critical for assessing revenue shortfalls, the impact of collective bargaining agreements, and the rising costs of minimum wage mandates. These updates reveal growing budget deficits, which could exceed $4 billion for fiscal year 2018, necessitating careful scrutiny of spending on economic development and Medicaid.
Recommendations related to State Budget Process
The State should fully evaluate economic development spending and cut less desirable projects.
The State should ensure the financial plan accommodates raises without increasing total personnel costs.
The State should ensure that savings from plans to reduce out-of-control healthcare costs are identified and included in the Update.
The State should continue to slow the growth in Medicaid spending even as more individuals enroll.
Key Data
$4 billion
— Potential 2018 deficit if revenue shortfalls and collective bargaining agreements are not offset.
$3.2 billion
— The fiscal year 2018 budget gap as of August.
$588 million
— The projected cost of minimum wage increases by 2020.
$780 million
— Personnel cost increase in 2019 assuming the collective bargaining pattern holds.
$423 million
— Personal income tax collections below the plan through the end of September.
3.2 percent
— The lowered 2018 global Medicaid cap forecast based on medical inflation.
The state's reliance on non-profits and the SUNY system to award economic development contracts has created a system prone to corruption, as evidenced by a scandal involving over $1 billion in public funds. To restore public trust, the state should implement competitive contracting requirements, empower the Comptroller to oversee all contracts, and establish a public database to track business subsidies.
Recommendations related to State Budget Process
Transfer responsibility for awarding all business subsidy awards to the Empire State Development Corporation, and end the use of state non-profits and SUNY in awarding these subsidies.
Require competitive and transparent contracting for the award of state funds, regardless of the contracting entity, using agency procurement guidelines as a uniform minimum standard.
Empower the Comptroller to review and approve all state contracts to ensure accountability.
Create a Database of Deals that allows the public to see the total value of all forms of subsidies awarded to a business.
Seek to reduce the potential for conflicts of interest by exploring options to limit campaign contributions from anyone who has or is seeking a state contract.
Key Data
$750 million
— The scale of the bid-rigging scandal involving state-controlled non-profits and SUNY Polytechnic.
over $1 billion
— The amount of public funds affected by the scandal and systemic problems with how the state awards certain large contracts.
six states
— The number of states that currently have a Database of Deals to track subsidies awarded to businesses.
Nineteen states and NYC
— The number of jurisdictions that have "pay to play" laws to limit campaign contributions from those seeking state contracts.
New York state spends $8.6 billion annually on economic development initiatives without a unified budget or clear metrics to measure their effectiveness. The state should halt project-specific appropriations until it establishes standardized eligibility criteria and accountability mechanisms to ensure taxpayer funds are used effectively.
Recommendations related to State Budget Process
The state should implement more robust reporting requirements for all economic development initiatives.
The state should pay for performance, providing subsidies only for investments and wages that have already been expended.
The state should stop project-specific appropriations for economic development until clear eligibility criteria are established and accountability mechanisms are enhanced.
Key Data
$8.6 billion
— Total annual state economic development investments.
$750 million
— Cost to the state to build the SolarCity factory.
$638 million
— Appropriation for the Nano Utica project.
$486 million
— Appropriation for the SolarCity plant in Buffalo.
$125 million
— Appropriation for the Norsk Titanium plant at SUNY Polytechnic Institute.
$4 billion
— The state portion of annual economic development investments.
Following a bid-rigging scandal that impacted over $1 billion in public funds, watchdog groups are calling for major reforms to New York's state contracting and subsidy award processes. Proposed changes include centralizing subsidy awards under the ESDC, requiring competitive contracting, empowering the Comptroller to review contracts, and creating a public database of deals.
Recommendations related to State Budget Process
Require competitive and transparent contracting for the award of state funds, regardless of the contracting entity.
Transfer responsibility for awarding all business subsidy awards to the ESDC and end the use of state non-profits and SUNY in awarding these subsidies.
Empower the Comptroller to review and approve all state contracts.
Create a Database of Deals that allows the public to see the total value of all forms of subsidies awarded to a business.
Seek to reduce the potential for conflicts of interest by exploring options to limit campaign contributions from anyone who has or is seeking a state contract.
Key Data
$1 Billion
— The amount of public funds affected by the scandal involving systemic problems with how the state awards certain large contracts.
6
— The number of states that currently have a Database of Deals allowing the public to see the total value of subsidies awarded to a business.
19
— The number of states and New York City that have 'pay to play' laws to limit campaign contributions from those seeking state contracts.
New York's Medicaid program, which accounts for the largest portion of the state budget, has successfully contained costs through redesign initiatives like managed care and value-based payments. However, achieving further savings and sustainability requires overcoming implementation challenges related to enrollment, coordinated care models, and payment structures.
Recommendations related to State Budget Process
New York must make more progress toward the goal of enrolling nearly all Medicaid-eligible individuals in managed care plans to improve program efficiency.
The state requires greater use of coordinated service delivery models to better manage the care of those with multiple conditions.
Policymakers must address the complex technical issues and difficult policy choices involved in the design and implementation of the value-based payment strategy.
The state should aggressively pursue further gains in Medicaid reform to ensure the sustainability of this vital service.
Key Data
34 percent
— Portion of the $156 billion State budget comprised by Medicaid.
6.3 million
— Number of New Yorkers provided access to medical care through Medicaid.
17 percent
— Decline in average cost per enrollee between 2010 and 2014.
$10,432 to $8,620
— Range of the decline in average cost per enrollee between 2010 and 2014.
$1.3 billion and $1.9 billion
— Annual savings target for state fiscal year 2020.
250,000
— Number of people intended to benefit from the Health Home initiative.
Legislative proposals to enhance public employee benefits, including disability, pension, and death benefits, threaten to impose significant, unbudgeted costs on state and local governments. These measures risk undermining previously enacted fiscal reforms that are projected to save $21 billion over 30 years.
Recommendations related to State Budget Process
The Legislature should reject the bills detailed in the scorecard because they would impose expensive mandates on New York State and local governments without improving services for taxpayers.
Policymakers should ensure that hard-fought reforms that yield significant savings remain in place rather than being undermined by proposals to enhance expensive employee benefits.
Key Data
$21 billion
— Projected savings over 30 years from reforms that would be rolled back by bills enhancing disability benefits for recently hired New York City police and fire employees.
$46 million
— First-year cost of the most expensive bill (A4295) that would allow judges or justices to use their most recent annual salary rather than a 36-month average to calculate pension amounts.
$36 million
— First-year cost of bill S5245, which would enhance in-service death benefits for retirement-eligible State correction officers.
$21 million
— Annual cost of bill A9850/S7232, which would decrease the employee contribution rate under the New York City Transit Authority 25-year/55-age early retirement plan.
$16 million
— Annual cost to New York City of bill A6988/S5972, which would expand eligibility for variable supplement fund payments to those who retired between 1968 and 1987.
$3 million
— Cost of retroactive payments for bill A3879-b/S1968-a, which would allow certain State Department of Corrections and Community Service superintendents to opt out of the half pay after 25 years of service pension plan.
The State's Enacted Budget for Fiscal Year 2016-2017 impacted New York City by withholding $600 million in sales tax revenue, which amounts to $200 million annually. This loss was partially offset by a 5.7 percent increase in school aid, while proposals to shift Medicaid and CUNY costs to the City were ultimately rejected.
Key Data
$600 million
— The total amount of City sales tax revenue withheld by the State's Enacted Budget.
$200 million
— The annual amount of City sales tax revenue withheld by the State's Enacted Budget.
5.7 percent
— The increase in school aid provided by the State to the City.
The 2016-17 state budget agreement relies on optimistic economic growth projections to balance future financial plans, necessitating potential tax increases or spending cuts if the economy slows. While the budget includes significant increases in education and capital spending, it missed opportunities to secure the state's long-term financial future by failing to implement structural reforms like capping STAR benefits or rationalizing retiree health insurance.
Recommendations related to State Budget Process
The state should rationalize retiree health insurance shares to help secure the state's financial future.
Policymakers should cap STAR benefits to improve the state's long-term fiscal health.
The state should extend rational funding plans for SUNY and CUNY to ensure sustainable financial management.
To balance the financial plan, the state must hold the line on agency spending.
The state should extend the personal income tax surcharge on high-income earners to address projected deficits.
Key Data
$24.8 billion
— Total state education spending, which grew by 6.5 percent.
$4.2 billion
— Annual tax savings for married couples with incomes between $24,000 and $300,000 by 2025.
$54 billion
— Total value of the five-year transportation capital plan.
$1.2 billion
— Projected state fiscal year 2018 deficit.
$600 million
— Amount of public university and Medicaid expenses that were proposed to be shifted from the state to New York City.
$1.5 billion
— Funding allocated for high-tech economic development through the Urban Development Corporation.
New York State's fiscal year 2017 budget lacks transparency regarding the 2% limit on operating fund growth and relies on a capital budget that funds ad-hoc initiatives outside of a meaningful planning process. While the budget avoids shifting certain costs to New York City, it fails to implement necessary reforms like a rational tuition policy for SUNY and CUNY, freezing the STAR program, and addressing retiree health benefits.
Recommendations related to State Budget Process
The State should enact a rational tuition policy for SUNY and CUNY.
The State should freeze the poorly targeted School Tax Relief (STAR) program.
The State should reform retiree health benefits in a responsible and sustainable manner.
Key Data
2%
— Limit on State operating fund growth.
6.5%
— Growth rate of school aid in the budget.
3.4%
— Growth rate of Medicaid in the budget.
$1.3 billion
— Subsidies for nanotechnology and high-tech manufacturing.
$1 billion
— Funding for the Jacob Javits Center expansion.
$300 million
— Funding for a research corridor on Long Island.
New York's proposal in the 2017 Executive Budget to require New York City to resume paying for growth in Medicaid expenses reverses progress made in shifting these costs away from local governments. This policy change would exacerbate existing inequities, as New York City currently faces a significantly higher Medicaid burden per capita and relative to income than the rest of the state.
Recommendations related to State Budget Process
The State should maintain its policy of assuming the growth in local Medicaid spending rather than rescinding the policy for New York City.
The State should continue the phased takeover of local share growth for Medicaid to ensure equitable distribution of costs.
Key Data
$597
— New York City's Medicaid burden per capita.
$190
— Average local share of Medicaid per capita throughout the rest of the State.
$10.00
— New York City's local Medicaid costs per $1,000 of income.
$3.63
— Average local Medicaid costs per $1,000 of income for the rest of the State.
$96
— Putnam County's local Medicaid costs per capita.
$1.70
— Putnam County's local Medicaid costs per $1,000 of income.
New York State's proposal to use $2.3 billion in bank settlement funds to subsidize the Thruway Authority deviates from the principle that roads should be funded by user fees like tolls. Instead of relying on general tax-funded subsidies that encourage pollution, the state should maintain the Authority's self-supporting model by removing non-transportation burdens like the canal system and rejecting new policing costs.
Recommendations related to State Budget Process
The Governor and the Legislature should make a U-turn in policy and return to a sounder approach to funding the Authority.
The Legislature should concur with removing the Canal Corporation from the Thruway to save $50 million annually.
The Legislature should reject the proposal to require the Thruway Authority to pay for the annual cost of policing.
The State should not allocate additional settlement funds in the 2016-2017 budget to the Thruway.
Key Data
$2.3 billion
— Proposed subsidy from bank settlements for the New York State Thruway Authority.
$50 million
— Estimated annual operating losses saved by removing the Canal Corporation from the Thruway.
$35 million
— Annual cost of policing the Thruway that the Executive Budget proposes shifting to the Authority.
$1.4 billion
— Amount spent by the Thruway on canal operations and capital from 1993 to 2015.
$209 million
— Planned capital spending for the Canal Corporation that could be alleviated.
$20.60
— Current cost of a passenger vehicle trip from Buffalo to New York City.
New York's "spousal refusal" provision allows families to bypass Medicaid income and asset limits, creating an unfair and costly loophole that the Legislature has repeatedly refused to close despite Executive Budget proposals. Repealing this practice would generate approximately $10 million in annual savings while encouraging better long-term care planning through insurance.
Recommendations related to State Budget Process
The Legislature should end the costly and unfair practice of spousal refusal in Medicaid.
New York State should implement the Executive Budget proposal to stop requiring Medicaid to pay for services to a newly eligible spouse or child in a noncompliant family.
Key Data
$21,984
— Annual income eligibility limit for couples over 65 to receive Medicaid.
$21,750
— Asset eligibility limit for couples over 65 to receive Medicaid.
$35,760
— Income limit for Medicaid when one spouse requires institutionalized care and the other remains in the community.
$119,220
— Asset limit for Medicaid when one spouse requires institutionalized care and the other remains in the community.
$10 million
— Estimated annual savings from the Executive Budget proposal to repeal spousal refusal in fiscal years 2016-2017 and 2017-2018.
20 percent
— Personal income tax credit offered by New York State for long-term care insurance premiums.
The fiscal year 2017 Executive Budget includes significant shifts of expenses from the state to New York City totaling over $2.3 billion, while relying on one-time financial settlements to fund ongoing operating expenses. To address looming budget gaps that could reach $3.6 billion by 2020, the state should prioritize foundation aid for schools, implement a moratorium on new economic development spending, and reform binding arbitration rules.
Recommendations related to State Budget Process
The use of settlement funds to support the operation of roads and bridges and economic development projects with unquantifiable returns on investment should be rejected.
The entire funding increase for school aid should go to foundation aid, which targets aid to districts with the highest need and least ability to pay.
Authority to pursue public-private partnership arrangements should be extended to all State agencies and the City of New York.
Arbitrators should account for the full cost of a decision, including retroactive pay and the impact on fringe benefits, without increasing taxes, making service cuts, or employing fiscal gimmicks.
A moratorium should be declared on expansions in economic development spending until the benefits of existing programs can be examined carefully and unsuccessful programs terminated.
Creating the proposed New York Design and Construction Corporation should be rejected because it would blur lines of accountability and give new powers to politically appointed individuals.
Key Data
$2.3 billion
— Total expenses shifted from the State to New York City over three years through CUNY and Medicaid proposals.
$1.1 billion to $3.6 billion
— Projected growth of general fund budget gaps in fiscal years 2018 to 2020 without specified savings.
$2.5 billion
— Amount of one-time financial settlements in the current year that should not be used for ongoing operating expenses.
$590 million
— Amount dedicated to capital housing projects, which is considered an appropriate use of settlement funds.
$600 million
— Amount of sales tax revenue shifted from the City to the State over three years through the Sales Tax Asset Receivable Corporation transaction.
$10 million
— Savings for the State in fiscal year 2017 resulting from proposed changes to retiree health insurance premium-sharing.
The FY2017 State Executive Budget is evaluated through a grading system that emphasizes spending growth, particularly within the major expenditure categories of Medicaid and school aid. This assessment focuses on the fiscal trajectory of the state's two largest expense areas.
