Structural state budget balance refers to the long-term alignment of New York State’s recurring revenues and expenditures, ensuring that annual spending does not consistently exceed income. This page covers CBC’s work on spending growth trends, structural budget gaps, rainy day reserves, multi-year financial planning, and the fiscal impact of Medicaid and education aid.
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..
State leaders should focus on enacting a smart, future-proofing budget—one 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.
The State should adopt the smart choices the Governor proposed to reduce auto insurance costs.
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 Governor and Legislature should hold the line on taxes to keep New York competitive for families and businesses.
The State should add to the reserves rather than using them to offset recurring federal cuts.
The State should take additional steps to restrain growth in CDPAP and long-term care to manage Medicaid spending.
The Governor and Legislature should prioritize core programs and avoid adding unaffordable spending.
Key Data
As of June 2026, the FY2027 Enacted Budget includes a structural gap of nearly $18.0 billion, with fiscal year 2030 projected to have a $14.7 billion budget gap.
In May 2026, the FY2027 Enacted Budget increased State Operating Funds spending by at least 8 percent, pushing decade-long spending growth over $30 billion above inflation.
As of March 2026, the FY2027 Executive Budget drives a $12.8 billion fiscal year 2030 budget gap, which masks a structural imbalance of more than $20 billion.
In January 2026, it was reported that State Operating Funds spending had grown $8.6 billion, which is nearly twice the rate of inflation since fiscal year 2019.
Following the June 2025 FY2026 Enacted Budget, the State's structural budget imbalance exceeds $22 billion, while projected annual budget gaps exceed $14 billion by fiscal year 2029.
New York's fiscal year 2027 budget includes $174.1 billion in adjusted state operating funds spending, contributing to a structural gap of nearly $18.0 billion. Despite strong revenues, the state has increased recurring spending by $1.5 billion and failed to adequately bolster rainy day reserves, creating significant long-term fiscal risks.
Recommendations related to Structural State Budget Balance
The Governor should release basic fiscal plan tables alongside the enacted budget to help lawmakers make smart, future-looking decisions.
Key Data
$277.0 billion
— Total budget for the fiscal year 2027.
$174.1 billion
— Adjusted State Operating Funds spending.
9.7%
— 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.
New York State's fiscal year 2027 budget leaves a structural gap exceeding $17 billion while increasing operating funds spending by at least 8 percent. Despite strong revenues, the budget fails to bolster reserves and includes inefficient spending measures, such as aid to districts with shrinking enrollment and broad energy rebates, rather than focusing on long-term fiscal stability.
Recommendations related to Structural State Budget Balance
The Governor should continue to resist calls to increase personal income and corporate taxes next year.
The State must hold New York City accountable for shoring up its own finances to prevent future requests for massive aid or tax increases.
The State should target spending more effectively rather than sprinkling funds like energy rebates across millions of households.
The State should stop increasing school aid to districts with shrinking enrollment to avoid wasting funds and undermining funding fairness.
The State should build feasible targets into a market-driven cap-and-invest program to cost effectively reduce emissions.
Key Data
$17 billion
— The amount by which the State's structural gap exceeds in the fiscal year 2027 budget.
8 percent
— The minimum increase in State Operating Funds spending in the enacted budget.
$30 billion
— The amount by which decade-long spending growth exceeds inflation.
$1 billion
— The amount allocated for energy rebates across millions of households.
$700 million
— The annual amount wasted by increasing school aid to districts with shrinking enrollment.
$268 billion
— The total amount of the enacted budget.
New York State's budget is currently delayed for the seventh consecutive year, prompting calls for leaders to prioritize fiscal responsibility and long-term sustainability. Policymakers are urged to curb spending growth, maintain tax discipline, and implement structural reforms to improve affordability and program efficiency.
Recommendations related to Structural State Budget Balance
State leaders should focus on enacting a smart, future-proofing budget—one 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.
The State should adopt the smart choices the Governor proposed to reduce auto insurance costs.
New York State's fiscal year 2027 budget faces a $12.8 billion projected gap by 2030, which actually hides a $20 billion structural imbalance due to unsustainable spending growth. To achieve long-term fiscal stability, the state must restrain spending to 2.6 percent annually, better target school aid, and reject costly benefit enhancements.
Recommendations related to Structural State Budget Balance
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.
Repeal the Class Size Reduction mandate and extend Mayoral control of schools by four years.
Eliminate hold harmless and minimum increase provisions in school aid formulas.
Reject all benefit sweeteners including enhancements to Tier 6.
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 to protect against future economic downturns.
Reject economic development spending unless it has proven effective, including the NYC Musical and Theatrical Production Tax Credit.
Enact the executive budget auto insurance reforms to reduce premiums for New Yorkers.
Publish basic financial plan tables with the enacted budget to enhance transparency.
Key Data
$12.8 billion
— Reported out-year budget gap in fiscal year 2030.
$20 billion
— Structural budget gap masked by temporary tax increases and pre-payments.
$30 billion
— Amount by which fiscal year 2026 State Operating Funds spending exceeds what it would have been if it had grown at the rate of inflation over the last decade.
2.6 percent
— Recommended annual growth rate for State Operating Funds to close the structural budget gap by fiscal year 2030.
$14.6 billion
— Amount held in 'Principal Reserves' through fiscal year 2030.
7.9 percent
— Growth rate of State Operating Funds spending between fiscal years 2026 and 2027.
$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 creates a structural gap exceeding $15.0 billion, driven by an $8.6 billion increase in State Operating Funds spending. To ensure fiscal stability, the state should avoid new unaffordable spending, restrain growth in long-term care programs, and scale back wasteful economic development and aid to wealthy school districts.
Recommendations related to Structural State Budget Balance
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 Governor and Legislature should hold the line on taxes to keep New York competitive for families and businesses.
The State should add to the reserves rather than using them to offset recurring federal cuts.
The State should take additional steps to restrain growth in CDPAP and long-term care to manage Medicaid spending.
The Governor and Legislature should prioritize core programs and avoid adding unaffordable spending.
Key Data
$15.0 billion
— The structural gap driven by the Fiscal Year 2027 Executive Budget.
$8.6 billion
— The growth in State Operating Funds spending.
$5.1 billion
— The amount New York State spent on economic development in fiscal year 2025.
$2.6 billion
— The amount of education aid directed to districts that self-fund a sound basic education.
$469 million
— The amount of 'Hold harmless' funds provided to districts with declining enrollment.
$1 billion
— The amount shifted within reserves to the Rainy Day Fund.
New York faces a massive structural budget gap and potential federal cuts that threaten the state's financial stability. To avoid a future fiscal reckoning that could necessitate service cuts, the state must prioritize sustainable funding and target new programs specifically toward those in greatest need.
Recommendations related to Structural State Budget Balance
We urge the Governor to 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.
Governor Hochul is right to hold the line on taxes to continue to bolster New York’s competitiveness.
This requires the State to focus its money and management on programs that deliver results.
New York faces a $20 billion structural budget gap and must avoid raising taxes while shifting funds from ineffective programs to high-impact priorities to ensure long-term fiscal stability. By curbing low-impact spending and building adequate rainy day reserves, the state can improve affordability and competitiveness without sacrificing essential services.
Recommendations related to Structural State Budget Balance
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 shift dollars from lower-impact programs to affordability and other priority programs.
The state should end aid increases to districts with declining enrollment to save $500 million annually.
Policymakers should redirect $2.5 billion in state aid provided to wealthy districts that already self-fund a sound basic education.
The state should curb the $5 billion in economic development tax breaks and programs that fail to deliver results.
Albany must protect and build Rainy Day reserves, which are currently insufficient to weather a recession.
Key Data
$20 billion
— The size of the state's structural budget gap.
$11 billion
— The amount New York State and its localities would save by spending what California does per person.
$80 billion
— The amount New York State and its localities would save by spending like New Jersey.
$10 billion
— The additional revenue the state would collect annually if its share of the nation’s millionaires held steady since 2010.
$500 million
— The amount saved annually by ending aid increases to districts with declining enrollment.
$2.5 billion
— The amount of state aid provided to wealthy districts that already self-fund a sound basic education.
The MTA's November 2025 Financial Plan reports near-term balance, but a deeper analysis reveals a $1.1 billion structural budget gap by 2029 due to reliance on one-time revenues and optimistic assumptions. To ensure long-term fiscal stability and avoid future service reductions, the MTA must implement operational efficiencies, reduce fare evasion, control paratransit costs, and adjust fare and toll increases to match expense growth.