New York's proposed 2016-17 school aid budget increases total funding to $24.2 billion, yet relies heavily on expense-based reimbursements that favor wealthier districts rather than targeting the neediest through Foundation Aid. To improve equity, the state should reform aid formulas by eliminating hold harmless provisions and prioritizing Foundation Aid allocations during budget negotiations.
Recommendations related to State Budget Process
The State should address fundamental issues with aid formulas, such as hold harmless provisions and generous reimbursements for school transportation and construction expenses, during budget negotiations.
The State should prioritize redirecting resources through Foundation Aid, which is the best mechanism for targeting aid to the neediest districts.
The State should maintain the statutory growth cap tied to personal income to ensure school aid remains affordable.
Key Data
4.3%
— The proposed increase in total school aid for the 2016-17 school year.
$24.2 billion
— The total amount of school aid proposed for the 2016-17 school year.
27%
— The portion of the proposed school aid increase distributed through Foundation Aid.
$400 million
— The amount of the school aid increase flowing through expense-based reimbursement formulas like Building Aid and Transportation Aid.
$715
— The average per-student increase in school aid for the poorest 10 percent of districts.
$149
— The average per-student increase in school aid for the wealthiest 10 percent of districts.
New York State's executive budget relies heavily on unspecified savings and lacks clear funding plans for major infrastructure projects like the $3.9 billion Tappan Zee Bridge replacement. Furthermore, the proposal includes problematic economic development subsidies and fails to reform school aid formulas that disproportionately benefit wealthier districts.
Recommendations related to State Budget Process
The State should avoid relying on unspecified savings to achieve future budget balance, as this is not a plan to achieve savings but a plan to "figure it out later."
The State should reform binding arbitration provisions to sufficiently account for a local government's ability to pay, rather than extending them without such reforms.
The State must provide clear details regarding how the substantial unfunded costs of major infrastructure projects like the Tappan Zee Bridge replacement and the MTA capital program will be covered.
The State should improve performance reporting for economic development programs to ensure transparency and accountability, as current documentation of job results is insufficient.
The State should improve school aid formulas to ensure they do not disproportionately favor wealthier districts over those with greater needs.
Key Data
$1.7 billion
— Unspecified savings relied upon to achieve future budget balance in fiscal year 2018.
$4.6 billion
— Unspecified savings relied upon to achieve future budget balance by fiscal year 2020.
$90 million
— Annual subsidy to the Thruway Authority for state police and other operations.
$2.3 billion
— Total amount of one-time legal settlement funds proposed for spending.
$3.9 billion
— Unfunded costs associated with the Tappan Zee Bridge replacement.
$1 billion
— Amount of new economic development capital grants proposed.
The upcoming fiscal year 2016-2017 budget proposal requires careful examination of spending growth limits, the allocation of $2.2 billion in bank settlement funds, and the potential for increased transparency in lump sum appropriations. Key areas of concern include the equity of school aid formulas, the sustainability of Medicaid growth caps, and the fiscal impact of proposed minimum wage increases and transportation infrastructure funding.
Key Data
$5.4 Billion
— Amount in windfall bank settlements received by the State last year.
$2.2 Billion
— Additional windfall bank settlement funds available for the State to allocate.
$4 Billion
— Increase in state funding for school districts over the last four years.
3.4%
— Growth cap limit for state-funded Department of Health Medicaid.
$8.3 Billion
— Amount pledged by the Governor to the Metropolitan Transportation Authority’s capital plan.
$1.2 Billion
— Amount designated for the Family Tax Relief Credit and the Property Tax Freeze Rebate.
The Governor is urged to veto four specific bills that would increase public employee retirement benefit costs and threaten the fiscal savings achieved by the 2012 Tier VI pension reforms. During the 2015 legislative session, over 50 bills were introduced to enhance pensions, creating a concerning trend of potential fiscal rollbacks for taxpayers.
Recommendations related to State Budget Process
The Governor should veto A7490/S3010, A6771A/S4907, A5327C/S3948B, and A7547/S5785 to prevent an increase in the cost of public employee retirement benefits.
State officials should avoid permitting 'sweeteners' that threaten to undo the hard-won savings from the 2012 Tier VI pension reforms.
Key Data
50
— Number of bills introduced during the 2015 session to enhance State and local government employee pensions and benefits.
4
— Number of specific bills the Governor is urged to veto to prevent increased retirement benefit costs.
2012
— The year the Tier VI pension reforms were enacted, which generated savings for State and local government employers.
New York State's recent legislative package adds nearly $1.5 billion in annual obligations, including a new property tax relief rebate program, while relying on uncertain future budget surpluses. Lawmakers must now implement significant cost-saving measures to address the projected out-year budget gaps that are expected to reach $4.2 billion by fiscal year 2018-2019.
Recommendations related to State Budget Process
Lawmakers must be prepared to enact cost-saving measures to produce the surpluses they just spent.
Key Data
$1.5 billion
— New annual state obligations created by the legislative package.
$4.2 billion
— Projected out-year budget gap in fiscal year 2018-2019.
$1.3 billion
— Annual cost of the new property tax relief rebate program when fully implemented.
$250 million
— Increase in aid to nonpublic schools.
$1.6 billion
— Projected state budget surplus in fiscal year 2019.
2 percent
— Annual spending growth rate that the state is attempting to constrain spending to.
The New York State end-of-session agreement included fiscally concerning last-minute spending commitments, such as a $1.3 billion property tax rebate and a $250 million increase in aid to nonpublic schools. Furthermore, the legislative process was criticized for circumventing the rule requiring bills to be introduced three days before voting, which prevented adequate public scrutiny of the complex agreement.
Recommendations related to State Budget Process
Legislators and the general public should be afforded time to read legislation of such importance before its adoption.
Key Data
$1.3 billion
— Estimated annual cost of the new property tax rebate program.
$250 million
— Increase in aid to nonpublic schools.
New York State legislators introduced over 50 bills that would collectively increase annual taxpayer costs by at least $140 million by enhancing public employee pension and benefit programs. These legislative proposals threaten to erode landmark 2012 pension reforms and should be rejected to prevent further increases in state and local government spending.
Recommendations related to State Budget Process
The bills detailed in the scorecard should be rejected because they would add to already costly pension expenses for the State and for local governments.
Legislators should ensure that these benefit sweetener bills do not advance to the Governor’s desk.
The legislature should reject bills that would erode the landmark pension reforms enacted in 2012.
Key Data
$140 million
— Collective increase in annual costs to New York taxpayers from the proposed bills.
$40 million
— First-year cost of A.8032/S.5656, which improves disability benefits for recently hired employees.
$13.9 million
— Cost of A. 7801A/S. 5936, which would enhance death benefits for State correction officers.
$11.5 million
— First-year costs for A. 7854B/S. 5705B, a revised disability pension proposal for New York City’s uniformed employees.
$1.8 million
— Cost of A. 6771A/S. 4907, which would enhance retirement plans of uniformed court or peace officers.
3.2 percent to 6.8 percent
— Increase in employer costs for A. 7490/S. 3010, which enhances retirement plans for certain State and local police and firefighters.
New York's state budget significantly increased funding for economic development programs despite a lack of evidence that these subsidies generate positive economic returns. The state continues to expand tax credit programs and capital grants without implementing rigorous performance metrics or in-depth economic analyses to justify the expenditures.
Recommendations related to State Budget Process
State leaders should have sought better evidence that large subsidies produce positive returns for New York before adopting more than $2 billion in new capital funding for economic development purposes and expanding tax credit programs.
Other economic development programs would benefit from in-depth economic analyses similar to the one required for the film tax credit to prove their ability to induce new economic activity.
The state should implement clear metrics to measure the impact of its economic development programs, which currently total $8 billion annually.
Key Data
$8 billion
— Total state and local spending for economic development activities in 2014.
$2 billion
— Additional funding added to economic development programs in the fiscal year 2016 state budget.
$5.7 billion
— Planned capital disbursements for Empire State Development for fiscal years 2016 to 2020.
88 percent
— Increase in planned capital disbursements for Empire State Development compared to actual disbursements over the previous five years.
$570 million
— Net loss in tax revenue from film and TV production credits awarded in 2013 and 2014.
30 percent
— Value of the fully refundable film tax credit relative to qualified expenditures.
New York State's reliance on borrowing from public employee pension funds to balance the budget creates long-term fiscal risks and interest costs that undermine the state's pension health. Instead of continuing this practice, the state should utilize its $5.4 billion bank settlement windfall to pay down existing pension liabilities and restore full funding to the retirement system.
Recommendations related to State Budget Process
The State should end the practice of borrowing from public employee pension funds rather than extending it.
The State should use available bank settlement funds to reduce the outstanding liability from $2.5 billion in past borrowings.
The State should 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.
The State should cease the continued use of short-term budget relief that poses unwarranted risk to the long-term fiscal health of the pension funds.
Key Data
$5.4 billion
— Unexpected revenue from bank settlements available to the state.
$1.8 billion
— Amount the Executive Budget proposes to borrow from public employee pension funds in coming years.
$2.5 billion
— Outstanding liability from past pension borrowings.
$713 million
— Amount the State will defer in pension payments this year.
$4.3 billion
— Total amount the State will amortize through fiscal year 2020.
$5.1 billion
— Total amount likely to be repaid by fiscal year 2030.
The fiscal year 2016 Executive Budget for New York State includes several proposals regarding spending caps, tax credits, and economic development funding that require legislative review. These recommendations emphasize the need for disciplined spending growth, improved procurement methods, and a more rigorous evaluation of state investments to ensure long-term fiscal health.
Recommendations related to State Budget Process
The state should permanently extend design-build authorization for all state agencies to allow for better-designed and lower-cost capital projects.
School aid should be distributed according to student need and district ability to pay, correcting loopholes and misallocations regardless of other education policy changes.
A stronger framework to evaluate proposed investments relative to return on investment should be developed and adopted for bank settlement funds.
The state should declare a moratorium on expansions in economic development spending until the benefits of existing programs can be examined carefully and unsuccessful programs terminated.
The state should increase the allowable annual contribution and maximum allowable reserves for rainy day funds to better withstand adverse economic conditions.
Key Data
$64.5 billion
— Cumulative budget gaps over the four-year financial plan in January 2011.
$14.2 billion
— Cumulative budget gaps over the four-year financial plan in the current budget.
$3.4 billion
— Annual cost of the School Tax Relief (STAR) program.
$5.4 billion
— Total settlements with banks for regulatory violations benefiting New York.
$23.1 billion
— Projected school aid if proposed increases are adopted.
131,741
— Executive-controlled workforce in fiscal year 2010.
The fiscal year 2016 executive budget utilizes $5.7 billion in bank settlement proceeds for various investments while masking a $1.8 billion baseline gap that requires significant spending reductions in local government assistance. To address long-term fiscal health, the state must overhaul antiquated school aid formulas and establish viable financing plans for major transportation entities like the MTA and Thruway Authority.
Recommendations related to State Budget Process
The State should overhaul antiquated and byzantine school aid formulas to ensure funding flows according to need and district ability to pay.
The State must develop viable financing plans for the MTA and Thruway Authority to address their capital plan funding gaps.
The State should pair unit costs with effectiveness measures within the NY Performs platform to improve agency productivity.
The State should avoid speculative investments like the Upstate Revitalization fund in favor of proposals with proven merits.
The State should ensure tax policy extensions are fiscally sustainable to prevent future year budget gaps from growing.
Key Data
$1.8 billion
— The true baseline gap in the FY2016 financial plan that the state must close to meet its 2 percent growth target.
$5.7 billion
— The amount of bank settlement proceeds the FY2016 Executive Budget uses for one-time expenditures and investments.
$1.1 billion
— The total dollar amount of the proposed 4.8 percent school aid increase.
27 percent
— The savings achieved on Department of Transportation projects through the use of design-build contracts.
9.5 percent
— The reduction in the Executive-controlled workforce from FY2010 to the projected FY2016 levels.
$1.3 billion
— The amount proposed from bank settlements for the Thruway Authority for the new Tappan Zee Bridge and other needs.
New York's fiscal year 2016 budget proposal includes positive measures like maintaining spending caps and expanding design-build procurement, but relies on questionable pension deferrals and lacks transparency in school aid distribution. The plan also commits significant one-time settlement funds to economic development projects that would be better utilized for infrastructure needs.
Recommendations related to State Budget Process
The Legislature should refrain from adopting large, long-term spending commitments or tax reductions based on aspirational budget surpluses.
School aid increases should be targeted to the neediest districts, and the allocation details should be available to the public for review and analysis well in advance of budget adoption.
The State should prioritize investing one-time settlement funds in infrastructure needs rather than economic development spending.
All outstanding liabilities regarding deferred pension payments should be repaid rather than compounding the problem with further borrowing.
The State must ensure that design-build procurement authority does not permanently lapse to allow for more efficient capital project delivery.
Key Data
$3.2 billion
— Amount of required state employee pension contributions deferred by the end of the current fiscal year.
$1.1 billion
— Proposed increase in school aid, which amounts to an additional $400 per student on average.
$1.7 billion
— Value of the phased-in income tax credit, or “circuit breaker” program, proposed against assumed surpluses.
$1.5 billion
— Amount of bank settlement funds proposed for an Upstate Revitalization fund.
$3.4 billion
— Annual cost of the School Tax Relief (STAR) program, New York’s largest property tax relief program.
$5.7 billion
— Total amount collected by state regulators from resolving litigation with financial firms.
The FY2016 New York State budget process requires careful scrutiny of how windfall settlement funds are allocated and whether education reforms effectively address broken aid formulas. Policymakers must also prioritize fiscal discipline by maintaining Medicaid spending caps, addressing capital plan funding gaps for the MTA and Thruway Authority, and ensuring economic development tax credits are supported by documented benefits.
Recommendations related to State Budget Process
The state should ensure that windfall settlement funds are spent prudently with returns on investment.
Education reforms must include a plan to fix broken school aid formulas.
The state should ensure that Medicaid spending stays under the 3.6% cap.
The state must reduce spending to make a surplus a reality to meet the 2% growth assumption.
The state should not expand economic development tax credit programs without clear benefits documented.
The state should extend design-build authority as a proven tool in reducing construction costs.
The state should extend lower personal income tax rates for middle brackets.
The state should realize greater efficiencies in agency spending rather than just attempting to 'do more with less'.
The state should enact sensible reforms to the brownfields tax credit program.
The state must fill the funding gaps in the MTA and Thruway Authority capital plans.
Key Data
$4.5B
— Proposed amount of one-time spending from the windfall settlement.
New York State received a $5 billion windfall from bank settlements, which should be prioritized for long-term fiscal health rather than recurring expenses or pet projects. Officials are encouraged to invest in infrastructure and debt reduction while avoiding non-transparent allocation practices like memorandums of understanding.
Recommendations related to State Budget Process
The State Legislature should reject any proposal with recurring costs that continue after the windfall has been depleted.
New York should prioritize proposals that improve long-term fiscal health, such as paying down debt, replacing planned borrowing with pay-go capital, shoring up the Rainy Day Fund, and fully funding the State’s pension funds.
State leaders should avoid using memorandums of understanding (MOUs) to allocate lump-sum appropriations for economic development capital programs because such practices lack transparency.
State leaders should use the opportunity presented by a special session to extend design-build procurement authority.
If an infrastructure bank is endowed, clear criteria and a formal allocation process should be adopted at the same time.
Key Data
$5 billion
— The amount of the windfall from bank settlements available for state spending.
10 years
— The amount of time almost one-third of the state’s sewage systems have been beyond their useful life.
40 percent
— The portion of the state’s pavement that is in fair or poor condition.
$138 billion
— The total size of the state’s annual budget.
27 percent
— The reduction in project costs achieved by the Department of Transportation using design-build procurement.
The 2014 legislative session saw numerous proposals for pension and benefit enhancements that would impose significant fiscal burdens on the state and local governments. These 'benefit sweeteners' carry a combined estimated cost of $1.699 billion for the state and $116 million for local jurisdictions, highlighting the ongoing pressure on public budgets from legislative actions.
Key Data
$1,699 Million
— Total estimated state costs for the benefit sweetener bills tracked in the 2014 scorecard.
$116 Million
— Total estimated local costs for the benefit sweetener bills tracked in the 2014 scorecard.
$1.1 Billion
— Past service cost associated with bill 4890, which would increase pension benefits for certain Tier III, IV, and V members.
$617.9 Million
— Increase in the Actuarial Present Value of benefits for bill 9594 in fiscal year 2019.
$374 Million
— One-time costs associated with bill 5324, which would allow members of Tiers III and IV additional service credit.
$708,000
— One-time cost associated with bill 4910, which would create a new alternative retirement plan for peace officers in the Department of Motor Vehicles.
New York State’s reliance on accounting tricks and unspecified future savings to maintain a 2 percent spending cap obscures significant budget gaps that are projected to grow to $3.4 billion by fiscal year 2018. To achieve fiscal sustainability, the state must replace these placeholder savings with concrete plans and adopt a more transparent financial reporting process.
Recommendations related to State Budget Process
State officials should ensure new school aid agreed to in the current year budget is below the school aid cap to avoid relying on accounting tricks.
The state should reform overly rich reimbursement formulas for functions such as transportation and capital construction to achieve baseline reductions in school aid.
Policymakers must create realistic plans to adhere to the 2 percent spending cap rather than creating illusions about spending a surplus.
The state should return to a straightforward and transparent financial plan that clearly displays the baseline budget gaps resulting from current budget actions.
Key Data
$7.6 billion
— New bond authorizations included in the adopted budget that will add to debt service costs.
$8 billion
— Federal funds from a waiver to the State’s Medicaid Plan that the Department of Health plans to distribute over the next five years.
$1.3 billion
— The amount by which agency personal service would need to be reduced over the next three years to comply with the 2 percent spending cap.
42 percent
— The portion of the state operating fund budget comprised by Medicaid and school aid.
The fiscal year 2015 New York State enacted budget increased school aid by $1.1 billion, surpassing the statutory cap linked to personal income growth and exceeding the Governor’s Executive Budget proposal by $552 million. This total increase, which reaches $1.6 billion when including unallocated funds, relies heavily on Gap Elimination Adjustment restorations and categorical grants that fail to effectively target the neediest school districts.
Key Data
$1.1 billion
— Increase in school aid for school year 2014-15 in the enacted budget.
$552 million
— Amount by which the enacted budget exceeded the Governor’s Executive Budget proposal.
$21.8 billion
— Total school aid for school year 2014-15.
$1.6 billion
— Total increase in school aid including unallocated formula aid.
$340 million
— Amount allocated for the expansion of universal prekindergarten.
$42 million
— Amount of bullet aid to be distributed to specific districts.
The Executive Budget proposes several tax reforms, including merging corporate and bank taxes and reducing estate taxes, while also introducing property tax relief measures like the Real Property Tax Freeze Credit. These proposals are criticized for being poorly targeted and failing to address the underlying high costs of local government that drive property tax burdens.
Recommendations related to State Budget Process
The state should defer action on the property tax relief proposals until their design is improved and the surplus necessary to sustain them is achieved.
The state should eliminate the utility surcharge immediately for industrial customers and accelerate the phase-out for all others to improve economic competitiveness.
The state should further reduce the local share of Medicaid as an effective method of reducing local government expenses and tax burdens.
Key Data
$346 million
— Estimated receipts loss from the corporate tax reduction by fiscal year 2018.
$1.4 billion
— Amount of local property tax collections that would be replaced by State tax revenue under the proposed measures.
$1 billion
— Annual cost of the proposed Real Property Tax Freeze Credit.
$400 million
— Estimated annual cost of the proposed Renter's Credit.
$1,000
— Maximum allowable credit for the Enhanced Real Property Tax Circuit Breaker Credit.
Governor Cuomo’s 2014-15 Executive Budget proposes increasing total education aid to $21.9 billion, with $323 million of the $603 million increase allocated to general operating aid based on student need. This proposal includes reducing the Gap Elimination Adjustment from -$1.6 billion to -$1.3 billion while maintaining a 2 percent growth limit on state operating funds.
Key Data
$21.9 billion
— Total education aid proposed for the 2014-15 school year.
$323 million
— Increase in general operating aid distributed through formulas tied to student need.
-$1.3 billion
— Proposed level of the Gap Elimination Adjustment under the Governor's plan.
$4.6 billion
— Total proposed aid for transportation and building aid in the 2014-15 school year.
3.8 percent
— Total increase in education aid from the 2013-14 school year.
2 percent
— Proposed limit on growth in state operating funds.
New York's fiscal year 2015 Executive Budget relies on "unspecified spending reductions" of up to $3.6 billion to achieve a projected $2 billion annual surplus by fiscal year 2016-17. Achieving this surplus requires maintaining state operating fund spending growth at or below 2 percent, a difficult target given that major budget items like school aid and Medicaid are slated to grow at nearly double that rate.
Recommendations related to State Budget Process
The legislature must work with the Governor to adopt budgets that keep state operating fund growth at 2 percent or less to achieve the projected surplus.
The state must replace unspecified spending reductions with concrete, identified savings to ensure the financial plan is realistic.
Key Data
$142.1 billion
— Total value of the fiscal year 2015 Executive Budget presented by Governor Andrew Cuomo.
$2 billion
— Projected annual surplus beginning in fiscal year 2016-17.
2 percent
— Growth cap for state operating fund spending required to achieve the projected surplus.
$92.0 billion
— Governor’s state operating funds spending plan for fiscal year 2014-15.
$1.7 billion
— Unspecified spending reductions inserted in the financial plan for fiscal year 2015-16.
$3.6 billion
— Unspecified spending reductions inserted in the financial plan for fiscal year 2017-18.
New York State faces projected budget gaps of $2 billion to $3 billion by fiscal year 2016-17, necessitating a focus on reforming existing $4 billion in annual local tax relief programs rather than creating new spending initiatives. The state should prioritize better targeting of aid programs like STAR and the Family Tax Relief rebate toward low- and moderate-income households while re-evaluating the division of state and local fiscal responsibilities.
Recommendations related to State Budget Process
The Commission's work should be focused on repurposing and improving the significant sums already directed to local tax relief, not on spending for sizable new programs.
The Commission should re-examine and reform the local tax relief programs on which the State already spends $4 billion annually.
The Tax Relief Commission could achieve its objective by better targeting STAR aid and the Family Tax Relief rebate and by expanding the Real Property Tax Credit so that all three of these programs provide deeper relief for low and moderate income households with the greatest burden.
The State should conduct a comprehensive revision of current measures, and a reexamination of local government costs and the underlying division of state and local responsibilities.
Key Data
$2 to $3 billion
— Projected out-year budget gaps by fiscal year 2016-17.
$4 billion
— Amount the State spends annually on local tax relief programs.
$3.4 billion
— Cost of the STAR program in fiscal year 2014.
$1,533
— STAR payment per pupil among the wealthiest/least-needy 10 percent of districts.
$991
— Average STAR payment per pupil among the least-wealthy/neediest 10 percent of districts.
$410 million
— Amount allocated for Family Tax Relief rebates.
Expanding universal prekindergarten to all three- and four-year-olds in New York would require significant new funding, with estimates ranging from $1.4 billion to over $4 billion depending on the quality and scope of the program. Policymakers must carefully consider these substantial fiscal impacts and the potential burden on taxpayers before committing to such an ambitious expansion.
Recommendations related to State Budget Process
New York’s leaders should review the history of such efforts and take stock of some key realities before raising public expectations regarding universal prekindergarten.
The state should avoid underfunding services for those students who could benefit most for the sake of achieving the goal of universality.
Policymakers must acknowledge that making the program both richly-resourced and fully universal would impose a significant new fiscal burden on already highly taxed New Yorkers.
Key Data
$1.4 billion
— Estimated annual cost of providing an Abbott-style prekindergarten program for all four-year-olds in New York State.
$3.0 billion
— Estimated annual cost of providing an Abbott-style prekindergarten program for all three- and four-year-olds in New York State.
$51 billion
— Total annual cost of public education in New York State.
$80.60
— Local tax burden per $1,000 of personal income in New York, which is 72 percent higher than the national average.
New York State's first 10-year capital plan commits $174 billion to infrastructure projects, but it lacks sufficient detail on asset conditions, financing, and project-level tracking. To improve future iterations, the state should implement better assessment of repair needs, establish a clear financing framework, and provide granular data to track project progress.
Recommendations related to State Budget Process
The state should provide better information about asset condition and the match-up between planned levels of state of good repair (SOGR) spending and need.
The state should develop an improved financing plan that addresses the issue of affordability.
The state should include better project-level data to facilitate project tracking.
The state should establish a framework for assessing the affordability of the plan, similar to New York City's Annual Statement of Debt Affordability.
The state should reconcile discrepancies and standardize the approach to commitments versus financing and disbursements in future plans.
Key Data
$174 billion
— Total planned investment commitments for the 10-year statewide capital plan.
$113 billion
— Amount of the plan committed to transportation, representing 65 percent of the total.
$117.8 billion
— Amount allocated for State of Good Repair (SOGR) projects, representing 67.5 percent of the total.
$180.3 billion
— Total debt outstanding for the agencies and authorities included in the plan for fiscal years ending in 2011-12.
$95.4 billion
— Total assets net of depreciation reported by New York State in fiscal year 2012.
$641 million
— Projected amount that debt outstanding will be below the debt limit by fiscal year 2016-17.
The Port Authority of New York and New Jersey should adopt more transparent and rigorous financial practices, including multi-year financial and capital plans, to align with the standards of other major public entities. These improvements should incorporate regular public review, long-term capital strategies, and consistent performance reporting to ensure accountability and fiscal health.
Recommendations related to State Budget Process
The PANYNJ should have a detailed annual operating budget and a four-year financial plan.
The operating budget should be adopted only after opportunities for public review and should be revised and updated during the fiscal year.
The PANYNJ’s capital budgeting should be guided by a long-term (a period of 10 to 20 years) capital strategy that is revised every four years.
The capital budget should include an annual and a four-year commitment plan revised annually.
Regular and frequent (quarterly) reports should be made to the Board and the public on the status of each capital project relative to the scheduled milestones and planned costs for the project.
Performance measures of activities and accomplishments should be specified for each major agency activity, and regular and frequent (quarterly) reports should be presented to the Board and the public comparing actual and targeted performance.
The fiscal year 2014 New York State budget added $1.8 billion in annual commitments by 2017, relying on tax increases and one-time accounting shifts rather than sustainable revenue growth. This approach reversed recent trends of fiscal restraint by increasing projected budget gaps and utilizing risky revenue projections to cover new spending.
Key Data
$1.8 billion
— Annual commitments added by the final year of the financial plan.
$6.0 billion
— Projected budget gap for fiscal year 2017 without new ways to pay for added spending.
$1.75 billion
— Cash infusion provided by a shift in the accounting method for financing workers’ compensation.
$677 million
— New business tax breaks committed over three years.
$410 million
— Estimated annual cost of personal income tax rebates for families earning between $40,000 and $300,000.
5.3%
— School aid increase from school year 2012-13 to 2013-14.
The SAGE Commission's report offers a roadmap for modernizing state government operations through agency consolidation, performance management, and structural reforms to improve efficiency. Implementing these recommendations would allow the state to continue reducing operational costs and headcount while improving service delivery and accountability.
Recommendations related to State Budget Process
The state should "right size" the expensive and underutilized criminal and juvenile justice systems by closing facilities.
New York should restructure services for the mentally ill and developmentally disabled to replace the antiquated system of care.
The state should merge and consolidate agencies and public authorities that perform overlapping functions to achieve recurring savings.
New York should take full advantage of modern information technology to improve customer service and enable electronic licensing and permitting.
The state should reform the civil service law and the performance appraisal process to enhance managerial discretion in employment decisions.
The legislature should expand design-build authority for capital projects to all State agencies to reduce construction costs.
Key Data
18%
— Increase in state spending on operations in just three years from 2005 to 2008.
9%
— Growth in total state operations spending from 2008 to 2012.
$19 billion
— Amount agency spending was held flat at per year from fiscal year 2010 to fiscal year 2012.
135,723
— Executive headcount at the end of fiscal year 2005.
119,579
— Executive headcount at the end of fiscal year 2012.
17%
— Percentage decrease in Executive headcount from the peak hiring year of fiscal year 2008.
TWC News It has only been two weeks since the state budget was passed, but already some potential sticking points in next year's budget talks are emerging.
New York State's 2013-14 budget increased school aid by $1.1 billion, or 5.3%, effectively breaking the previously established cap tied to personal income growth. The distribution of this $20.8 billion in formula-based aid was poorly targeted, providing increases to both wealthy and needy districts rather than focusing resources on the most disadvantaged communities.
Recommendations related to State Budget Process
School aid allocations will need to be more disciplined next year if New York State is to continue to improve its fiscal footing.
Highly targeted, substantial increases for the less affluent districts are a better way to meet pressing needs without supersizing the out-year budget gaps.
Key Data
$20.8 billion
— formula-based aid allocated for school year 2013-14
$1.1 billion
— total school aid increase for school year 2013-14
5.3%
— percentage increase in total school aid for school year 2013-14
$7,760
— average formula aid per pupil for school year 2013-14
$400
— increase in average formula aid per pupil for school year 2013-14
3%
— limit on school aid growth set by the previous cap
New York's fiscal year 2013-14 budget proposal makes progress in controlling spending, but requires further adjustments to ensure long-term financial stability and cost-effectiveness. Key areas for improvement include refining school aid distribution, restricting economic development spending, and rejecting the proposed pension stabilization plan in favor of genuine mandate relief.