Recommendations related to Structural State Budget Balance
Implement additional operating efficiencies in collaboration with labor by modifying work rules, increasing employee availability, and sharing the benefits of additional operational flexibility and higher productivity to cut costs while supporting competitive wages.
Continue to reduce fare evasion, which is on track to cost more than $900 million this year, by assessing the cost-effectiveness of enforcement efforts, refining the multifaceted approach to reducing fare evasion, accelerating the rollout of new faregates, and working with District Attorneys.
Collaborate with the City to improve uptake, assess the cost-effectiveness, and consider expanding Fair Fares NYC.
Reduce paratransit per-trip expenses by using the paratransit fleet and broker services strategically to ensure users are provided with the lowest-cost transportation option that meets their needs.
Continue biennial fare and toll increases and consider tying them to year-over-year expense growth instead of a flat 4 percent.
Key Data
$1.1 billion
— The MTA's underlying structural budget gap in 2029.
$900 million
— The estimated cost of fare evasion in 2025.
$250 million
— The amount of recurring operating efficiencies the MTA plans to identify by 2029.
$2.1 billion
— The amount of one-time resources the multi-year plan relies on.
$3.5 billion
— The projected debt service expenses in 2029.
$150 million
— The cost of each percentage point above 2 percent for wage increases.
Seventeen proposed bills would increase costs to New York State and local governments by expanding pension, disability, and death benefits outside of the established budget process. These measures, which lack offsetting savings, threaten the state's fiscal stability by adding millions in immediate and recurring annual expenses.
Recommendations related to Structural State Budget Balance
The Governor should veto the 17 bills that increase costs to New York State and local governments outside of the budget process without enhancing public services or providing offsetting savings.
Policymakers should avoid granting targeted benefit enhancements that increase costs and may encourage further expansions that also increase costs to the public.
Key Data
$30.0 million
— Immediate costs estimated for 12 of the bills with complete fiscal notes.
$18.1 million
— Annual recurring costs estimated for 12 of the bills with complete fiscal notes.
$5.9 million
— Annual cost of S6486/A6942, which reduces the service requirement for Tier 3 members of the Unformed Sanitation Force and Uniformed Correction Service.
$3.9 million
— Annual cost of S4727/A5861, which reduces the service requirement for Tier 3 members of the New York City Fire Pension Fund.
$4.2 million
— Annual cost of S6640/A6784, which extends the 'death gamble' benefit to Tier 4 and Tier 6 Special Plan transit members of NYCERS.
$4.9 million
— First-year cost of S5083/A5898, which provides an in-service death benefit for retirement-eligible members of NYSLRS employed as State-paid judges or justices.
Download the Presentation The New York State and New York City budgets are unaffordable and unprepared both for a recession and for federal budget cuts that will start hitting this fiscal year and grow in the future. Check out CBC’s New York State and New York City Fiscal…
New York State's fiscal foundation is weakening due to spending growth that is four times the rate of inflation and the depletion of rainy day reserves. This has resulted in a projected annual budget gap exceeding $14 billion by fiscal year 2029 and a structural imbalance surpassing $22 billion.
Recommendations related to Structural State Budget Balance
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 taking more than $7 billion from rainy day reserves.
Key Data
$14.6 billion
— Projected annual budget gap by fiscal year 2029.
$22.7 billion
— Estimated structural imbalance for fiscal year 2029.
$7 billion
— Amount taken from the State’s rainy day reserves.
12.5%
— State spending growth rate in fiscal year 2026.
$94.1 billion
— Amount of federal receipts in the fiscal year 2026 budget.
$114.1 billion
— Amount of state tax receipts in the fiscal year 2026 budget.
New York State's recent budget plan increases spending by over 12 percent, creating a long-run structural imbalance between receipts and disbursements that exceeds $20 billion. To address future annual budget gaps of $14 billion, state leaders must make difficult choices to preserve core programs, protect reserves, and maintain tax competitiveness.
Recommendations related to Structural State Budget Balance
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.
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 once non-recurring resources are removed.
$49 billion
— The amount the State spent before releasing the financial plan to the public.
The $254 billion New York State budget for fiscal year 2026 increases spending by 12 percent, creating a structural imbalance of approximately $20 billion that leaves the state vulnerable to federal cuts and potential recession. By failing to set aside funds and instead siphoning $7 billion from reserves, the budget creates long-term fiscal instability rather than preparing for future economic challenges.
Recommendations related to Structural State Budget Balance
Lawmakers should have put aside $2 billion to soften the initial blow of federal cuts to the state budget.
Lawmakers should have used other resources, such as the $2 billion for rebate checks or $2 billion of school aid for wealthy districts, to replenish the Unemployment Insurance Trust Fund instead of siphoning reserves.
Lawmakers should ensure that labor supports the MTA plan by agreeing with MTA leadership to operational changes that reduce costs, increase efficiency, and preserve services.
Key Data
$254 billion
— Total size of the New York State budget for fiscal year 2026.
12 percent
— The rate at which State Operating Funds spending is estimated to increase, which is four times the rate of inflation.
$20 billion
— The estimated structural imbalance between future receipts and disbursements.
$7 billion
— The amount siphoned from the State’s reserves to replenish the Unemployment Insurance Trust Fund.
New York faces a structural budget gap with projections showing the state is on track to spend $18 billion more than it takes in within a few years. To address this, the state should restrain spending growth to inflation, protect its $20 billion rainy day fund, and establish a $2 billion contingency fund for potential federal aid cuts.
Recommendations related to Structural State Budget Balance
The State should keep spending growth close to inflation to restrain spending in the face of a recession and federal cuts.
Lawmakers 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 must 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 know how their money is being spent.
The State should prioritize services by reining in long-term care and home care costs and better aligning 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 hike in spending 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
— Recommended amount to set aside in a federal cut contingency fund.
$20 billion
— Amount already set aside in a rainy day fund that should be protected.
New York State's proposed budget features the largest spending increase in recent history, ranging between 10.9 percent and 13.8 percent, which creates an $18.2 billion structural gap. To ensure fiscal sustainability, the state should restrain spending growth, set aside at least $2 billion for potential federal cuts, and publish multi-year financial plan tables.
Recommendations related to Structural State Budget Balance
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
— The lower bound of the spending increase featured in the Governor’s and Legislature’s proposals.
13.8 percent
— The upper bound of the spending increase 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 of funding that should not be spread so thinly among taxpayers that it fails to help affordability.
New York State's budget process lacks transparency because the enacted budget agreement is released without detailed, multi-year financial plan tables that demonstrate long-term fiscal impacts. Requiring the publication of these tables alongside budget bills would provide legislators and the public with the necessary information to understand the state's fiscal condition and long-run budget balance.
Recommendations related to Structural State Budget Balance
The state should publish at least one financial plan table each for All Funds, State Operating Funds, and the General Fund to ensure a transparent budget process.
Each of these three 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 consistent transparency.
New York State's government spending is growing at an unsustainable rate, with projected State Operating Funds spending increasing by $15.5 billion in the fiscal year 2026 executive budget. To address the projected $18.2 billion structural imbalance and close future budget gaps, the state must limit annual spending growth to 2.7 percent through fiscal year 2029.
Recommendations related to Structural State Budget Balance
Lawmakers should find savings that restrain spending growth rather than adding more spending.
The state should keep annual spending growth to 2.7 percent starting next fiscal year to close projected budget gaps and eliminate the structural imbalance.
Key Data
10.9 percent
— Projected increase in State Operating Funds spending for fiscal year 2026.
$15.5 billion
— The amount of the increase in State Operating Funds spending proposed in the fiscal year 2026 Executive Budget.
$18.2 billion
— The size of the structural imbalance masked by spending growth supported temporarily by extraordinary receipts.
$11.0 billion
— The projected budget gap for fiscal year 2029.
$31.6 billion
— The total increase in State Operating Funds spending between fiscal years 2025 and 2029.
$65.7 billion
— The projected growth in State Operating Funds spending over the eight years between fiscal years 2021 and 2029.
New York's proposed $252 billion budget masks an $18.5 billion structural imbalance by relying on temporary taxes and revenue surges rather than restraining spending. To achieve long-term stability, the state must curb Medicaid and education aid growth, prioritize cash payments for infrastructure over tax rebates, and bolster rainy day reserves.
Recommendations related to Structural State Budget Balance
The State should restrain Medicaid spending, which is the biggest budget buster.
The State should restrain State school aid spending growth, such as by eliminating 'hold harmless' provisions or redirecting aid from wealthy districts.
The State should use the $3.7 billion from the MCO tax for a one-time investment in health system transformation rather than building it into the Medicaid spending base.
The State should use the $3 billion tax rebate to reduce ongoing costs by paying cash for infrastructure projects instead of borrowing.
The State should deposit some of this year’s closeout surplus into the rainy day reserves to better prepare for a recession.
Key Data
$18.5 billion
— The State's structural imbalance masked by the Executive Budget's projected gaps.
$11.0 billion
— The projected budget gaps by fiscal year 2029.
$252 billion
— The total size of the proposed Executive Budget.
$2 billion
— The amount of State aid sent to wealthy districts that do not need it to fund a sound basic education.
$3.7 billion
— The revenue generated from the MCO tax.
$3 billion
— The amount of the tax rebate that is spread too thinly to have a lasting impact.
New York State faces a $15.6 billion structural budget imbalance that requires spending restraint to ensure long-term fiscal stability. To address this, the state must implement major savings plans for Medicaid and education aid while utilizing surplus funds to restructure government operations and bolster reserves.
Recommendations related to Structural State Budget Balance
The State should take the opportunity to use its surplus funds to restructure State government to be lower cost and higher quality, pay cash for capital projects, and further bolster reserves.
Major savings plans are needed to reduce the growth in Medicaid costs and education aid so we can sustain critical services.
The State cannot afford tax cuts in the long run unless it restrains spending elsewhere.
Key Data
$15.6 billion
— The amount of the State's current structural imbalance.
$33 billion
— The funding hole in the MTA’s capital plan that remains unaddressed.
New York State faces a $15.6 billion structural budget imbalance that requires spending restraint and fiscal discipline to ensure long-term stability. Policymakers should prioritize bolstering reserves, limiting annual spending growth to under 3 percent, and enacting recurring tax relief rather than relying on temporary measures.
Recommendations related to Structural State Budget Balance
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 (RDR), 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 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 (MCO) tax for a one-time investment in health transformation that improves quality and lowers cost.
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.
Key Data
$15.6 billion
— The estimated structural imbalance by fiscal year 2028.
7.5 percent
— The rate at which State Operating Funds (SOF) spending is slated to grow this year.
$33 billion
— The financing gap in the MTA's 2025-2029 capital program.
7.1 percent
— The annual growth rate of the State's share of Medicaid costs.
$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 (MCO) tax.
New York State faces a $15.6 billion structural budget imbalance, despite recent improvements in tax receipts that have helped reduce out-year gaps. To ensure long-term fiscal stability, the state should prioritize increasing reserves to 22 percent of operating funds and use additional tax receipts to close budget gaps rather than relying on temporary measures.
Recommendations related to Structural State Budget Balance
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 RDR.
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.
Reserves should increase 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.
4.8 percent
— The average annual rate of growth for State Operating Funds spending.
$653 million
— The average difference in tax receipt forecasts for fiscal year 2026 between the Legislature and Comptroller compared to the Executive.
$2 billion
— The average annual increase in State tax receipts resulting from an improved economic outlook.
$1.0 billion
— The projected budget gap for fiscal year 2026.
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 is increasingly enacting pension and benefit "sweeteners" and rolling back Tier 6 reforms, which add hundreds of millions of dollars in annual costs and billions in new pension liabilities without corresponding service improvements. These legislative actions circumvent collective bargaining and budget processes, undermining the state's fiscal stability and creating unplanned, long-term financial burdens.
Recommendations related to Structural State Budget Balance
State lawmakers should cut the sweetener habit and should stick to a healthy Tier 6 diet as enacted over a decade ago.
Legislators should kick this growing habit and leave sweeteners on the shelf.
Lawmakers should maintain the valuable Tier 6 reforms, which continue to offer generous defined benefits for public employees.
Governors should veto sweeteners that are passed outside of the budget process.
Key Data
$438 million
— Total first-year annual fiscal impact of enacted Tier 6 reform rollbacks.
$1.5 billion
— Annual price tag of just one other proposed Tier 6 rollback.
$61 million
— Increased annual pension contribution costs to State and local governments from changing the minimum vesting period.
$377 million
— Increased State and local government annual costs from changing the final average salary calculation.
$4.3 billion
— Increase in the net present value of pension benefits from enacted changes.
$714 million
— Estimated first-year fiscal impact of a 2022 proposal to reduce employee contribution rates to 3 percent for Tier 6 employees.
New York's structural budget gap is projected to exceed $16 billion by fiscal year 2028, necessitating spending restraint in major expense areas like education. Reforming school aid formulas, which currently total $38.6 billion, is essential to ensure fiscal sustainability and align resources with actual student needs.
Recommendations related to Structural State Budget Balance
Eliminate or phase-out the hold harmless provision to align Foundation Aid with district enrollment.
Revise the expected local contribution calculation to better reflect districts' actual fiscal capacity and willingness to generate local resources.
Update district poverty estimates and regional cost measures for a more accurate assessment of need.
Reassess arbitrary floors and ceilings to ensure they are limited to extreme situations and do not undermine the intent of allocating school aid based on need and local capacity.
Adjust library, textbook, and software aids to account for district wealth either by modifying the formula or folding the funding into Foundation Aid.
Eliminate High Tax aid, which is fixed and not tied to an educational expense.
Eliminate the School Tax Relief (STAR) program due to its regressive nature and significant cost.
Key Data
$16 billion
— Projected structural budget gap by fiscal year 2028.
$38.6 billion
— Total funding for school districts through Foundation Aid, expense-based aids, and the STAR program for the upcoming school year.
$3.3 billion
— Estimated cost of the STAR program in the next year.
$2.8 billion
— State aid provided in the 2023-24 school year to districts that fully fund a sound basic education before receiving any state funds.
$10.4 billion
— Total funding for expense-based aids in the current year.
$20.6 million
— Excess funding provided for expense-based aids compared to what the formulas would otherwise determine.
New York State's fiscal year 2025 enacted budget includes $239 billion in total spending, which is $2 billion higher than initially reported. This spending trajectory creates a $16.1 billion structural budget gap by fiscal year 2028, which is currently masked by temporary resources and expiring tax increases.
Key Data
$239 billion
— Total All-Funds spending for fiscal year 2025.
$2 billion
— Amount by which total All-Funds spending for fiscal year 2025 is higher than the State reported when the budget was enacted.
$1.5 billion
— Amount added to reserves at the end of fiscal year 2024 due to strong tax receipts.
7.8%
— Increase in Adjusted State Operating Funds spending in fiscal year 2025.
$10.4 billion
— Dollar amount increase in Adjusted State Operating Funds spending in fiscal year 2025.
$2.4 billion
— Amount by which projected fiscal year 2028 State Operating Funds spending is greater than proposed in the Executive Budget.
New York's recent budget agreement fails to address a structural deficit likely exceeding $16 billion, instead adding unaffordable spending while lacking transparent financial plan tables. While avoiding tax increases, the budget relies on short-term funding bridges and fails to implement necessary reforms to Medicaid and school aid, further exacerbating long-term fiscal instability.
Recommendations related to Structural State Budget Balance
All reserves should be deposited into the Rainy Day Reserve to protect them from potential squandering.
Short-term funds should be used to restructure the Medicaid system to be more sustainable.
The State should remove the hold harmless provision to align school aid to enrollment.
Key Data
$16 billion
— The amount the structural budget deficit is likely to exceed.
$237 billion
— The total amount of spending approved in the state budget.
$4 billion
— The amount added to the State's pension liabilities by Tier 6 retirement-plan sweeteners.
$377 million
— The amount of unnecessary costs imposed on state and local government budgets next year due to Tier 6 changes.
The conceptual New York State budget agreement includes $237 billion in spending and leaves the state with a structural budget gap likely exceeding $16 billion. This agreement fails to utilize strong receipt growth to stabilize the state's fiscal foundation, instead adding unaffordable spending and rejecting proposals to restrain Medicaid and education costs.
Recommendations related to Structural State Budget Balance
The State should publish basic financial plans as the Legislature votes on the bills to provide a clear view of the full budget picture.
The State should restrain Medicaid spending rather than rejecting the Governor's proposals to do so.
The State should remove the hold harmless provision on education aid to avoid unnecessary spending.
The State should reject the Tier 6 retirement-plan enhancement because it is unnecessary, unpaid for in the long run, and an unfunded mandate on localities.
Key Data
$16 billion
— The estimated future structural budget gap that the conceptual budget agreement likely exceeds.
$237 billion
— The reported amount of public money the State plans to spend under the conceptual agreement.
New York faces a structural budget gap of over $16 billion, with adjusted State Operating Funds having grown by $33.8 billion, or 32 percent, between fiscal years 2020 and 2025. To ensure long-term fiscal stability, the state must restrain spending growth, avoid relying on speculative federal revenue, and reject tax increases or expensive retirement plan enhancements.