Recommendations related to State Budget Process
The Legislature should follow the pattern set in the last two years and keep state operating funds spending growth under 2 percent.
The Legislature should support the extension of the efforts of the Medicaid Redesign Team and adopt the proposal to close the Medicaid eligibility loophole of “spousal refusal.”
The Legislature should reallocate funds from the competitive grant program to the basic foundation aid program to ensure school aid is distributed based on district need.
The Legislature should require that all of the State Insurance Fund reserves be used prudently for purposes such as capital investment and debt retirement rather than recurring operating expenses.
The State should halt the unjustified expansion of economic development spending by more than $800 million until it more systematically scrutinizes and justifies its subsidies for business.
The Legislature should reject the pension “stabilization” plan and instead enact real mandate relief measures that aid local governments.
Key Data
$21.1 billion
— Total proposed school aid for the next school year.
$800 million
— Increase in spending for economic development activities.
$2 billion
— Excess reserves identified in the State Insurance Fund.
$1.1 billion
— Annual federal payment reduction for services provided by the Office of People with Developmental Disabilities.
$50 million
— Total pool for the school year 2012-13 competitive grant program.
2 percent
— Proposed cap on binding arbitration awards for fiscally distressed employers.
The Governor's proposal to allow local governments to pay fixed-rate pension contributions is fiscally irresponsible because it artificially stabilizes rates below actuarial requirements, endangering the long-term viability of pension funds. Instead of deferring costs, the state should maintain its historic practice of fully funding pension obligations annually to ensure future taxpayers are not burdened by unfunded liabilities.
Recommendations related to State Budget Process
The Comptroller should reject the Governor's proposal to allow local governments to opt into a 'fixed rate' contribution plan to fund their public employee pension obligations.
The State should maintain its historic practice of fully funding its pension obligations on an annual basis.
Policymakers should avoid additional underfunding options for pension contributions, as they are not advisable.
Key Data
12 percent
— Proposed fixed pension payment rate for members of the Employees’ Retirement System.
12.5 percent
— Proposed fixed pension payment rate for members of the Teachers’ Retirement System.
18.5 percent
— Proposed fixed pension payment rate for members of the Police and Fire Retirement System.
94 percent
— New York's pension funding ratio in 2010, with assets covering liabilities.
7.5 percent
— The assumed rate of return for pension investments.
6.4 percent
— The ten-year earnings average for pension investments.
Governor Cuomo's 2013-14 Executive Budget proposal includes an $889 million increase in total school aid, raising funding to $21.1 billion. This plan includes $611 million in formula and categorical aid, alongside $203 million for a "fiscal stabilization fund" and $75 million for new competitive grant programs.
Key Data
$889 million
— Total increase in school aid proposed for the 2013-14 school year.
4.4 percent
— The percentage increase in total school aid from the 2012-13 school year.
$20.2 billion
— Total school aid provided in the 2012-13 school year.
$21.1 billion
— Total school aid proposed for the 2013-14 school year.
$203 million
— Funding allocated for a new "fiscal stabilization fund" in the budget.
$75 million
— Funding allocated for new competitive grant programs.
New York State faces a projected budget gap of $982 million for fiscal year 2013-14, necessitating strategic reforms in education aid formulas, Medicaid spending, and economic development oversight. State leaders are urged to extend the Medicaid growth cap, provide mandate relief to local governments, and pause new economic development funding until accountability tools are fully implemented.
Recommendations related to State Budget Process
Instead of putting more money in the hands of school districts through the same seriously flawed methods, state leaders should redesign the school aid formulas.
To help assure realization of the waiver application’s savings projections, and improve the State’s prospects of bending the Medicaid cost curve over the long run, the Legislature and the Governor should extend the Medicaid growth cap for at least five years.
Mandate relief needs to be given renewed priority by Governor Cuomo who should press for adoption of the pending proposals in the fiscal year 2013-14 budget.
No additional funds should be authorized for economic development programs until a thorough review of all of them has been conducted to assess whether they are working and until the results of the new performance metrics put in place by the Regional Councils can be evaluated.
Key Data
$982 million
— Projected budget gap in fiscal year 2013-14.
$20.1 billion
— Education aid in the current year.
$15.9 billion
— Medicaid spending in the current year.
$245 million
— Estimated annual savings from Mandate Relief Redesign Team proposals left on the table.
$7 billion
— Amount the State and its local governments spend on economic development each year.
$2.6 billion
— Credits and exemptions that reduce state taxes.
New York State faces critical budget decisions, including reforming school aid formulas, extending the Medicaid growth cap, and providing mandate relief to local governments. Additionally, economic development spending should be frozen until better accountability tools are implemented to ensure fiscal stability.
Recommendations related to State Budget Process
State leaders should redesign the school aid formulas to eliminate inequities and avoid flawed methods of distributing education aid.
The Legislature and the governor should extend the Medicaid growth cap for at least five years to help assure the realization of savings projections.
Mandate relief needs to be given renewed priority by Governor Cuomo who should press for adoption of the pending proposals in the fiscal year 2013-14 budget.
No additional funds should be authorized for economic development programs until a thorough review of all of them has been conducted to assess whether they are working.
State leaders should adopt a budget that addresses the identified priorities in order to consolidate the gains they have made toward fiscal stability for New York.
Key Data
$982 million
— Projected budget gap in fiscal year 2013-14.
$20.1 billion
— Education aid in the current year.
$1.5 billion
— Growth in education aid over the next two years.
$15.9 billion
— Medicaid spending in the current year.
$245 million
— Estimated annual savings from mandate relief ideas left on the table.
$365 million
— New capital grants authorized in the last two budgets for Regional Economic Development Councils.
New York's public education system spends significantly more per pupil than the national average, yet student achievement remains average due to inequitable funding distribution and high costs for fringe benefits and special education mandates. State leaders should prioritize retargeting existing funds by overhauling aid formulas, capping health insurance contributions, and reducing burdensome special education mandates rather than increasing overall spending.
Recommendations related to State Budget Process
State leaders should focus less on increasing spending and more on redirecting existing funds to better meet student needs.
State aid to school districts should be based on three factors: local ability to pay, student need, and regional cost differences.
The legislature and the Governor should work together to establish a statutory cap on school district employer contributions at 85 percent for single coverage and 75 percent for family coverage.
The legislature could begin reducing costs by passing the pending bill that authorizes multiple mandate relief measures already approved by the State Education Department.
Key Data
$60 billion
— The total annual cost of the public education enterprise in New York.
$18,825
— The annual per pupil spending in New York, which is the second highest among the 50 states.
73.5 percent
— New York's high school graduation rate, which ranks 39th in the nation.
20 percent
— The portion of per pupil expenditures statewide that districts spend on employee fringe benefits.
$4.7 billion
— The amount school districts in New York State, including New York City, spend on health insurance for employees and retirees.
$500 million
— The annual savings that would be realized if school districts changed their health insurance premium-sharing arrangements to match those of the State of New York.
The 2012-13 New York State budget demonstrates fiscal responsibility through a modest 2 percent spending increase and limited reliance on budgetary gimmicks, though it includes some misguided economic development expansions and fiscal shortcuts. While the budget makes positive strides in Medicaid financing and capital planning, it fails to address certain accountability issues and continues to utilize temporary fixes for local government funding.
Recommendations related to State Budget Process
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 New York Power Authority’s economic development power programs should be completely overhauled.
The State should close the spousal refusal loophole in Medicaid eligibility, which allows one spouse to refuse to provide financial support to the other to protect assets.
State leaders should cease authorizing fiscal gimmicks like AIM spin-ups for local governments, as these practices only push fiscal problems down the road.
Key Data
$900 million
— The projected fiscal year 2013-14 budget gap, a figure that is low relative to historical standards.
2 percent
— The modest increase in state-financed spending in the Executive Budget, representing a significant departure from past trends.
$6 billion
— The total annual spending on economic development in New York State, including capital grants, tax breaks, and direct subsidies.
$1.9 billion
— The additional revenue raised by a package passed in December 2011 that aided the budget process.
$770 million
— The capital support required by the Metropolitan Transportation Authority to complete its current five-year capital plan.
$38 million
— The amount that can be transferred into the Community Projects Fund at the request of the Budget Director.
New York's proposed $805 million increase in school aid is poorly targeted, with competitive grants and categorical aid formulas favoring wealthier districts over those with the greatest need. The state should prioritize distributing funds through the foundation aid formula and reexamine existing aid formulas to ensure resources effectively boost student achievement.
Recommendations related to State Budget Process
To help high need districts recover from two years of cuts, the proposed $805 million increase should be highly targeted to the neediest districts by relying heavily on distribution through the foundation aid formula.
Categorical aid should be frozen or subject to a tight growth cap.
The competitive grant program should be much smaller, if not eliminated.
In coming years, all the formulas for distributing school aid should be reexamined.
A full-on effort to retool the school aid formulas should be launched.
Key Data
$805 million
— Governor’s proposed state aid increase for school districts.
$2.2 billion
— Amount school aid was cut from its $21.7 billion peak in school year 2009-10.
$555 million
— Governor’s proposed school aid increase for school year 2012-13, excluding the competitive grant pool.
$265 million
— Proposed categorical aid increases for school year 2012-13.
$250 million
— Amount allocated for new competitive performance grants.
$50 million
— First amount from competitive performance grant programs to be distributed in the 2012-13 school year.
New York State should pause additional funding for regional economic development competitions until it consolidates its fragmented network of over 100 development agencies and establishes standardized performance metrics. To ensure taxpayer funds are used effectively, the state should implement a unified budget that provides full disclosure of the costs and benefits of all economic development investments.
Recommendations related to State Budget Process
Do not authorize additional funds for another round of regional competition until the "hydra" of economic development is tamed.
Improve the accountability and transparency of all expenditures in this area to make sure that grants that were just made, and the preexisting programs in the area, are a success.
The apparatus of economic development in the State should be brought together under a management structure that works to make the most efficient and effective types of investments.
Empire State Development should develop a consistent set of performance measures that look not only at output measures, but also at outcome measures.
New York State should adopt a Unified Economic Development Budget (UEDB) to include direct subsidies, tax expenditures, discounted power grants, and any other investment from any level of government.
Key Data
$6.6 billion
— Annual state and local investment in direct subsidies and tax expenditures for economic development.
100
— Number of Industrial Development Agencies (IDAs) currently operating in New York State.
28:1
— The leveraging ratio of public to private capital proposed in Central New York's regional plan.
$783 million
— Amount of funding just awarded through the regional economic development competition.
6.5:1
— The leveraging ratio of public to private capital proposed in the North Country's regional plan.
5:1
— The leveraging ratio of public to private capital proposed in the Capital Region's regional plan.
New York's public employee pension costs are among the highest in the nation, contributing significantly to the state's tax burden and threatening the long-term sustainability of public services. Implementing reforms such as raising the retirement age, barring overtime from pension calculations, and offering 401(k)-style options could save taxpayers an estimated $123 billion over the next 30 years.
Recommendations related to State Budget Process
The state should reform and modernize pension benefits for new employees to ensure long-term sustainability.
The state should offer a 401(k)-style option for new employees as an alternative to traditional plans.
Future employees who opt for the traditional defined benefit plan should contribute between 3% and 6% of their paychecks toward their pensions.
The state should raise the retirement age from 62 to 65 for new employees.
The state should bar overtime from pension calculations for new employees.
Key Data
$574
— New Yorkers pay per person per year in taxes for public employee pensions, which is more than twice the national average.
$123 billion
— Estimated savings for taxpayers throughout New York State over the next 30 years if proposed pension changes are implemented.
$8.6 billion
— New York City’s projected pension costs by FY 2014, up from $2.4 billion in FY 2004.
$1 billion
— MTA pension costs projected for FY 2014, rising from $314 million in FY 2004.
30%
— Percentage of MTA payroll that pension costs will total by FY 2014 without reform.
19%
— Percentage of fare and toll revenue that pension costs will total by FY 2014 without reform.
New York's state and local tax burden is significantly higher than the national average, driven largely by rapidly escalating public employee pension costs that threaten municipal budgets. Implementing a new pension benefit package for new employees is essential to align with national norms and achieve substantial long-term savings for the state and local governments.
Recommendations related to State Budget Process
The governor should use his strong hand in the budget process to bring about more affordable pension benefits at all levels of government.
A pension reform proposal should be included in the governor's budget, and the Legislature should swiftly adopt it.
The state should implement a new package of pension benefits for new employees to bring New York more closely in line with national norms.
Key Data
$123 billion
— Projected savings for New York state and local governments over the next 30 years from a new package of pension benefits for new employees.
$8.6 billion
— Expected New York City pension costs by FY 2014, up from $2.4 billion in FY 2004.
$2 billion
— Expected state government pension costs by FY 2014, up from $455 million in FY 2004.
$1 billion
— Expected MTA pension costs by FY 2014, up from $314 million in FY 2004.
$574
— Annual tax amount paid per person in New York for public employee pensions, which is more than twice the national average.
$143
— New York's state and local tax burden per $1,000 of personal income in fiscal year 2009, which was 40% above the national average.
New York State's rising public employee pension costs, which have grown significantly over the last decade, place a substantial burden on state and local government budgets. To address this, the state should adopt the proposed "Tier VI" pension reform, which would align benefits more closely with national norms and generate significant long-term savings for taxpayers.
Recommendations related to State Budget Process
The Governor should include the Tier VI pension reform plan in the Executive Budget, and the Legislature should adopt it in a timely manner.
New York should add a well-designed Tier VI to pension plans to bring the state in line with national practices and contain future pension cost growth.
The state should extend the defined contribution plan option to other groups of employees to provide more portable retirement benefits or serve as a foundation for a hybrid combination plan.
Key Data
$93 billion
— Estimated savings for New York State and local governments over 30 years from the proposed Tier VI pension reforms.
$30 billion
— Estimated savings for New York City pension systems over 30 years from the proposed Tier VI pension reforms.
$123 billion
— Total estimated savings for New York State, local governments, and New York City pension systems over 30 years from the proposed Tier VI reforms.
$574
— Combined state and local pension cost per capita in New York, which is more than twice the national average.
4.1 percent
— Share of total state and local spending accounted for by employer contributions to pension funds in New York.
New York State government is attempting to implement a performance management system to improve accountability and transparency by measuring outcomes and efficiency. This initiative aims to integrate performance metrics directly into the state budget process, starting with 16 pilot agencies and eventually expanding to all state agencies.
Recommendations related to State Budget Process
The SAGE Commission recommends that 16 pilot agencies complete the implementation of their performance management systems, already under development, immediately this year.
A high priority should be placed on outcome and efficiency, not simply process measures.
Benchmarks and targets should be required in all cases.
Metrics should be publicly reported in one accessible document.
Performance metrics should be integrated with the budget.
The State should require reporting of key metrics that are standard across the State for aid programs passed through to local governments.