Recommendations related to Structural State Budget Balance
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, as New York and its localities already collect more taxes per person than any other state.
Boost housing production to address the housing-supply and affordability crisis.
Defer decisions on the Heat Act until there is a full analysis and proposal about 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 proposed increase in adjusted State Operating Funds spending for the current year.
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 reliance on temporary revenues to fund permanent spending has contributed to a structural budget gap estimated between $16 billion and $20 billion. Leveraging federal funds through a new Medicaid tax risks repeating this pattern, as such funds should be reserved for one-time programs rather than recurring expenses.
Recommendations related to Structural State Budget Balance
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.
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 aims to leverage through a new tax on Medicaid and other managed care plans.
New York State's proposed budgets rely heavily on non-recurring resources and unsustainable spending growth, which threatens to widen the structural budget gap to $20.3 billion. To ensure fiscal stability and allow temporary tax increases to expire, the state must restrain annual spending growth to 2.0 percent and prioritize building reserves over funding new initiatives.
Recommendations related to Structural State Budget Balance
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.
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 gap in the State budget based on the Legislature's one-house budget proposals.
$27.8 billion
— The total increase in Adjusted State Operating Funds (SOF) 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 funding currently required to make principal reserves sufficient to cover receipts losses and spending growth of a typical recession.
$33.6 billion
— The amount by which the Executive Budget would push spending above the pre-pandemic trend in fiscal year 2028.
New York State's rapid growth in school aid spending has contributed to widening budget gaps, necessitating reforms to Foundation Aid and other programs to ensure long-term fiscal sustainability. By phasing out the 'hold harmless' provision and adjusting inflation factors, the state can better target resources to districts with the greatest need while moderating overall expenditure growth.
Recommendations related to Structural State Budget Balance
The Legislature should enact a fiscal year 2025 budget that brings State school aid growth to a more sustainable level.
The State should enact the phaseout of the hold harmless provision to ensure Foundation Aid is more reflective of changing demographics.
The State should shift some of its expense-based aid to Foundation Aid to target funding based on need rather than a district's ability to self-fund.
The State should eliminate the School Tax Relief (STAR) program, which currently results in increased funding for wealthier districts.
Key Data
$413 million
— Projected savings in school year 2024-25 from proposed changes to the Foundation Aid formula.
$38.1 billion
— Total State school aid allocated in the coming school year under the Governor's proposal.
$2.4 billion
— Amount of State aid allocated to 145 districts that can fully self-fund a sound basic education.
6.7 percent
— Annual growth rate of State school aid from fiscal year 2021 to fiscal year 2024.
2.1 percent
— Proposed growth rate for Foundation Aid in school year 2024-25.
1.9 percent
— Proposed increase in total State school aid for the coming school year.
New York faces out-year budget gaps approaching $10 billion and a structural gap exceeding $16 billion, necessitating a limit on annual spending growth to 2 percent to achieve balance by fiscal year 2028. To reach this stability, the state must prioritize spending reductions in areas like school aid and Medicaid while avoiding tax increases that could harm economic competitiveness.
Recommendations related to Structural State Budget Balance
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.
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.
Extra scrutiny should be given to the State’s two biggest expenses—school aid and Medicaid.
Tempering spending growth, holding the line on taxes, and boosting housing production are critical to New York’s fiscal stability.
Key Data
$16 billion
— The State's structural budget gap.
$10 billion
— The State's out-year budget gaps.
$8 billion
— The amount added to State Operating Funds spending on top of the Governor’s proposal.
8.9 percent
— The year-over-year growth in State Operating Funds spending under the Senate's proposal.
2 percent
— The annual limit on spending growth recommended to close gaps and reach structural balance by fiscal year 2028.
7.9 percent
— The rate of year-over-year spending growth in years preceding the current proposal.
New York State faces a significant structural budget imbalance of $16.4 billion, which requires immediate spending restraint to avoid future fiscal crises. By limiting annual spending growth to 2.0 percent, the state can close these projected gaps and allow temporary tax increases to expire by fiscal year 2028.
Recommendations related to Structural State Budget Balance
Restrain State Operating Funds spending growth to 2.0 percent annually in order to close the State's $16.4 billion structural imbalance.
The State should not increase taxes, since nation-leading taxes and spending should be sufficient, and higher taxes risk competitiveness for residents and businesses.
Deposit the additional fiscal year 2024 closeout surplus to the Rainy Day Reserve and make further structural improvements to reserves.
Publish basic financial plan tables with the one-house and enacted budgets to foster transparency.
Rein in Medicaid spending growth by targeting savings in high-growth areas such as home- and community-based care, and by prioritizing enrollees with high needs.
Limit school aid spending growth by adopting the Governor’s proposal to eliminate hold harmless provisions, and target resources to districts and students with rising needs.
Enact policies that boost housing production and reject those that disincentivize new housing.
Key Data
$16.4 billion
— The State's structural budget imbalance in fiscal year 2028, once the use of nonrecurring resources is taken into account.
$9.9 billion
— The projected budget gap in fiscal year 2028.
2.0 percent
— The recommended annual rate to restrain State Operating Funds spending growth to close projected gaps.
$20 billion
— The current level of principal reserves.
$28 billion
— The estimated amount needed to meet the target standard for reserves to withstand two years of recessionary receipts losses.
7.0 percent
— The annual growth rate of the State share cost of Medicaid from fiscal year 2025 to fiscal year 2028.
New York State faces a $16.4 billion structural budget imbalance, driven by rapid spending growth that outpaces sustainable revenue. To achieve fiscal stability, the state must restrain annual spending growth to 1.5 percent over the life of the financial plan and avoid further tax or spending increases.
Recommendations related to Structural State Budget Balance
The State must 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.
Policymakers 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 amount of the structural imbalance in the state budget when accounting for non-recurring resources.
$9.9 billion
— The projected budget gap for fiscal year 2028.
1.5 percent
— The annual rate to which SOF spending growth would need to be kept to close the State’s structural imbalance.
$26 billion
— The total growth in State Operating Funds spending from fiscal year 2021 to fiscal year 2024.
$51 billion
— The projected growth in State Operating Funds spending over the 8 years between fiscal years 2021 and 2028.
New York faces a looming fiscal reckoning as both city and state governments struggle with structural budget gaps driven by years of unsustainable spending growth. To ensure long-term stability, officials must align recurring expenditures with revenues by prioritizing effective programs, increasing government efficiency, and curbing excessive spending rather than raising taxes or depleting reserves.
Recommendations related to Structural State Budget Balance
Both the City and State must align recurring expenditures for all programs with revenues.
Smart spending restraint should focus on prioritizing the programs that produce the most significant effects, based on a hard-nosed look at the data, and shrinking or eliminating those that are ineffective or deliver less benefit.
It should also focus on increasing efficiency by leveraging technology and streamlining processes.
For the state, the challenging work will be to reduce Medicaid spending growth while ensuring access to needed high-quality care and a strengthened safety net.
School aid, the State’s other major cost, needs to focus on better targeting aid to high-need districts, not increasing aid to wealthy districts that already self-fund a sound basic education, and not holding districts harmless when enrollment declines.
Key Data
$233 billion
— The State’s total budget for fiscal year 2025.
$33 billion
— The increase in State Operating Funds spending between fiscal years 2020 and 2025.
$15 billion
— The structural gap in the State budget when accounting for non-recurring revenue.
$9.9 billion
— The State budget gap projected for FY 2028 on paper.
40%
— The growth in Medicaid spending over the last three years.
New York's fiscal year 2025 executive budget faces a structural gap of approximately $15 billion, with the fiscal year 2028 gap projected to widen to $9.9 billion. To address this imbalance, the state must align future spending with its ongoing receipts base and avoid relying on temporary tax increases and surplus pre-payments.
Recommendations related to Structural State Budget Balance
Significant additional restraint is needed to close the State’s structural budget imbalance.
The State must get on a path to align future spending with its ongoing receipts base.
The State should limit school aid spending growth to districts without new or high needs and make adjustments based on enrollment.
Ensuring that temporary tax increases sunset on time is critically important to New York’s competitiveness.
State lawmakers should make basic improvements to the budget process to increase transparency and accountability, including publishing basic financial plan tables, avoiding lump sum appropriations, avoiding messages of necessity, and omitting fiscal maneuvers.
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 from prior year surpluses.
$15 billion
— The approximate structural gap of the State.
$19 billion
— The amount of record State reserves maintained by the budget.