New York's state budget faces a $1.7 billion gap, driven by spending that has grown 13 percent since fiscal year 2008 despite a shrinking tax base. To achieve sustainability, the state must implement structural reforms to pension, school aid, and Medicaid programs while ending reliance on fiscal gimmicks and one-shot revenue sources.
Recommendations related to State Budget Process
The state should enact a new pension tier to address the fastest-growing area of the state budget.
New York should rejigger school-aid programs to ensure funds are distributed more efficiently rather than going to wealthy districts that do not require state assistance.
The state must continue curbing growth in Medicaid spending by maintaining the oversight and deliberation of the Medicaid Redesign Team.
Policymakers should resist the temptation for more economic-development spending, specifically halting the growth of grants.
The state should reduce reliance on fiscal gimmicks, such as the deferral of tax credits and the amortization of pension payments, which mask the structural deficit.
Albany should forgo one-shot revenues, which are temporary cash injections that disappear in future years while the associated spending continues.
Key Data
$1.7 billion
— The budget gap remaining after the tax hike on high earners that the executive budget must address.
$15 billion
— The amount by which total state spending, including federally financed programs, has increased since fiscal year 2008.
$120 billion
— The estimated savings over 30 years from the proposed new pension tier for new hires.
$785 million
— The total value of economic-development grants awarded by the Governor in December 2011.
$970 million
— The amount of business-tax credits deferred as a fiscal gimmick to mask the structural deficit.
$782 million
— The amount of the pension system payment amortized as a fiscal gimmick to mask the structural deficit.
New York State's fiscal policies result in a regional imbalance where New York City and the Downstate Suburbs contribute a disproportionately high share of state revenues compared to the expenditures they receive. Conversely, the Capital Region and the Rest of State receive significantly more in state-funded expenditures than they contribute in tax revenues.
Key Data
45%
— New York City's share of state revenue payments based on the residence of taxpayers.
40.0%
— New York City's share of total state-funded expenditures in fiscal year 2010.
62%
— Share of state Medicaid expenditures that went to New York City in fiscal 2010.
$4.1 billion to $6.1 billion
— Estimated amount New York City would have received in additional state-funded expenditures if its share matched its share of state-funds revenues.
27%
— Share of taxes and other revenues provided by the Downstate Suburbs.
35%
— Share of expenditures received by the Rest of State region.
New York State must address its remaining fiscal year 2012-13 budget gap by focusing on structural reforms to control spending rather than relying on new taxes or fiscal gimmicks. Sustainable long-term stability requires slowing cost drivers like pensions, school aid, and Medicaid, while ending the use of one-time revenue sources.
Recommendations related to State Budget Process
The Governor should avoid more new taxes as the way to close the rest of the budget gap.
The State should close the remaining budget gap with structural reform measures that slow down the fastest cost drivers: pensions, school aid, and Medicaid.
The basic formulas by which school aid is distributed should be reopened to address better the great disparities in local districts’ wealth and capacities to fund their schools.
New York’s inequitable local financing scheme for Medicaid should be phased out to relieve poorer counties of an unfairly large share of program costs.
The Governor and Legislature should end the use of fiscal gimmicks, such as the deferral of business tax credits and the amortization of pension payments, while addressing underlying cost drivers.
Key Data
$3.2 billion
— Estimated budget gap in New York State’s fiscal year 2012-13.
$120 billion
— Projected savings over 30 years from the Governor's proposed pension tier for new hires.
$970 million
— Amount of business tax credits deferred as a fiscal gimmick.
$782 million
— Amount of pension system payment amortization used as a fiscal gimmick.
$800 million
— Total amount of one-shot resources used by the State last year.
$15 billion
— Amount by which total spending in fiscal year 2012 is higher than in fiscal year 2008.
New York's requirement for local governments to fund a portion of Medicaid creates an inequitable financial burden on taxpayers in less affluent counties and undermines incentives for cost containment. The state should eliminate this local funding requirement and assume full financial responsibility for the program to align decision-making with fiscal obligations.
Recommendations related to State Budget Process
The State should eliminate the local funding requirement for Medicaid to align decision-making responsibility with the obligation to pay for the program.
The State should assume responsibility for the local share liability over a period of four or five years.
New York should replace the current local share with new, statewide revenues to relieve the disproportionate burden placed on taxpayers in low-income counties.
Key Data
$7.1 billion
— The amount New York's counties will pay for Medicaid in state fiscal year 2012.
$6.5 billion
— The amount New York's counties paid for Medicaid in fiscal year 2008.
$555
— The per capita Medicaid burden for New York City residents.
$1,361
— The average cost for a homeowner in Chemung County with a property valued at $250,000 to cover Medicaid costs.
$135
— The average cost for a homeowner in Putnam County with a property valued at $250,000 to cover Medicaid costs.
$11.07
— The Medicaid burden for New York City residents per $1,000 of personal income.
New York has achieved roughly half of its $2.2 billion Medicaid savings target for fiscal year 2012, yet concerns persist regarding the timely implementation of remaining measures and the potential for enrollment spikes to threaten fiscal goals. Achieving long-term sustainability requires successfully navigating utilization control reforms and maintaining expenditures within the Global Medicaid Spending Cap.
Key Data
$2.2 billion
— budgeted savings target for fiscal year 2012
$640 million
— savings considered to be “in progress” from the Global Medicaid Spending Cap
$173 million
— amount spending was below the threshold in August
2.5 percent
— percentage spending was below the threshold in August
3.6 percent
— increase in Family Health Plus enrollment since April
8 percent
— increase in Family Health Plus enrollment since September of last year
New York State's recent budget session achieved fiscal progress through measures like a property tax cap and pension restraint, yet significant challenges remain regarding unfunded mandates and infrastructure needs. The state must now prioritize achieving over $1 billion in budgeted savings, enacting comprehensive pension reform, and securing funding for the Metropolitan Transportation Authority's capital requirements.
Recommendations related to State Budget Process
The bill allowing school districts to borrow to fund pension payments should be destined for a prompt veto because it undermines the property tax cap.
The state must ensure that the more than $1 billion in unspecified savings in the adopted budget are actually achieved to avoid a mid-year deficit.
Serious pension reform should become a top priority to ensure the fiscal stability of New York City and the state.
The state needs to fund the pressing capital needs of the MTA and the rest of the state's transportation infrastructure.
Key Data
2%
— The annual limit on property tax growth for local governments and school districts.
$2,500
— The monthly rent threshold for vacancy destabilization.
$200,000
— The annual income threshold for luxury destabilization.
$1 billion
— The amount of unspecified savings in the adopted budget that must be achieved to avoid a mid-year deficit.
New York's pension system requires structural reform to address rapidly escalating costs that have squeezed municipal budgets and forced difficult choices regarding public services. Governor Cuomo's proposal to increase the retirement age, raise employee contributions, and eliminate pension padding would create a more sustainable system, ultimately saving state and local governments billions over the next three decades.
Recommendations related to State Budget Process
The state should increase the retirement age to 65 to align with Medicare eligibility and reduce the length and cost of benefit payouts.
The plan should require a 6 percent contribution from all employees for their entire length of service to bring contributions closer to national norms.
Policymakers should calculate pension benefits based on the highest five years of earnings rather than the highest three to eliminate 'pension padding.'
The proposal should cap maximum eligible wages at $179,000 for the purpose of calculating pension benefits.
The state should exclude overtime pay from the earnings used to calculate benefits to bring New York’s rules in line with 94 percent of other public employees nationwide.
Key Data
$1.5 billion to $7 billion
— The growth in New York City pension costs since 2002.
$8.7 billion
— The projected cost of New York City pension contributions in 2015.
$93 billion
— The projected savings for state and local governments over 30 years under the proposed reforms.
$30 billion
— The projected savings for New York City over 30 years under the proposed reforms.
$179,000
— The proposed cap on maximum eligible wages for pension benefit calculations.
6 percent
— The proposed required contribution rate for all employees for their entire length of service.
New York State's existing rainy day funds have proven ineffective due to structural limitations, including restrictive repayment rules and inadequate deposit mandates. To better weather economic downturns, the state should implement uniform, clear guidelines for deposits, withdrawals, and repayment, while raising the caps on fund sizes to reflect actual recessionary needs.
Recommendations related to State Budget Process
New York should mandate prudent uses of surplus funds, including rainy day fund deposits.
The state should raise the cap on the size of the rainy day funds to reflect likely needs in times of recession.
New York should set uniform conditions for withdrawal from both funds, with those conditions based on declining economic indicators.
The state should set uniform repayment rules for both funds, with those rules allowing adequate time for economic and fiscal recovery before payments must begin.
Key Data
$10 billion
— The budget gap for the fiscal year beginning April 1, 2011.
20.3 percent
— The decline in New York State’s total tax collections from the first quarter of fiscal year 2008-09 to the first quarter of fiscal year 2010-11.
6.8 percent
— The average annual decline in total state tax receipts from peak anticipated receipts to actual receipts during recessionary periods since 1990.
15 percent
— The decline in common rate and base tax receipts over fiscal years 2009 and 2010.
$1.03 billion
— The total balance of the Tax Stabilization Reserve Fund (TSRF) from fiscal years 1946 to 2011.
$473.3 million
— The total amount of loans taken from the Tax Stabilization Reserve Fund (TSRF) for the General Fund.
New York's public higher education system requires greater autonomy in setting tuition and managing assets to move away from the current legislative control that leads to erratic, sharp tuition hikes and revenue diversion. State leaders should expand the proposed reforms for SUNY Buffalo to all SUNY and CUNY institutions while reversing recent cuts to the Tuition Assistance Program to ensure continued access for low-income students.
Recommendations related to State Budget Process
All public higher education institutions in New York should be given the same authority as SUNY Buffalo with respect to tuition policies and control over physical assets.
State leaders should reverse the trend of reducing financial aid by restoring Tuition Assistance Program (TAP) funding to ensure a more rational system of funding public higher education.
The state should allow universities to set differential tuition among campuses and programs to recognize variation in costs and maximize revenue.
The Legislature should cease the practice of diverting tuition revenue to replace general fund subsidies instead of using it to improve the quality of higher education.
Key Data
$5,790
— Average tuition and fees for resident undergraduate students charged by New York's four-year public colleges and universities in 2010-11.
$7,605
— National average tuition and fees for resident undergraduate students at four-year public colleges and universities in 2010-11.
$12,870
— SUNY's out-of-state undergraduate tuition in 2009-10.
$40 Million
— Amount of CUNY tuition revenue the Legislature refused to appropriate in the 2011 budget cycle.
$5,000
— Previous TAP funding level for students in 2-year colleges before recent budget reductions.
$4,000
— Current TAP funding level for students in 2-year colleges following recent budget reductions.
New York's recent state budget agreement reduces spending on Medicaid and school aid while relying on over $2 billion in uncertain savings from union concessions, unspecified agency efficiencies, and prison closures. The state must now pivot to addressing critical legislative issues, including rent regulation, unfunded mandates, property tax caps, and pension reform.
Recommendations related to State Budget Process
Rent regulation in New York City, which will expire on June 15, should be extended without expansions that would provide assistance to high-income families and harm low- and middle-income households whose rents are not regulated.
Unfunded mandates imposed by the state on localities and school districts, particularly unnecessary special education requirements, should be removed so they are not forced to raise local taxes.
A property tax cap will need to be designed carefully to avoid hardship for needy communities that do not receive sufficient state aid to adequately fund services.
A new pension tier should be created for all state and local public employees that raises the retirement age, increases employee contributions and ends the inclusion of overtime in pensionable salary.
Key Data
$132.5 billion
— The total amount of approved spending in the state budget.
$450 million
— Planned savings to be negotiated with public employee unions.
$640 million
— Savings expected from an overall Medicaid spending cap.
$72 million
— Savings expected from the closing of prisons.
$1 billion
— Unspecified efficiencies in agency operations that need to be developed.
$2 billion
— The total amount of budget risk if anticipated savings do not materialize as planned.
New York's Medicaid Redesign Team has introduced a collaborative budgeting approach that includes a new program-wide spending cap to control costs while maintaining care quality. This strategy aims to reverse historical spending trends by implementing targeted provider rate reductions, utilization controls, and eligibility reforms to address long-term fiscal challenges.
Recommendations related to State Budget Process
The state should ensure that the new program-wide spending cap is tested carefully in the coming year.
The state should ensure that the effective savings measures included in the Medicaid redesign package are implemented speedily.
Future efforts should be pursued to reverse the new assessments that push up the cost of care.
Future savings in line with the goal of the innovative cap strategy will require broad changes in the way providers are paid.
Future savings in line with the goal of the innovative cap strategy will require greater efforts to limit excessive utilization through managed care and other new controls.
Key Data
4 percent
— State spending for the Medicaid program is projected to fall more than 4 percent.
6 percent
— Medicaid spending increased an average of more than 6 percent annually between 1995 and 2010.
$250,000
— The proposed medical malpractice reform would cap non-economic damages at $250,000.
76 percent
— Per recipient costs in the Certified Home Health Agencies program increased 76 percent from 2003 to 2008.
30 percent
— New York’s nursing home rates were 30 percent above the national norm in 2007.
40 percent
— Spending on personal care services increased nearly 40 percent from 2003 to 2008.
New York State's budget gap is driven by a combination of decreased tax revenues and rapidly increasing spending, necessitating a shift away from temporary revenue measures. To achieve long-term fiscal stability, the state must restructure spending commitments to align more closely with the state's actual revenue growth rather than relying on one-time fixes.
Recommendations related to State Budget Process
It is time to allow temporary revenue measures to phase out and to begin to restructure spending commitments.
To avoid a perpetual reliance on one-shot revenues and tax increases, spending growth must be more closely aligned with long-term revenue growth.
Key Data
$11.7 Billion
— Revenues attributable to actions taken since the start of fiscal year 2008-09.
$7.8 Billion
— Recurring cuts proposed by the Governor.
$9.5 Billion
— The budget gap addressed in the Governor’s plan.
$8.5 Billion
— Reduction in base tax collections in the current fiscal year.
$25.8 Billion
— Projected increase in state spending by fiscal year 2013-14 without new action.
$19.4 Billion
— Total revenue enhancements and temporary revenues currently benefiting the state.
Governor Cuomo's executive budget aims to close a $9 billion gap through significant belt-tightening, including $2.9 billion in school aid cuts and $2.9 billion in Medicaid reductions. To achieve sustainable savings, the state should prioritize consolidating prison facilities, reducing public employee compensation costs, and rationalizing Medicaid care for high-cost populations rather than relying on across-the-board layoffs.
Recommendations related to State Budget Process
The state should consolidate prison facilities and the corrections workforce because the prison population has been declining for years.
Public employee unions should agree to reduce compensation costs—such as paying a higher percentage of health insurance costs or accepting lower wages—to avoid across-the-board layoffs.
The state should rationalize care for high-cost populations as the primary source of Medicaid savings, rather than cutting eligibility for healthy mothers and their children.