New York State faces a $16.8 billion structural budget gap by fiscal year 2028, driven by spending growth that significantly outpaces revenue. To achieve long-term fiscal stability, the state must restrain annual spending growth to 1 percent and avoid relying on one-time resources to balance the budget.
Recommendations related to Structural State Budget Balance
NYS needs to restrain SOF spending growth to 1 percent annually to close the structural gap by fiscal year 2027.
The State should deposit any fiscal year 2024 surpluses into the Rainy Day Reserve.
The State should pilot a reliable funding stream such as vehicle miles travelled fees to maintain the State’s roads and bridges.
The State should omit lump sum appropriations from the budget to improve fiscal management and transparency.
The State should establish an independent fiscal analysis office to provide additional insight on the state’s fiscal condition.
The State should end the School Tax Relief (STAR) program to better target aid based on district need.
Key Data
$16.8 billion
— The structural budget gap projected for fiscal year 2028.
$4.3 billion
— The reported budget gap for fiscal year 2025.
$9.5 billion
— The reported budget gap for fiscal year 2026.
$7.7 billion
— The reported budget gap for fiscal year 2027.
5.3 percent
— The average annual projected growth of State Operating Funds spending over the financial plan.
1 percent
— The annual rate to which State Operating Funds spending growth must be restrained to close the structural gap by fiscal year 2027.
New York faces a structural budget gap of $17 billion, necessitating spending restraint to ensure long-term fiscal stability. Avoiding tax increases is crucial, as the state currently maintains the highest combined top personal income and business tax rates in the nation.
Recommendations related to Structural State Budget Balance
New York State must exercise spending restraint to put the state on a path to fiscal stability.
The Governor should follow through on the commitment to address the structural budget gap in the upcoming budget proposal.
New York should avoid raising taxes, as the state's combined top personal income and business tax rates are already the nation's highest.
Key Data
$17 billion
— The size of the structural budget gap facing New York State.
New York State faces a significant structural budget imbalance, with a $16.8 billion gap between recurring receipts and disbursements that is currently masked by non-recurring resources. To ensure fiscal stability, the state must shift from its recent trend of adding new spending to a strategy of restraining spending growth and securing adequate reserves.
Recommendations related to Structural State Budget Balance
Closing these gaps will require the State to shift to restraining spending growth, rather than the recent trend of adding new spending.
If receipts exceed projections this year, additional funds should be deposited in the Rainy Day Reserve.
The full balance of the State’s principal savings should be moved immediately into statutory lockboxes.
Key Data
$16.8 billion
— The structural gap between recurring receipts and disbursements after accounting for the use of non-recurring resources.
$27 billion
— The amount the State should have in reserves to deal with two years of recessionary tax receipt losses and fund modest annual spending growth.
$19.6 billion
— The current level of the State's principal reserves, including statutory rainy day funds and related accounts.
$19.5 billion
— The increase in State Operating Funds spending from fiscal year 2021 to fiscal year 2023.
The state's 'Quick Start' budget meetings serve as a vital mechanism for establishing consensus on revenue projections, which is essential for avoiding budget gaps like the projected $4.3 billion shortfall for fiscal year 2025. By aligning on revenue and spending forecasts early, the government can prioritize spending effectively and ensure a more transparent and timely budget process.
Key Data
$4.3 billion
— The estimated budget gap for fiscal year 2024-2025 that must be addressed through revenue increases or spending cuts.
$10 billion/year
— The amount of taxpayer subsidies provided to corporations that advocates argue should be more transparent and justified.
New York State faces significant long-term fiscal challenges, with a structural imbalance exceeding $16.8 billion and projected budget gaps of $9.5 billion in fiscal year 2026 and $7.7 billion in fiscal year 2027. To stabilize the state's fiscal foundation and avoid future service cuts, the government must implement decisive spending restraint in the upcoming budget.
Recommendations related to Structural State Budget Balance
The State needs to implement significant spending restraint to stabilize and strengthen its fiscal foundation.
The State should take decisive action to rein in spending in the upcoming budget in order to stave off significant future cuts.
Key Data
$4.3 billion
— The reduced budget gap for the upcoming year.
$9.1 billion
— The previous estimate for next year's budget gap.
$9.5 billion
— The projected budget gap for fiscal year 2026.
$7.7 billion
— The projected budget gap for fiscal year 2027.
$9.1 billion
— The amount of prepayments, reserves, and sunsetting tax increases relied upon in fiscal year 2027.
$16.8 billion
— The State's long-term structural imbalance.
Medicaid, the single largest program in the state budget, costs $101 billion this year and has been a significant driver of spending growth. Improved data transparency regarding home care services is necessary to better understand these fiscal impacts, though specific measures to address the structural balance of the state budget are not proposed.
Key Data
$101 billion
— The cost of Medicaid in the current year, which is the single largest program in the State’s budget and a significant contributor to spending growth.
New York faces a projected $9 billion budget gap next year that will grow to $13 billion, eventually resulting in a $22 billion structural hole as temporary funding sources expire. To address this fiscal imbalance, the state must restrain spending growth, particularly in Medicaid and education, while avoiding further tax increases or the depletion of financial reserves.
Recommendations related to Structural State Budget Balance
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, the state should understand and reverse rapid cost growth in long-term care and other areas to reduce costs.
In economic development, the state should curtail — not expand — programs with dubious impacts.
The state should avoid another round of tax increases or drawing down reserves to close budget gaps.
Key Data
$9 billion
— Next year’s projected budget gap.
$13 billion
— The amount the budget gap grows to thereafter.
$22 billion
— The structural hole the state will face when temporary funds are removed.
9.0%
— The annual rate of state spending growth over the past three years.
5.2%
— The budgeted annual increase in state spending going forward.
$1.5 billion
— The amount budgeted for migrant costs over two years.
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 needs to strengthen its fiscal resilience by consolidating its reserves into a single, protected Rainy Day Reserve and mandating automatic deposits during periods of economic growth. Establishing a target reserve level of 22 percent of State Operating Funds would provide a necessary buffer to weather future recessions without resorting to harmful service cuts or tax increases.
Recommendations related to Structural State Budget Balance
Combine all principal reserves into the Rainy Day Reserve (RDR) lockbox immediately.
Deposit up to an additional $2.4 billion this year to the RDR this year.
Set a target for the RDR of 22 percent of SOF spending.
Increase the maximum RDR balance to 30 percent of SOF spending.
Mandate RDR deposits when the economy is growing.
Key Data
$27.9 billion
— The recommended rainy day savings level for fiscal year 2024, equal to 22 percent of State Operating Funds (SOF).
$2.4 billion
— The additional amount that should be deposited into the Rainy Day Reserve this year.
45 percent
— The portion of New York State's own source revenue that comes from the economically sensitive personal income tax.
$19.5 billion
— The current amount held in New York State's 'Principal Reserves'.
22 percent
— The recommended target for the Rainy Day Reserve as a percentage of State Operating Funds (SOF) spending.
30 percent
— The recommended maximum allowed balance for the Rainy Day Reserve as a percentage of State Operating Funds (SOF) spending.
New York State's enacted budget financial plan reveals that future budget gaps have doubled to $9.1 billion for the upcoming year and $13.4 billion by fiscal year 2027, driven by unsustainable recurring spending and downward revisions in tax receipt estimates. While reserves have grown to over $19 billion, these funds remain vulnerable due to the lack of a secure Rainy Day Reserve lockbox and the looming structural budget gap of more than $20 billion.
Recommendations related to Structural State Budget Balance
The State should release basic financial plans concurrently with the budget agreement to ensure transparency.
The State should protect its reserves by depositing funds into the Rainy Day Reserve lockbox.
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
— The State's annual structural budget gap.
$19 billion
— The amount of reserves the State has increased to.
The New York State Fiscal Year 2024 budget weakens the state's financial footing by increasing the long-term structural deficit to over $15 billion and adding billions in new spending without sufficient cost-control measures. This fiscal approach risks future service cuts and tax increases while failing to address critical housing and transit efficiency needs.
Recommendations related to Structural State Budget Balance
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 to address housing production and affordability crises.
The Governor and Legislature should strongly support identifying and implementing productivity improvements during this round of collective bargaining between the MTA and its unions to ensure an efficient transit system.
State officials should prioritize additional deposits to the Rainy Day Fund to better protect the state from economic downturns or severe emergencies.
Key Data
$15 billion
— The long-term structural deficit is projected to be well over $15 billion.
$5 billion
— The next year's budget gap is projected to be substantially beyond the $5 billion originally estimated in the Executive Budget.
$2.9 billion
— Up to $2.9 billion in efficiency improvements are possible for the Metropolitan Transportation Authority.
$1 billion
— The budget includes $1 billion to assist New York City in addressing the costs of asylum seekers.
The NYS FY 2024 budget framework was announced without sufficient financial transparency regarding new recurring spending and its impact on the state's structural budget gap. New York must publish detailed financial plan tables to clarify how the state intends to fund its $229 billion spending plan and ensure long-term fiscal stability.
Recommendations related to Structural State Budget Balance
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.
The State should restrain spending so that it can be supported by recurring receipts.
Key Data
$229 billion
— The total amount the State plans to spend in the Fiscal Year 2024 budget.
New York State's ongoing budget delay threatens fiscal stability and creates uncertainty, with a projected structural budget gap of $15 billion to $20 billion. Leaders must prioritize a budget that restrains spending growth and provides transparency through multi-year financial plan tables to ensure long-term economic health.
Recommendations related to Structural State Budget Balance
The State’s leaders should 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.
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 projected range of the State’s massive structural budget gap depending on the choices made in the budget.
$1 billion
— The amount of additional City spending that could be required due to State policies that remain unknown during the budget delay.
New York State faces a massive structural deficit of $15 billion to $20 billion, necessitating that any potential aid to the New York City Housing Authority for rent arrears be offset by savings elsewhere to avoid worsening long-term fiscal instability. Providing such one-time assistance must be conditioned on the housing authority implementing a plan to restore rent collection rates to pre-pandemic levels.
Recommendations related to Structural State Budget Balance
Any one-time aid provided to the New York City Housing Authority should be conditioned on the authority devising and implementing a plan to return its rent collection rate to pre-pandemic levels.
Given the State’s massive $15 billion to $20 billion structural deficit, any aid provided to the housing authority should be offset by savings found elsewhere so it does not exacerbate the State’s long-run fiscal instability.
The New York City Housing Authority should fix its deteriorating buildings through the Rental Assistance Demonstration (RAD) and the Preservation Trust, improve property management, and increase productivity through collective bargaining changes in its labor agreements.
The State could help the New York City Housing Authority reduce costs by reforming the Scaffold Law, and it should increase the Trust’s unit cap when needed.
The federal government can support the New York City Housing Authority by increasing funding for Tenant Protection Vouchers and providing procurement flexibility.
Key Data
$450 million
— Accumulated rent arrears for the New York City Housing Authority.
$15 billion to $20 billion
— The State's massive structural deficit.
59,811
— Number of households that requested rent decreases between March 2020 and February 2022.
35 percent
— Portion of occupied units that requested rent decreases between March 2020 and February 2022.
90 percent
— Previous norm for the New York City Housing Authority's rent collection rate.
65 percent
— Current rent collection rate for the New York City Housing Authority.
To ensure transparency regarding the state's fiscal condition, the Governor and legislative leaders are urged to publish basic, multi-year financial plan tables at the time of the budget agreement. This would allow the public and legislators to better understand the size, balance, and long-term impacts of the enacted budget, rather than waiting for detailed reports released weeks later.
Recommendations related to Structural State Budget Balance
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 reasonably disaggregated and totaled 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 the enacted budget.
The Legislature should include these financial plan tables with their one-house proposals to provide transparency on the size, balance, and out-year impacts of the budget.
New York State's budget proposals for fiscal year 2024 are unsustainable, with spending growth outpacing receipts and creating structural deficits of up to $20 billion by 2027. To ensure fiscal stability, the state must restrain spending, allow temporary tax increases to expire, and implement comprehensive budget management reforms.
Recommendations related to Structural State Budget Balance
Restrain SOF spending growth to 2 percent annually to bring spending trends in line with receipts and close forecast gaps.
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.
Maintain or expand the Governor’s Rainy Day reserves plan by dedicating more funding to the lockbox and automating future deposits.
Publish basic financial plan tables with the enacted budget so that New Yorkers can understand the fiscal impacts of their leaders' choices.
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 percent
— The year-over-year increase in adjusted State Operating Funds (SOF) spending from fiscal year 2022 to fiscal year 2023.
$2.4 billion
— The amount of new, recurring spending added in the Executive Budget.
$3.9 billion
— The amount of additional annual spending the Legislature proposes to add to adjusted State Operating Funds above the Governor’s proposal.
$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…
New York State's fiscal health is threatened by unsustainable spending growth and reliance on one-time budget maneuvers, which create a projected structural gap of $14.4 billion by fiscal year 2028. To ensure long-term stability, the state must restrain spending growth to 2 percent, reject tax increases, and improve fiscal transparency by publishing detailed financial plan tables.
Recommendations related to Structural State Budget Balance
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 when voted on.
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.
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.
Reject proposed Executive universal appropriation transfer authority and lump sum appropriations.
Require non-budget bills with fiscal impacts be accompanied by multi-year fiscal impact estimates.
Key Data
$14.4 billion
— The exposed structural budget imbalance in fiscal year 2028.
$7.2 billion
— The projected budget gap in fiscal year 2027.
$8.6 billion
— The projected budget gap in fiscal year 2026.
$2.4 billion
— The amount of new, recurring spending added in the Fiscal Year 2024 Executive Budget.
$5 billion
— The amount of annual tax revenues raised by 'temporarily' increasing business and personal income taxes in the Fiscal Year 2022 Enacted Budget.
$220 billion
— The total amount of State spending that requires a public, comprehensive performance measurement and management system.
New York faces a structural budget gap exceeding $12 billion annually, with projected gaps widening to $9.0 billion by fiscal year 2026. To ensure long-term fiscal stability, the state must align spending with recurring revenues and restrain the rapid growth in operating funds, which has averaged 7.1 percent annually over the last three years.
Recommendations related to Structural State Budget Balance
New York should focus on aligning spending with revenues, and should not create new fiscal cliffs.
The State should close its gaps, stabilize its finances and services, and be better positioned to protect New Yorkers by restraining spending growth above its already high level to be in line with its recurring revenue.
At least half of any MTA stabilization plan should come from productivity improvements that reduce spending, which will require changes agreed to with labor.
The State should avoid reversing the local share freeze for Medicaid costs, as increasing the amount local governments pay is a step backwards.
Key Data
$12 billion
— The structural budget gap New York faces annually.
$5.7 billion
— The projected budget gap in fiscal year 2025.
$9.0 billion
— The projected budget gap in fiscal year 2026.
$7.5 billion
— The projected budget gap in fiscal year 2027.
7.1 percent
— The average annual increase in State Operating Funds spending over the past three years.
12.8 percent
— The growth in State Operating Funds spending this year.
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. To ensure long-term stability, the state should limit spending growth, avoid creating new fiscal cliffs, and reform spending in areas like Medicaid and school aid for wealthy districts.
Recommendations related to Structural State Budget Balance
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 to unilaterally transfer spending authority.
Omit lump sum appropriations that are later allocated to programs not specified in the budget.
Publish financial plan tables with the one-house and enacted budgets to facilitate analysis.
Put Medicaid on a fiscally sustainable path to prevent it from blowing huge holes in future budgets.
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.
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 needs to be closed.
2 percent
— The recommended limit for average annual State Operating Funds spending growth through fiscal year 2028.
$2 billion
— The amount that should be added to the Rainy Day reserves beyond what is currently planned.
$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.
1 million
— The number of enrollees added to Medicaid over the past three years.
New York faces a $12 billion structural budget problem, necessitating a reduction in spending growth and the implementation of fiscal reforms to ensure long-term sustainability. Addressing this imbalance requires aligning major program costs with available revenues and rejecting the continuation of extraordinary executive budget powers.
Recommendations related to Structural State Budget Balance
The State should reduce State Operating Funds spending growth to 2 percent annually to eliminate the current 2027 budget gap and accommodate the loss of nonrecurring resources.
The State should reject the continuation 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 to bolster fiscal reserves.
The State should establish an independent fiscal analyst’s office, transition to budgeting on a modified accrual basis, and implement a performance management system to improve fiscal management.
Stabilizing the Metropolitan Transportation Authority’s operating budget should rely significantly more on efficiency savings rather than new revenue sources.
The State should identify the most cost-effective and achievable policies and projects from its menu of choices to begin making meaningful progress toward its climate goals.
A well-designed replacement for the now-expired 421-a tax credit program would help spur affordable and market rate rental housing production.
Key Data
$12 billion
— The total structural problem the State has in its sights for fiscal year 2027.
$6 billion
— The budget gap in fiscal year 2027 opened by updated projections.
$2 billion
— The amount of unallocated receipts the State should save for a rainy day.