Local governments should make changes in pensions and compensation, as 70% of their expenses are for labor.
The state should avoid across-the-board layoffs, which would damage essential services.
Key Data
$9 billion
— Amount of serious belt-tightening proposed to close the state's budget gap.
$2.9 billion
— Total amount of school aid cuts proposed.
72%
— Portion of Medicaid expenses that go toward services for the 24% of enrollees who are elderly or disabled.
$50,000
— Average cost per year for individuals in nursing homes.
70%
— Portion of local budget expenses that are for labor.
10,000
— Number of potential layoffs threatened for state agencies.
New York faces a $9 billion state budget gap, driven in part by Medicaid spending that is the highest in the nation on a per-capita basis. To address this, the state must implement a multiyear plan to restructure the system, focusing on payment rates and service utilization to lower costs without compromising care for the neediest residents.
Recommendations related to State Budget Process
Gov. Cuomo should create a multiyear plan that addresses the problem of excessive spending on Medicaid—restructuring the system to provide better health-care outcomes and lower costs.
The state needs to bring down the cost of care where it is exorbitant to meet its obligations to the neediest New Yorkers without slashing other public services.
The state should address the number of people enrolled, the payment rates to providers, and the extent to which services are utilized in order to contain costs.
Taxpayers in their home districts should let legislators know how they feel regarding the state's costly Medicaid system.
Key Data
$9 billion
— projected gap in the state budget when the incoming governor takes office in January.
$50 billion
— annual cost of Medicaid in New York.
$2,283 vs. $1,026
— New York's per-capita Medicaid spending compared to the national average.
14 percent
— of all Medicaid spending in the nation that occurs in New York.
$12.5 billion
— annual cost of long-term care services for the elderly and disabled.
76 percent
— growth in per-recipient spending for certified home health agencies between 2003 and 2008.
New York State faces significant fiscal challenges as Medicaid spending, particularly for the elderly and disabled, drives costs far above national averages. To achieve meaningful fiscal relief, the state must implement a multi-year plan that restructures service provision and addresses provider payment rates and utilization rather than focusing on peripheral expenses.
Recommendations related to State Budget Process
Any cost containment proposals must address the three primary drivers of Medicaid costs: enrollment, provider payment rates, and utilization.
Future cost control initiatives should primarily focus on rates and utilization for long-term care and other services for the elderly and disabled.
The state should develop a multi-year plan to restructure the system to provide better health, better outcomes, and lower costs.
Policymakers should avoid proposals that only address the fringes of program expenses, such as fraud or the costs of healthy mothers and children, as they will not yield significant fiscal relief.
Key Data
$50 billion
— Annual cost of the New York State Medicaid program.
$2,283
— New York's Medicaid spending per capita, the highest in the nation.
72 percent
— Share of Medicaid dollars consumed by the elderly and disabled, who comprise less than one-quarter of enrollees.
$12.5 billion
— Annual cost for long-term care services in New York.
$47,909
— Average cost per recipient for long-term care in an institutional setting.
$9 billion to $17 billion
— Projected growth of New York State budget gaps over two years.
New York's ongoing budget crisis has led to calls for a state spending cap, but evidence from other states suggests that such caps often have limited effectiveness and can lead to unintended consequences like shifting costs to local governments. Instead of rigid caps, the state should consider alternative fiscal reforms, such as strengthening balanced budget requirements, adopting accrual-based accounting, and enhancing rainy day funds.
Recommendations related to State Budget Process
New York should establish a more rigorous and comprehensive balanced budget requirement to improve fiscal discipline.
The state should move the executive and legislative budgets from a cash basis to an accrual system in accordance with generally accepted accounting principles.
New York should enhance the allowable size of the state’s rainy day fund and require that funds are dispersed only in an emergency.
The state should impose a new constitutional debt limit to rein in state borrowing.
New York should provide more timely and meaningful fiscal information to legislators and to the public.
Key Data
$17 billion
— The amount state spending would have been curbed in fiscal year 2007-08 had a spending cap been in place starting in 2002-03.
$1.1 billion
— The predicted surplus in fiscal year 2011-2012 if a spending cap proposal were implemented.
$3.2 billion
— The total amount of rebate checks sent to Colorado taxpayers between fiscal year 1996-97 and fiscal year 2000-01 due to the TABOR revenue limit.
$348
— The amount by which Colorado's per capita spending was lower than it would have been without the TABOR cap.
$1.2 billion
— The difference in fiscal year 2004 between a hypothetical cap based on a fixed base year and one based on the actual prior year's spending.
$1.6 billion
— The difference in fiscal year 2010 between a hypothetical cap based on a fixed base year and one based on the actual prior year's spending.
The fiscal year 2010-11 New York State budget includes $4.0 billion in spending reductions, such as school aid cuts and the elimination of member items, but fails to address structural issues in major spending areas like Medicaid and employee compensation. While the plan avoids some fiscal pitfalls, it relies on risky borrowing from pension funds and misses opportunities for significant policy reforms in higher education and economic development programs.
Key Data
$4.0 billion
— Total spending reductions included in the fiscal year 2010-11 budget plan.
$1.5 billion
— School aid cut resulting from the Governor's vetoes.
$190 million
— Savings achieved by canceling member items for the year.
$7 billion
— Projected increase in school aid over the next four years.
$47 billion
— Total Medicaid costs expected to grow annually.
10 percent
— Annual growth rate expected for total Medicaid costs.
New York's public university systems are currently constrained by legislative control over tuition, which links tuition hikes to state budget gaps rather than institutional needs. The Public Higher Education Empowerment and Innovation Act would grant SUNY and CUNY autonomy over tuition rates, allowing for more predictable increases and better alignment with educational costs.
Recommendations related to State Budget Process
The Public Higher Education Empowerment and Innovation Act should be separate from budget negotiations and passed immediately.
The state should grant university officials full control over tuition rates and eliminate the requirement that the Legislature appropriate the funds.
The university systems should implement a differential tuition policy to recognize variation in costs among programs and campuses.
The state should address concerns regarding student accessibility by using financial aid to mitigate the impact of tuition increases on needy students.
Key Data
$5,761
— Average tuition and fees for resident undergraduate students at New York's four-year public colleges in 2009-10, which was 18% below the national average.
$7,020
— The national average for tuition and fees for resident undergraduate students at four-year public colleges in 2009-10.
$12,870
— Out-of-state undergraduate tuition in 2009-10, which was 40% less than that at 29 comparable state universities.
14%
— The percentage increase in tuition for undergraduates at SUNY to help close the 2009 budget gap.
15%
— The percentage increase in tuition for undergraduates at CUNY to help close the 2009 budget gap.
28%
— The percentage increase in tuition during the recessions in 1995 and 2003.
The proposed Public Higher Education Empowerment and Innovation Act would decouple tuition revenue from the state budget appropriation process, granting SUNY and CUNY autonomy to set tuition rates and implement differential pricing. While these reforms aim to create a more rational funding system, they must be paired with maintained financial aid levels to ensure continued access for low-income students.
Recommendations related to State Budget Process
The state should remove tuition revenue from the legislative appropriation process to allow SUNY and CUNY to control their own revenue directly.
The state should grant university officials full control over setting tuition rates to replace the current de facto legislative control.
Future tuition increases should be subject to an annual cap of two-and-one-half times the five-year rolling average of the Higher Education Price Index (HEPI).
The state should allow SUNY and CUNY to set differential tuition rates among campuses and programs to reflect varying costs and market demand.
The Legislature should reject the proposed cuts in financial aid to ensure that higher tuition rates do not negatively impact student access.
Key Data
$13.5 Billion
— Total size of the public higher education system including SUNY and CUNY.
$2.7 Billion
— Annual tuition collected by CUNY and SUNY combined.
$827 Million
— Grants awarded to eligible undergraduates through the Tuition Assistance Program (TAP) during the 2007-08 academic year.
$5,761
— Average tuition and fees for resident undergraduate students at New York's four-year public colleges and universities in 2009-10.
$7,020
— National average tuition and fees for resident undergraduate students at four-year public colleges and universities in 2009-10.
$12,870
— SUNY's out-of-state undergraduate tuition in 2009-10.
New York faces a persistent fiscal crisis driven by high spending on Medicaid, education, and employee benefits, which together consume 70 percent of the state budget. To close a projected $12.4 billion budget gap without raising taxes, the state must eliminate entitlements for those who do not need them and reallocate funds from affluent school districts.
Recommendations related to State Budget Process
Albany will need to make cuts to Medicaid soon; restricting access to long-term care benefits so they go only to the truly needy is the place to start.
The state should stop providing aid to wealthy school districts, as that money could be saved, or better spent elsewhere.
To close the budget gap without raising New York’s already high taxes, entitlements must end for those who do not need them.
Key Data
70 percent
— Portion of the state budget accounted for by Medicaid, education, and employee benefits.
32 percent
— Share of all elderly-services beneficiaries nationwide located in New York.
$28,754
— Per pupil spending in the richest 10 percent of New York school districts during the 2007-2008 school year.
$3,809
— State aid provided per pupil to support spending in wealthy school districts.
$5 billion
— Amount of spending reductions state leaders aimed to agree to for the current year.
$12.4 billion
— Projected budget gap in three years if current trends continue.
New York State faces significant fiscal challenges, with legislative budget proposals relying on speculative revenue and excessive borrowing rather than necessary spending reductions. To avoid catastrophic future deficits, the Governor must utilize executive budget powers to enforce austerity, reject unrealistic revenue claims, and ensure that any necessary borrowing is accompanied by strict fiscal reforms.
Recommendations related to State Budget Process
The State must achieve the full $5.1 billion worth of spending reductions proposed in the Executive Budget.
State leaders should drop the overly optimistic claims regarding high fraud recoveries and tax collection on Indian Reservations.
The State must get the borrowing total for this year down well under the Ravitch Plan's $2 billion maximum.
The Governor should ensure that reforms in the Ravitch Plan, such as a balanced budget requirement and better accounting, accompany any agreed-upon borrowing.
The Governor must use temporary extender bills to create an austerity plan if the Legislature fails to cooperate on necessary spending controls.
Key Data
$5.1 billion
— The amount of spending reductions in the Executive Budget that should be achieved.
$3.3 billion
— The projected increase in employee compensation over the four-year term of the financial plan.
$2 billion
— The maximum amount of deficit financing allowed under the Ravitch Plan.
4%
— The scheduled raises for employee unions effective April 1.
2%
— The proposed reduction in per-pupil spending in the Executive Budget.
New York State's Empire Zone program, originally intended to assist economically distressed areas, has become an ineffective and costly vehicle for tax breaks, with 76 percent of the $514 million in annual credits going to just 500 firms. Because the program has proven resistant to reform and fails to meet its stated job creation and investment targets, it should be abolished to preserve scarce public resources.
Recommendations related to State Budget Process
The Empire Zone program should be abolished because it is not worth the tremendous loss of revenue it requires.
With the State budget under enormous stress, the Empire Zone program should be a prime target for elimination.
The State should end the Empire Zone program as repeated efforts to reform it have only created more loopholes.
Key Data
$514 million
— Total cost of the Empire Zone program in 2006.
$391 million
— Amount of tax credits claimed by just 500 firms, representing 76 percent of the total program cost.
58%
— Percentage of firms participating in the program that missed their job or investment targets by at least 60 percent.
$127 million
— Total annual credits that went to firms on the Fortune 1000 list.
9,800
— Number of certified businesses reported by Empire State Development.
380,000
— Number of people employed by certified businesses in Empire Zones statewide.
New York faces a $6.7 billion budget deficit for the 2010-11 fiscal year, with projections indicating the gap could reach $12.2 billion by fiscal year 2013-14 without structural changes. The Governor's budget proposal attempts to address this shortfall through spending controls and reduced reliance on one-time revenue measures, though further action is required to achieve long-term fiscal balance.
Recommendations related to State Budget Process
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.
Key Data
$6.7 billion
— Budget hole in the 2010-11 fiscal year.
$12.2 billion
— Expected budget gap in fiscal year 2013-14.
$4.4 billion
— Federal stimulus aid sustaining the 2010-11 budget.
$565 million
— One-shots proposed in the executive budget.
$19.9 billion
— Governor's proposed school aid.
$216 million
— Proposed increase in gross receipts taxes on health care institutions.
New York State's budget process relies on an outdated General Fund construct that obscures the true financial picture, as evidenced by a $13.5 billion GAAP deficit compared to a $1.9 billion cash-basis surplus. To improve transparency and accountability, the state should adopt broader reporting measures like "State Operating Funds," separate capital budgets from operating plans, and implement systematic performance metrics.
Recommendations related to State Budget Process
The basis for reporting and budget reform should be broadened to encompass all of the activities of state government.
The State’s capital budget should be separated from its annual operating budget plan, and it should cover the activities of public authorities as well as State agencies.
More detailed GAAP reporting requirements should be adopted to ensure a truer picture of State obligations.
A simpler, more transparent budget format that tracks cash disbursements should be developed.
The Legislature should play a key role in systematically assessing government performance through metrics that are well developed, regularly reported to the public, and discussed in public hearings.
Key Data
$121.6 billion
— The All Funds cash total for the state.
$54.6 billion
— The General Funds portion of the state's total spending.
45 percent
— The portion of total state spending represented by the General Fund.
$3 billion
— The annual cost of the School Tax Relief (STAR) program supported by personal income tax revenues.
$13.5 billion
— The state's deficit on a GAAP basis reported in the Annual Financial Report.
$1.9 billion
— The state's positive year-end balance reported on a cash basis.
The New York State fiscal year 2009-10 budget was enacted with a $17.9 billion gap, relying heavily on temporary federal stimulus aid and tax increases rather than structural spending reductions. This approach created an unsustainable fiscal path, leaving the state with a projected $13.7 billion budget gap to address in the near future.
Key Data
$17.9 billion
— The size of the budget gap created by existing budget gaps and severe revenue losses.
$131.9 billion
— The total expected All Funds spending in fiscal year 2009-10.
$10.3 billion
— The increase in All Funds spending over the previous fiscal year.
$3.2 billion
— The total amount of spending reductions in the budget from baseline estimates.
$24.6 billion
— The total expected federal stimulus package for New York over 27 months.
$13.7 billion
— The projected budget gap to address in three years due to disappearing federal aid and the expiration of the personal income tax surcharge.
New York State's annual budget process suffers from a lack of timeliness, accountability, and transparency, often resulting in late budgets and a reliance on lump-sum appropriations that obscure spending. To address these issues, reforms are needed to implement multi-year financial planning, improve public authority reporting, and ensure the adopted budget is presented in a clear, comparable format.
Recommendations related to State Budget Process
Prepare more extensive multi-year financial plans.
Enforce and build upon new requirements for reporting by public authorities.
Require that lump-sum appropriations meet specific program criteria and be subject to sunshine provisions.