$2.5 billion
— The annual structural operating budget deficit of the Metropolitan Transportation Authority.
$4.2 billion
— The amount of the environmental bond act approved by voters in the past two months.
$13 billion
— The amount of pandemic-related federal aid for schools that will be exhausted by the end of fiscal year 2025.
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 faces future budget gaps approaching $6 billion, with projections indicating a potential $12.7 billion shortfall by fiscal year 2028 if spending growth is not restrained. To ensure long-term fiscal stability, the state must prioritize maintaining reserves, limiting annual spending growth to 2%, and reforming major cost drivers like Medicaid and education aid.
Recommendations related to Structural State Budget Balance
First, stay the course on reserves to ensure the state has a lifeline for needy New Yorkers during the next recession.
Second, restrain spending growth, as limiting growth to 2% annually through 2028 would be enough to close that year’s $12 billion projected gap.
The state should charge a diverse panel of stakeholders to identify ways to transform not just Medicaid, but New York’s health system overall.
To stabilize the budget and increase equity, the state should better target education aid to high-need districts and reevaluate assistance to wealthy districts.
The state should implement comprehensive performance management to deliver high-quality, efficient services and focus funds where the impact is greatest.
The state should mind New York’s tax competitiveness, as New York already has the nation’s highest combined business and top personal income tax rates.
Key Data
$12.7 billion
— Projected budget gap for the year following FY 2027, accounting for the expiration of one-time money and the personal income tax surcharge.
$6 billion
— Projected future budget gap in the state financial plan by FY 2027.
2%
— Annual spending growth limit recommended through 2028 to close the projected $12 billion gap.
$10 billion
— Current amount of state reserves.
$19 billion
— Planned amount of state reserves over the next few years.
$3 billion
— Annual amount received by wealthy school districts that already self-fund a sound basic education.
The Metropolitan Transportation Authority faces a recurring structural deficit of approximately $2.5 billion annually, exacerbated by declining ridership and the depletion of federal COVID-19 aid. To achieve fiscal stability, the authority must implement efficiency-focused operating reforms and secure new revenue sources from the state to close remaining budget gaps.
Recommendations related to Structural State Budget Balance
The MTA should seize the opportunity and runway created by federal aid to implement efficiency-focused operating reforms and—to the extent possible—restructure its long-term debt, which would reduce its structural deficit before the region’s critical transit system risks falling off the fiscal cliff.
New York State should identify a new revenue source to provide $800 million in 2023 and $1.6 billion in 2024 and beyond to cover the remaining structural deficit.
The MTA should adopt a multi-year phase-in plan starting with efficiencies under the purview of management, followed by implementing changes collectively bargained with labor over time.
Key Data
$2.5 billion
— Recurring annual structural deficit projected by the MTA in the July 2022 Financial Plan.
$7.0 billion
— American Rescue Plan Act (ARPA) federal stimulus funds proposed to cover deficits through 2024.
$700 million
— Federal Emergency Management Agency (FEMA) reimbursement funds proposed to cover deficits through 2024.
$2.9 billion
— Amount borrowed from the Federal Reserve Board’s Municipal Liquidity Facility (MLF) during the pandemic.
$3.9 billion
— Debt service savings from restructuring and defeasing long-term debt from 2024 through 2028.
$800 million
— Additional aid requested from the State for 2023 to balance the budget.
New York State's fiscal outlook has weakened, with projected budget gaps growing from $310 million in fiscal year 2024 to $6.2 billion by fiscal year 2027 due to downward revisions in tax receipts. To maintain stability, the state must continue its plan to deposit $15.4 billion into reserves while identifying long-term cost savings in high-growth areas like Medicaid and school aid.
Recommendations related to Structural State Budget Balance
The State must build reserves to prepare for future economic uncertainty.
State leaders should vigilantly restrain spending growth to manage widening budget gaps.
The State needs to identify and implement long-run cost savings to address structural imbalances.
It is imperative that the State continue on the path of depositing $15.4 billion into reserves, at least until there is a recession.
The State should seek to reduce recurring spending, especially in high-growth areas such as Medicaid and school aid.
Key Data
$310 million
— Budget gap in fiscal year 2024.
$6.2 billion
— Projected budget gap by fiscal year 2027.
$15.4 billion
— Amount the State plans to deposit into reserves over four years.
$19.4 billion
— Total reserve balance after planned deposits.
$2.1 billion
— Increase in tax receipts for fiscal year 2023 based on collections to date.
$801 million
— Enhanced federal Medicaid funding provided for the next quarter.
New York State added $1.6 billion in capital projects to the fiscal year 2023 budget without rigorous evaluation or public consideration, undermining sound budgeting practices. These late additions, often funded through long-term borrowing, lack transparency and risk exhausting the state's debt capacity by fiscal year 2027.
Recommendations related to Structural State Budget Balance
The State should utilize a comprehensive capital planning process that identifies needs, project benefits, and allocates funds to projects that meet the greatest needs and deliver value.
The Governor and Legislature should stop using lump sum appropriations for capital projects or otherwise, as they pose a fiscal risk and lack 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
— in capital appropriations were added to the enacted fiscal year 2023 budget.
$920 million
— appropriated in a few lump sums that will go to projects and purposes identified behind closed doors.
$656 million
— appropriated for specific projects added to the enacted budget.
$418 million
— of the funding for the Buffalo Bills Stadium will be paid for with current money.
$1.2 billion
— of these projects may be financed through bonds, consuming State debt capacity.
New York State's Unemployment Insurance Trust Fund is currently insolvent, carrying over $8.1 billion in debt to the federal government that is not projected to be fully repaid until 2027. To address this, the state must weigh the trade-offs of using state revenues to accelerate debt repayment against the impact on other public services and the burden of higher tax rates on employers.
Recommendations related to Structural State Budget Balance
The State should pay off the Unemployment Insurance Trust Fund debt over time using higher tax rates, which is the standard practice.
The State could partially accelerate repayment of the Unemployment Insurance Trust Fund debt using State revenues, though this would require diverting resources from other programs.
The State could rapidly pay off the Unemployment Insurance Trust Fund debt using State revenues to provide immediate tax relief to employers.
Lawmakers should consider reforming the Unemployment Insurance system to ensure it is better equipped to meet claims during economic downturns and avoid regular borrowing from the federal government.
Key Data
$8.1 billion
— Outstanding debt owed to the federal government for the Unemployment Insurance Trust Fund as of June 7, 2022.
$14.7 billion
— Total unemployment payments made by New York State in 2020.
$2.65 billion
— Balance of the Unemployment Insurance Trust Fund in February 2020, prior to the pandemic.
$110 million
— Interest accumulated on Unemployment Insurance debt for the federal fiscal year 2022.
$6.5 billion
— Total unemployment insurance benefits paid out in New York in the second quarter of 2020.
$530 million
— Total unemployment insurance benefits paid out in New York in the fourth quarter of 2019.
New York State's fiscal plan balances the budget through 2027 by utilizing one-time resources and prepaying debt, but it faces a structural fiscal cliff with projected annual gaps of $8 billion starting in 2028. To ensure long-term stability, the state must exercise fiscal prudence, restrain spending growth in key areas like Medicaid and education, and improve transparency in the budget process.
Recommendations related to Structural State Budget Balance
The State should improve accountability and transparency, implementing performance management.
The State should actively develop plans to restrain Medicaid and education spending growth while delivering needed services and quality.
Maintaining balance and making these reserve deposits will require fiscal prudence, including adhering to spending targets and maximizing Rainy Day Fund deposits.
Next year, the Legislature and Governor should release basic financial plan tables with both the one-house and enacted budget bills.
Key Data
$222 billion
— All Funds spending, which is $36 billion higher than the budget two years ago.
$130 billion
— State Operating Funds spending, adjusting for off-budget shifts and payment timing.
$8 billion
— Projected annual budget gaps likely to open beginning in fiscal year 2028.
$15.4 billion
— Total planned deposits to reserves over a four-year period.
$10 billion
— Amount of debt service costs prepaid in fiscal years 2022 and 2023 to achieve budget balance.
$10.8 billion
— Portion of the $15.4 billion in reserve deposits allocated to the Rainy Day Fund lockbox.
New York State should publish basic, multi-year financial plan tables upon reaching a budget agreement to ensure transparency regarding the budget's size, balance, and multi-year impacts. Codifying this requirement in state law would provide legislators and the public with a timely understanding of the state's fiscal condition.
Recommendations related to Structural State Budget Balance
The State should publish basic, multi-year financial plan tables when agreeing on the Fiscal Year 2024 Enacted Budget to provide transparency on the size, balance, and out-year impacts of the enacted budget.