Publish the Adopted Budget in a format similar to the Executive Budget.
Key Data
$1.1 billion
— expenditures added by the Legislature in June 2006.
$4.2 billion
— projected budget gap in the next fiscal year.
20-year
— streak of late budgets that New York experienced until 2005.
8
— of New York's 11 competitor states that have a binding revenue forecast mechanism.
New York faces a multi-billion dollar budget gap that requires strategic use of federal stimulus funds to avoid harmful tax increases and service cuts. Instead of relying on fiscal gimmicks or raiding public authorities, the state should implement structural reforms to pension systems, Medicaid, and school aid formulas to ensure long-term fiscal sustainability.
Recommendations related to State Budget Process
Don’t adopt harmful tax increases, specifically regarding the personal income tax and the gross receipts tax on utilities, as these would damage economic competitiveness.
Form a commission to examine the question of how to reform New York’s tax structure to address issues of fairness, stability, and the division of responsibilities.
Roll back assessments on health insurance providers that were recently enacted as part of the deficit reduction program to prevent higher costs for consumers.
Make the changes in the Medicaid program that the Governor proposed, specifically regarding nursing home and hospital rates, to bring costs in line with other states.
Don’t adopt the foundation aid cuts to school districts proposed in the budget, and instead restore funding to the poorest districts.
Phase out unnecessary payments to the wealthiest school districts by ending the 'high tax' and 'hold harmless' aid increases.
End the middle class STAR program, as it is poorly crafted and difficult to administer.
Eliminate programs that are ineffective or unnecessary, such as the Empire Zones program and underutilized institutions like prisons.
Adopt a new pension tier and other compensation changes for public employees to address the overly generous pension system.
Don’t raid public authorities or rely on other one-shots, such as the proposed transaction with the Battery Park City Authority, to close budget gaps.
Key Data
$14.0 billion
— Revised budget gap for fiscal year 2009-10.
$18.7 billion
— Budget gap in year three of the financial plan.
$4.4 billion
— Amount of harmful actions in the budget that should be avoided.
$1.2 billion
— Proposed school aid cuts that should be restored to the neediest districts.
$200 million
— Amount in one-shots included in the deficit reduction program that should be reversed.
$500 million
— Amount the Battery Park City Authority would borrow under a proposed transaction.
New York faces a massive fiscal challenge with budget gaps reaching $18.6 billion by fiscal year 2011-12, necessitating significant spending reforms rather than excessive tax increases. The proposed strategy involves reducing the state's reliance on new revenue measures, reforming Medicaid and school aid, right-sizing institutional infrastructure, and trimming public employee benefits to ensure long-term economic competitiveness.
Recommendations related to State Budget Process
The budget adopted by the legislature should reduce the Governor’s proposed $5 billion in new revenue measures to no more than $2 billion.
The state should tighten Medicaid eligibility for individuals with homes worth less than $500,000 and apply the look-back period for asset transfers to eligibility for home care.
The state should eliminate high tax aid and hold harmless provisions in school aid formulas to better allocate funds based on need.
The legislature should review large state-run institutions to determine which facilities can be closed or consolidated, such as reducing prison staff and facilities to match the decline in inmate population.
The state should require a greater share of health insurance premiums to be paid by current and retired employees to bring contributions in line with other public sector workers.
Key Data
$18.6 billion
— The projected budget gap in fiscal year 2011-12.
$5 billion
— The amount of new revenue measures proposed in the Governor’s Executive Budget.
$400 million
— Annual savings from tightening Medicaid eligibility for long-term care.
$670 million
— Savings from dropping hold harmless provisions in school aid from the past two fiscal years.
$280 million
— Annual savings if the Department of Correction’s staff and facilities were reduced to a level commensurate with the 15 percent decline in inmate population.
$1.9 billion
— The amount of revenue increases mis-categorized as spending reductions in the Governor’s budget.
Governor David Paterson's proposed state budget highlights the urgent need to control rising employee compensation costs, which consume a significant portion of state and local government spending. To address these fiscal pressures, the state must implement structural reforms to public worker pension and health insurance benefits that align them more closely with private-sector standards.
Recommendations related to State Budget Process
The state should eliminate one annual pay increase, typically averaging 3 percent, for state employees that was planned as part of recent collective bargaining agreements.
The state should require retired state employees to pay a larger share of their health insurance premiums.
The state should eliminate the inclusion of overtime pay in calculating the worker's salary base for pension benefits.
The state should increase the minimum age requirement for most workers from 55 to 62.
The state should extend the employees' mandatory contribution beyond the first 10 years of service.
Key Data
3%
— Average annual pay increase for state employees planned as part of recent collective bargaining agreements.
75%
— Portion of family health insurance premiums currently paid by the state for retired workers.
$250 million
— Estimated short-term savings from proposed pension and health insurance measures in fiscal year 2010-11.
$5 billion
— Amount of new tax proposals required to address the state budget deficit.
Public-private partnerships offer a mechanism for New York to address infrastructure needs by leveraging private sector expertise and financing to improve project delivery and long-term maintenance. Implementing these partnerships requires legislative changes and careful selection of projects to ensure they provide genuine efficiencies rather than just alternative financing methods.
Recommendations related to State Budget Process
State and local entities in New York should initiate PPPs as pilot programs and view them as benchmarks for project delivery times and maintenance standards.
New York's leaders should give high priority to assets that are currently in poor condition and have a history of poor maintenance.
The public sector must develop an enhanced capacity for contract design, performance measurement and monitoring.
Public officials should decide the extent to which they share labor concerns and, if they are willing to sacrifice some of the benefits of PPPs, provide protections.
New York State should evaluate the variety of local experiences in developing a statewide framework for pursuing or encouraging PPPs.
Key Data
$509 billion
— Value of 1,109 PPP projects launched globally from 1985 to 2007.
$24.3 billion
— 22-year cumulative value of 95 PPP projects in the United States.
$1.6 trillion
— Investment necessary in the next five years to bring the nation’s infrastructure to a good condition.
$3.2 billion
— Critical maintenance backlog for the City University of New York.
$1.7 billion
— Critical maintenance backlog for the State University of New York.
6,650
— Number of bridges in New York State that are functionally obsolete or structurally deficient.
New York's state legislature passed a bill that prevents local governments from negotiating retiree health benefits, forcing them to bear costs without flexibility. Governor Paterson is urged to veto this unfunded mandate, which threatens to further increase the state's already high local tax burden.
Recommendations related to State Budget Process
Governor David Paterson should veto the legislation (A9393A/S6457A) to prevent the imposition of an unfunded mandate on local governments.
Local governments should retain the flexibility to negotiate retiree health benefits with local unions rather than having them decreed by state officials.
Key Data
79%
— New York's local taxes are 79% above the national average statewide.
$49.7 billion
— The state's estimated liability for government retiree health insurance is $49.7 billion.
$57.8 billion
— New York City's estimated liability for government retiree health insurance is $57.8 billion.
New York faces significant budget gaps of up to $7.9 billion over the next three years, necessitating savings of $6 billion to $7 billion annually to avoid tax increases. By restructuring Medicaid, fringe benefits, and economic development programs, the state can achieve these savings without reducing essential services.
Recommendations related to State Budget Process
The state should restructure its health insurance to bring it in line with other public-sector employers.
For retirees, New York should insist on a larger contribution toward premiums and eliminate repayment for Medicare Part B premiums.
The state should change the pension benefits for future employees by creating a new tier for them.
Empire Zones should be cut from the budget and the money set aside for Centers of Excellence should be reduced.
The state should scale back the Centers of Excellence program to cover only SUNY/Albany.
The state could close Medicaid eligibility loopholes for individuals with significant personal assets.
The state should limit the number of hours of personal care services covered by the Medicaid program.
Key Data
$4.3 billion
— Projected budget gap for the coming year.
$7,910
— New York's Medicaid spending per beneficiary.
69%
— Amount by which New York's Medicaid spending per beneficiary exceeds the national average.
$1.1 billion
— Annual cost of state-required pension contributions for employees and retirees.
$558 million
— Total tax credits given away through the Empire Zone program this year.
30%
— Percentage of Empire Zone tax credit recipients who met or exceeded their employment targets.
New York State faces significant future budget gaps due to spending growth that has historically outpaced inflation and personal income. To address these fiscal challenges, the state should implement targeted savings initiatives across various sectors, including education aid, Medicaid, employee benefits, and capital planning.
Recommendations related to State Budget Process
The State should phase out school aid for the wealthiest 10 percent of school districts to eliminate unnecessary and ineffective aid.
New York should reduce non-competitive institutional rates paid to hospitals and nursing homes to bring them closer to national norms.
The State should close eligibility loopholes for the non-poor regarding Medicaid long-term care, such as spousal refusal and asset transfers.
New York should restructure fringe benefits for employees by bringing the State’s practices more in line with those of private sector and other public sector employers.
The State should increase the work week to 40 hours for non-managerial, civilian employees to allow for productivity gains through a reduction of the workforce.
New York should streamline purchasing and other back office functions by consolidating duplicative administrative tasks and centralizing human resources support.
The State should eliminate or restructure ineffective economic development programs, such as the Empire Zones and Centers of Excellence, which have failed to deliver desired results.
New York should develop a comprehensive capital plan to replace the current ad hoc approach and provide better spending discipline.
The State should close unnecessary correctional facilities to better align prison infrastructure with the current inmate population.
New York should streamline the judiciary by reconfiguring the state’s major trial courts into a more efficient two-tiered structure.
Key Data
$5.4 Billion
— The total amount in saving initiatives that could be enacted in 2008 and beyond to reduce future budget gaps.
$7.6 Billion
— The projected State budget gap in 2011.
6.9 percent
— The average annual rate at which operating spending is projected to grow through fiscal year 2011.
$334 Million
— The amount the State would have saved by removing aid allocation for the 97 districts that would not qualify for State aid under a pure equalization policy.
$735 Million
— The potential additional savings from reducing nursing home rates by 29 percent.
$800 Million
— The estimated maximum savings from eliminating or scaling back Empire Zones and Centers of Excellence programs.
New York State's budget process suffers from limited accountability and transparency, characterized by a lack of long-term fiscal stewardship, an imbalance of power between the executive and legislative branches, and a reliance on "back-door" borrowing. To address these systemic issues, the state should implement more rigorous balanced budget requirements, establish meaningful debt limits, and enhance legislative oversight through formal budget committees and improved performance reporting.
Recommendations related to State Budget Process
The state should establish a more rigorous and comprehensive balanced budget requirement that applies to a wider range of governmental funds and uses GAAP accounting standards rather than cash-basis accounting.
New York should establish a more meaningful debt limit that is constitutional rather than statutory, applies to all forms of state-supported debt, and is flexible enough to avoid circumvention.
The state should enhance the capacity for preparing for a rainy day by combining reserve funds, eliminating the cap on the fund size, and requiring mandatory contributions during times of prosperity.
The Legislature should expand its budgetary powers through a constitutional amendment that limits the Governor's ability to insert policy language into appropriation bills.
New York should allow more time for deliberation by changing the fiscal year to July 1, which would provide more time for legislative consideration and allow decision-makers to know income tax collections before passing a budget.
The Legislature should create more meaningful and formal committee roles for its members by establishing budget committees with jurisdiction over appropriation bills.
The state should provide legislators and the public more timely fiscal information by creating an independent, nonpartisan source of budgetary analysis similar to the Congressional Budget Office.
The state should reduce and make more accountable spending on member items by requiring disclosure of grant goals, performance targets, and final reports, and by prohibiting appropriations for specific private entities.
New York should develop a comprehensive approach to performance measurement and reporting that integrates performance metrics into the budget process and centralizes reporting.
Key Data
$11.2 billion
— Total outstanding debt from borrowings used to support operating expenses as of the end of fiscal year 2007.
$39.4 billion
— Total "back-door" state-supported debt outstanding as of the end of fiscal year 2007.
92 percent
— Percentage of all State-supported debt outstanding that was of the "back-door" type as of the end of fiscal year 2007.
$1,031 million
— The balance of the Tax Stabilization Reserve Fund by fiscal year 2006-07.
$4.7 billion
— Total cost of the School Tax Reduction (STAR) program in fiscal year 2008.
$2.1 billion
— Total cost of Health Care Reform Act (HCRA) programs in fiscal year 2008.
New York's state budget process remains dysfunctional and secretive, necessitating reforms such as moving the fiscal year start date to July 1 and ensuring sufficient time for legislative review. The state must also address its unsustainable spending growth, excessive debt load, and inefficient Medicaid and education funding to improve fiscal responsibility.
Recommendations related to State Budget Process
The state should close the loopholes in the new budget-reform law to prevent a breakdown in the budget process.
Improvements to the budget process should ensure an active role for conference committees.
Lawmakers must be provided with sufficient time to review the budget before voting on it.
The state should ensure the timely public release of a document that summarizes the fiscal impacts of the multiple, complex appropriation bills.
The state should move the start of its fiscal year from April 1 to July 1 to allow for more accurate revenue estimates and more time for negotiations.
Key Data
$121 billion
— The total size of the budget that legislators were given less than two hours to review.
9 percent
— The rate by which this year's budget inflated spending, which is more than three times the rate of inflation.
$5 billion
— The budget gap the state has to close in just 18 months.
$60 billion
— The amount New York's debt load will soon exceed.
$10 billion
— The amount by which New York's debt load exceeds what is affordable under reasonable standards.
New York's state debt has surpassed $50 billion, with $11 billion of that total used for operating expenses rather than capital investments, while projected budget gaps are expected to rise from $4.2 billion in fiscal year 2008 to $5.1 billion in fiscal year 2009. To address these fiscal challenges, the state should pursue a constitutional amendment to limit debt and implement spending cuts, particularly within the costly Medicaid program.
Recommendations related to State Budget Process
The Legislature should pursue a constitutional amendment limiting the amount of debt based on criteria for affordability and restricting its uses to long-term capital improvements.
Spitzer and the Legislature should agree on a budget for the coming year that closes projected budget gaps by trimming expenditures.
The state should tighten Medicaid eligibility loopholes to reduce support for long-term care of wealthier residents.
The state should curb generous payments to nursing homes and hospitals that are among the most expensive in the nation.
Key Data
$50 billion
— State debt amount exceeded this figure in the current fiscal year.
$60 billion
— Expected state debt amount in the next two years.
$11 billion
— Amount of outstanding debt taken on to support operating expenses rather than capital investments.
$4.2 billion
— Projected budget gap in fiscal year 2008.
$5.1 billion
— Projected budget gap in fiscal year 2009.
New York State's debt has reached a historic $50 billion, with 20 percent of that amount used to cover operating deficits rather than capital investments. To address this, the state must implement reforms to stop using debt for operating expenses, integrate authority borrowing into the capital plan, and reduce future debt for capital spending.
Recommendations related to State Budget Process
The state should stop issuing state-funded debt to cover operating deficits.
The state should make authorities' borrowing part of the state's capital plan.
The state should institutionalize rigorous financial review of authority borrowing via an enhanced Public Authorities Control Board or by the governor's budget office.
The state should reduce future debt for capital spending by relying more on pay-as-you-go financing.
Key Data
$50 billion
— New York State's debt for the fiscal year ending March 31, 2007.
20 percent
— The portion of state debt that has gone for operating costs.
$12 billion
— The amount of state debt that has gone for operating costs.
$4 billion
— The amount of debt added in one year.
$2.2 billion
— The cash surplus the state ended with.
$2,700
— The amount of debt per capita for every man, woman, and child in the state.
New York's annual budget process suffers from a lack of timeliness, accountability, and transparency, often resulting in late budgets and reliance on lump-sum appropriations that bypass public scrutiny. The state faces significant fiscal challenges, including a projected budget gap of nearly $4.2 billion for the upcoming fiscal year, highlighting the urgent need for multi-year financial planning and improved reporting standards.
Recommendations related to State Budget Process
Prepare more extensive multi-year financial plans.
Enforce and build upon new requirements for reporting by public authorities.
Require that lump-sum appropriations meet specific program criteria and be subject to sunshine provisions.
Publish the Adopted Budget in a format similar to the Executive Budget.
Key Data
$4.2 billion
— Projected budget gap in the next fiscal year.
$1.1 billion
— Expenditures added by the Legislature in June 2006.
20-year
— Duration of the streak of late budgets in New York prior to 2005.
New York's outstanding debt has reached $166 billion, largely driven by public authorities that operate with little accountability and bypass voter approval through 'back door' borrowing. To address this, the state needs to implement constitutional debt limits, improve transparency in capital planning, and increase competition for industrial-development projects.
Recommendations related to State Budget Process
The solution to this problem is to adopt a new constitutional limit that would apply to all state-supported debt, including any issued by authorities.
The constitution should also limit this debt to true capital purposes.
The solution to this problem is for the governor and the budget director to be given responsibility for preparing a comprehensive, multi-year capital plan that includes state agencies and authorities.
The Public Authorities Control Board, which was created to provide such analyses, has not been doing the job adequately and ought to be abolished.
Each local industrial-development authority should select among private parties based on criteria established in advance and in response to competitive proposals.
Key Data
$166 billion
— Outstanding debt of New York's public authorities.
$227 billion
— Total outstanding debt issued by New York state and local governments and their authorities.
583
— Total number of public authorities in New York.
104
— Number of authorities accountable to state officials.
474
— Number of authorities accountable to local officials and five to more than one government.
$9 billion
— Amount of 'back door' debt, representing 9 percent of the $45 billion in current state-supported debt.
New York State achieved its first on-time budget in 21 years, yet many essential reforms remain unaddressed as the state continues to rely on informal agreements rather than structural changes. To achieve true fiscal accountability, the state must implement comprehensive reforms, including shifting Medicaid costs entirely to the state, adopting Generally Accepted Accounting Principles, and establishing a more robust rainy day fund.
Recommendations related to State Budget Process
The Legislature should increase the usefulness of the existing rainy day fund by amending State Finance Law to raise its permissible limit from 2 percent to 5 percent of General Fund revenues.
Financial responsibility for Medicaid still needs to be shifted entirely to the State.
The State should balance its budget in accordance with Generally Accepted Accounting Principles.
The Legislature should abandon this proposed amendment and work to design a new amendment that delivers to New Yorkers true budget reform.
Efforts in performance assessment of State expenditures should be broadened in scope and accelerated.
Key Data
21 years
— The state passed its first on-time budget in 21 years.
2 percent to 5 percent
— The state should amend State Finance Law to raise the rainy day fund's permissible limit from 2 percent to 5 percent of General Fund revenues.
3 percent
— The proposed rainy day fund amendment limits reserves to just 3 percent of General Fund revenues.
10
— The Palisades Principles identified 10 principles that should be implemented to achieve true budget reform.
New York City and State retirement benefits for public employees have become a significant and rapidly growing fiscal burden, far exceeding the generosity of benefits provided by most other public and private employers. To address these rising costs and ensure long-term fiscal sustainability, the current defined benefit pension systems should be transitioned to defined contribution plans, and health insurance and pension eligibility requirements should be reformed to align with broader market practices.
Recommendations related to State Budget Process
The long-run goal of pension reform should be to convert from defined benefit to defined contribution plans for all City and State workers.
The City and State should require retirees to pay 50 percent of the premium for health insurance for themselves and their dependents.
The City and State should stop reimbursing retirees for Medicare Part B premiums, as this practice is out-of-line with benefits provided by other large employers.
The New York systems should increase required employee contributions to a higher percentage and not limit them to ten years.
The New York system should raise the minimum age requirement for retirement to adopt age thresholds similar to the federal Social Security system.
The City and State should base pension benefits on a more standard definition of final average salary that excludes overtime and other supplements subject to manipulation.
The City and State should define work-related disabilities more rigorously to set more standard criteria for these benefits.
The City should eliminate the variable supplements, or 'Christmas bonuses,' available to some retired New York City uniformed workers.
Key Data
$4.7 billion
— Projected required pension fund contributions for the City in fiscal year 2008.
$1.4 billion
— Projected required pension fund contributions for the State in fiscal year 2008.
$6.3 billion
— Combined cost of health insurance for the City and State in 2008.
$12,000
— The amount of the variable supplement, or 'Christmas bonus,' for NYC uniformed workers in 2007.
$35.16
— Total compensation cost per hour among public employers in 2004.
$23.90
— Total compensation cost per hour among private sector employers in 2004.
New York State's budget process requires significant reform, including realigning fiscal responsibilities for Medicaid and school financing, and moving toward GAAP-based budgeting to ensure long-term stability. The state must also address its $4.2 billion budget gap by relying on recurring revenues rather than one-shots and borrowing, while improving transparency and timeliness in the legislative process.
Recommendations related to State Budget Process
Significantly reduce spending on Medicaid and ineffective programs.
Make meaningful progress in a long-run realignment of State and local fiscal responsibilities for Medicaid and school financing.
Balance the budget with recurring revenues.
Enact the budget on time and in full sunlight.
The Legislature should increase the usefulness of the rainy day fund by increasing its permissible limit.
The Legislature should start by balancing this year’s enacted budget on a GAAP basis, but a requirement should be written into the Constitution.
The Legislature should work toward meaningful, effective limits on State-supported debt.
The Legislature should permanently repeal the sales tax exemption on clothing and eliminate the two sales-tax free weeks.
Key Data
$101.3 billion
— Actual expenditures for fiscal year 2005.
$80.1 billion
— What expenditures for fiscal year 2005 would have been if spending had been held in line with inflation.
$37.1 billion
— Estimated cost of Medicaid in the current fiscal year.
$18.4 billion
— Amount of school aid distributed by New York State.
$4.2 billion
— The budget gap in fiscal year 2006.
5 percent
— The recommended minimum rainy day fund as a percentage of revenues.
New York's Medicaid program has grown at an unsustainable rate, consuming a large share of state expenditures and necessitating significant cost-containment measures. By tightening eligibility, adjusting payment rates to competitive levels, and rationalizing service utilization, the state could save approximately $4.6 billion annually without compromising access to care for the truly needy.
Recommendations related to State Budget Process
More careful design and better enforcement of eligibility rules for the elderly and disabled will reduce the number of such people receiving Medicaid funded nursing home and home care services by about 24,000 or 8 percent of the current 300,000 individuals in New York State receiving long-term care.
Limiting Medicaid provider payments to rates based on competitive costs would save about $2.5 billion annually.
A suitable goal would be to enroll about one-third of the elderly and disabled eligibles, or about 350,000 individuals, in a managed care plan.
Bringing use of personal care services more in line with national norms would save about $1.0 billion annually.
Spousal refusal should be permitted only under limited circumstances, and the three-year look-back provision relating to asset transfers should be applied to home care, be enforced more vigorously, and the financial penalties should be greater.
Key Data
$4.6 billion
— Annual savings possible by reversing the trend in Medicaid spending.
$7,646
— New York's annual cost per person enrolled in the Medicaid program.
$3,936
— National average annual cost per person enrolled in the Medicaid program.
$36 billion
— Total spending for Medicaid in New York in fiscal year 2003.
$12.6 billion
— Portion of Medicaid program paid for with State-raised revenues in fiscal year 2003.
$608 million
— Annual savings from tightening eligibility rules for the elderly and disabled.
New York State faces significant fiscal challenges, including recurring budget gaps, a lack of transparency in the budget process, and an unsustainable reliance on one-time revenue measures and off-budget spending. To address these issues, reforms are needed to establish balanced budget requirements, implement multi-year financial planning, and create an independent legislative budget office to improve fiscal accountability.
Recommendations related to State Budget Process
Require that the adopted budget be balanced in accord with generally accepted accounting principles.
Require a four-year financial plan with quarterly modifications.
Replace the constitutional requirement for voter approval of general obligation debt with a constitutional limit on the amount of all state debt that is set based on relevant, changing economic factors.
Create a professional, non-partisan Legislative Budget Office to provide fiscal information to both houses of the Legislature and to the public.
Require that independently prepared revenue projections be used in the adopted budget, if the Governor and Legislature do not agree on revenue projections in a timely way.
Require a “rainy day” fund larger than the current Tax Stabilization Reserve Fund.
Eliminate the use of “off-budget” accounts.
Change the budget calendar to allow more time for deliberation on the Executive Budget by the Legislature.
Strengthen the committee process of the State Legislature to allow more participation by members in budgetary decisions.
Key Data
208 days
— The number of days late the New York State budget was in 2002, the worst year in the last decade.
$9.3 billion
— The budget gap faced by New York State in the 2003-04 fiscal year.
$5.7 billion
— The amount of one-time actions and disappearing revenues the State relied upon to close the 2003-04 budget gap.
$170 million
— The amount appropriated for "member items" in the budget in 2003, up from $26 million in 1984.
$3.3 billion
— The accumulated deficit New York had by the end of fiscal year 2002-03.
$1.7 billion
— The amount of HCRA spending disbursed outside the traditional budget process in fiscal year 2002-03.
New York's state budget process is plagued by persistent lateness and dysfunction, stemming from a structural imbalance between the governor and the legislature that requires constitutional reform. To restore accountability and fiscal responsibility, the state should establish a more inclusive, staged budget process and implement structural changes like independent revenue estimating and campaign finance reform.
Recommendations related to State Budget Process
A constitutionally defined staged process in the legislature for considering the executive budget, engaging key committees, with conference committees to resolve differences, may both build the legislative role and redistribute power within each house.
A consensus system for revenue estimating built into this process may be acceptable to the legislative houses, if their powers in budgeting are otherwise assured in the constitution.
Various proposals have called for a shift of the beginning of the fiscal year to May 1, June 1, or July 1.
The majority in each house required for a veto override might be reduced.
A two-term limit for service as governor, the pattern now in 38 states, might be adopted in New York.
Two less draconian but still fundamental steps are the adoption of legislative redistricting by commission and serious reform in campaign finance.
Public financing of legislative election campaigns, with concomitant limits on direct and indirect (through legislative campaign committees) private funding, would be salutary.
Key Data
76
— Average number of days late for the New York state budget between 1995 and 2003.
68%
— Percentage of New Yorkers who reported having little or no trust and confidence in state government in a 2003 survey.
3,460
— Number of permanent legislative staff in New York in 2002.
$10,750,658
— Proposed budget for legislative fiscal staffs for the 2003-2004 fiscal year.
$170 million
— Total amount appropriated in 2003 to fund projects advanced by Senate Republicans and Assembly Democrats.
$30 - 40 million
— Estimated cost of a public financing program for state legislative races in New York.
New York State faces a significant fiscal crisis with recurring deficits that require a multi-year plan to align expenditures with recurring revenues rather than relying on short-term borrowing. The state should implement structural reforms, including adopting Generally Accepted Accounting Principles (GAAP) for budgeting and eliminating off-budget accounts to improve transparency and accountability.
Recommendations related to State Budget Process
The State should bring the budget into balance over three years by reducing expenditures to what the current revenue system supports by making productivity gains and by cutting services in a way that protects the neediest New Yorkers.
The State should close the gap between spending and revenues in the three-year, interim period by imposing a temporary and declining tax and by avoiding borrowing.
The State should make these decisions in a more accountable and transparent budget process.
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.
All off-budget accounts should be brought on budget to ensure a unified statement of all planned revenues and expenditures.
Key Data
$4.4 billion
— Deficit incurred by New York State in the fiscal year that ended March 31, 2002.
$9.3 billion
— Estimated gap in the fiscal year 2003-04 budget.
$104 billion
— Baseline projection for total spending in fiscal year 2005-06.
$26 billion
— Medicaid spending in New York in federal fiscal year 2000.
$7.4 billion
— Total cost of LGAC bonds repaid over thirty years.
$5 billion
— Gap between outlays and recurring revenues in the current fiscal year.
New York State's fiscal year 2002 budget process was characterized by a lack of serious negotiations and the passage of a late, stripped-down plan that failed to implement necessary fiscal reforms. This approach postponed critical decisions regarding service delivery and infrastructure, relying on political maneuvering rather than a transparent, long-term financial strategy.
Recommendations related to State Budget Process
State leaders should enact important budget reforms, such as managing the financial plan on a GAAP rather than cash basis, showing the enacted budget's impact on future years in the budget presentation, and making the budget presentation clearer.
State leaders should address the State’s high local taxes, but they should do so with better programs than STAR, which is poorly designed because it does not target reductions in local tax burdens where they are most needed.
Key Data
124 days
— The amount of time by which the state's bare-bones budget was late.
New York State and New York City have experienced rapid growth in debt, often circumventing constitutional limits through various authorities and appropriation-backed debt. To ensure long-term fiscal health, the state and city should adopt a new, comparative approach to debt affordability that establishes binding, multiyear limits based on economic resources rather than outdated procedural or property-value constraints.
Recommendations related to State Budget Process
New York State's elected leaders should bring the State's debt burden below the danger zone threshold identified in this report, and New York City's leaders should keep their debt below the relevant danger zone threshold.
New York City and New York State should create Debt Policy Committees to recommend long-run debt strategies and annual debt issuance limits.
The State Constitution should be amended to establish new limits on State and City debt.
New York State should develop a more aggressive strategy to lower its outstanding debt.
The new limits should be made more sensible by replacing the existing constraints with an approach based on that developed in this report.
Key Data
$35.8 billion
— State debt at the end of the 1999 fiscal year.
$46.8 billion
— City debt at the end of the 1999 fiscal year.
0.75 percent
— Limit on new State-supported debt beginning in fiscal year 2001.
10 percent
— City's constitutional limit for its general obligation debt.
$29.2 billion
— State-supported debt threshold in 1997.
$2.1 billion
— Additional debt New York City could have incurred in 1998 before reaching the danger zone.
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