The State should include at least one financial plan table each for All Funds, State Operating Funds, and the General Fund to ensure a timely, basic understanding of the budget and its implications.
The State should include reasonably disaggregated and totaled lists of receipts, disbursements, transfers, annual bottom line results, and allocations of fund balances to provide transparency on the size, balance, and out-year impacts of the enacted budget.
The State should codify the requirement to publish basic financial plan tables in State law for both the one-house budget bills and enacted budget to ensure legislators and the public have a timely, basic understanding of the budget and its implications.
The Legislature should include these tables with their one-house proposals to provide basic transparency on the size, balance, and out-year impacts of the enacted budget.
$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 avoid adding new recurring programs without offsetting reductions to maintain fiscal balance. Building reserves to 15 percent of State Operating Funds is essential to protect the state against future economic downturns or emergencies.
Recommendations related to Structural State Budget Balance
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.
State leaders 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.
Key Data
$5 billion
— non-recurring funds available for fiscal year 2023
$10 billion
— proposed increase in State Operating Funds (SOF) spending next year
$2 billion
— amount to be allocated jointly with the Legislature
$1 billion
— amount identified in the consensus revenue forecast
$2.2 billion
— proposed homeowner tax rebate
15 percent
— of SOF spending that the Executive Budget includes in a multi-year plan to build reserves
New York's current tax structure, which includes the highest combined top personal income and corporate tax rates in the nation, threatens economic competitiveness and increases revenue volatility. To stabilize the state's fiscal foundation, the budget should allow recent tax increases to sunset while restraining spending.
Recommendations related to Structural State Budget Balance
The enacted State budget should allow the business tax increase to sunset to promote long-run competitiveness and stabilize the fiscal foundation.
The enacted State budget should restrain spending to allow the personal income tax increase to sunset sooner or at least as scheduled.
Key Data
22 percent
— The decline in New York's share of the nation's millionaires from 2010 to 2019.
The Fiscal Year 2023 Executive Budget includes a $25.9 billion increase in state operating spending over five years and relies on $5 billion in additional annual receipts. To ensure long-term fiscal stability, the state should restrain recurring spending, increase reserve funds to 17 percent of operating funds, and curtail school aid to wealthy districts.
Recommendations related to Structural State Budget Balance
New York’s competitiveness, stability, and recovery would be better served by taking steps to restrain recurring spending.
The State should start to roll back last year’s tax increases that made New York’s combined business and top personal income tax rates the highest in the nation.
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 needs to ensure Medicaid spending growth is affordable.
The State can restrain spending by curtailing school aid to wealthy districts, which provide enough local resources to fund a sound basic education.
The total reserve fund should be at least 17 percent of state operating funds, a commonly accepted national benchmark, which would require another $2.5 billion be added over time.
Key Data
$5 billion
— Additional receipts recognized in each of the next four years.
$2 billion
— Additional fund 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 as a percentage of state operating funds.
$2.5 billion
— Amount needed to be added to reserve funds to reach the 17 percent benchmark.
New York faces a looming $3.5 billion fiscal cliff, necessitating careful management of new and existing programs to ensure long-term fiscal stability. To maintain competitiveness and financial health, the state should allow previous tax increases to sunset, expand Medicaid cost-saving innovations, and enlarge the Rainy Day Fund.
Recommendations related to Structural State Budget Balance
The State must actively manage both new and existing programs to ensure they deliver the results New Yorkers deserve and pay for.
New York will be even more competitive if it allows last year’s personal income and business tax increases to sunset as in law.
The State should engage in long-term planning and prioritization to ensure the right projects are pursued.
The effort to identify Medicaid innovations that improve access and care and lower costs should be expanded to help transform New York’s entire health system.
The State should enlarge the Rainy Day Fund to better prepare for future fiscal uncertainty.
The State should implement a performance management system to ensure New Yorkers get the maximum value from their government.
Key Data
$3.5 billion
— The amount of the looming fiscal cliff facing the State budget.
New York faces a potential fiscal cliff as federal pandemic aid expires, necessitating the identification of recurring savings to avoid drastic service cuts and the strengthening of rainy day reserves. To ensure long-term fiscal stability, the state should transition to generally accepted accounting principles, improve budget transparency, and reduce reliance on volatile personal income tax receipts.
Recommendations related to Structural State Budget Balance
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 deposit any receipts above the current projections to the Rainy Day Fund and Retiree Health Benefits Trust to build a stronger fiscal future.
The State should transition to budgeting and reporting in accordance with Generally Accepted Accounting Principles (GAAP), rather than using a cash basis for budgeting and reporting that leaves the door open to fiscal gimmickry.
The Governor and Legislature should allow budget bills to age and should release basic financial plan information before and after the budget is enacted to improve transparency.
The State should lower, reverse, or at least allow the latest tax increases to sunset to reduce fiscal risk and improve economic competitiveness.
Key Data
$3.5 billion
— Recurring program spending supported by federal aid in fiscal year 2025 but not thereafter.
$19.6 billion
— Estimated two-year impact of a typical recession.
$8.9 billion
— Projected State Operating Funds spending increase in fiscal year 2022.
$3.2 billion
— Projected State Operating Funds spending increase in fiscal year 2023.
New York State's reliance on one-time federal aid to support recurring expenses creates a $3.5 billion fiscal cliff by fiscal year 2025, while accounting maneuvers continue to obscure the true level of state spending. To ensure long-term fiscal stability, the state must improve financial transparency, adopt Generally Accepted Accounting Principles, and identify actions to reduce out-year budget gaps.
Recommendations related to Structural State Budget Balance
The State should identify actions to reduce the existing out-year gaps, avoid the fiscal cliff, and bolster reserves needed to mitigate the inevitable next downturn.
The State should shift to budgeting and reporting using Generally Accepted Accounting Principles (GAAP) to ensure financial transparency.
The State should present clear, timely financial reports that display the true level and growth of State spending.
The State should retain flexibility in how it will reduce future budget gaps, including restraining new aid growth for wealthy districts.
The State should forego fiscal maneuvers to make clear how accounting practices affect spending growth.
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.
15.5 percent
— The projected increase in State Operating Funds spending in fiscal year 2022 after adjusting for fiscal maneuvers.
5.7 percent
— The decline in State Operating Funds spending in fiscal year 2021 after adjusting for fiscal maneuvers.
$12.7 billion
— The amount of American Rescue Plan federal fiscal relief the State received in May 2021 to be disbursed over four years.
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. Although $2.4 billion has been added to reserve funds, the resulting $7.2 billion total remains insufficient to adequately weather future economic downturns.
Recommendations related to Structural State Budget Balance
The vast majority of the additional $3 billion in receipts should be deposited into Rainy Day reserves.
The State should have more than $7.2 billion on hand in Rainy Day reserves to help weather its next downturn.
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 projected 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 faces significant budget gaps in fiscal years 2024 and 2025, despite a temporary influx of federal aid that masks underlying structural spending issues. To ensure long-term fiscal health, the state must utilize the next two years to restructure its spending to be more sustainable rather than relying on one-time revenue sources.
Recommendations related to Structural State Budget Balance
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 federal funds are depleted.
Key Data
$5.7 billion
— The amount by which the Governor’s Fiscal Year 2022 Executive Budget plus reported restorations would increase State Operating Funds (SOF) spending.
$9.6 billion
— The projected surplus over fiscal years 2021 through 2023 resulting from the Governor’s Executive Budget, additional state aid, and higher revenue forecasts.
$1.3 billion
— The estimated spending added in the current year if the State restores major savings actions proposed in the Executive Budget.
$3.2 billion
— The estimated spending added in fiscal year 2022 if the State restores major savings actions proposed in the Executive Budget.
$2.8 billion
— The estimated average annual spending added over the three years following fiscal year 2022 if the State restores major savings actions proposed in the Executive Budget.
$12.6 billion
— The amount of direct federal funding provided to the State through the American Rescue Plan.
New York's legislative budget proposals rely on unnecessary tax increases and spending hikes that threaten long-term fiscal stability, despite projections showing revenues are already higher than pre-pandemic levels. Instead of raising taxes, the state should leverage federal aid to restructure spending in education and Medicaid to ensure sustainable, efficient service delivery.
Recommendations related to Structural State Budget Balance
The State should build long-term fiscal stability by prudently budgeting federal aid, restructuring school aid to focus resources on needy districts, and curtailing unproductive economic development programs.
The State should revive the Medicaid Redesign Team (MRT) and expand its charge to identify additional Medicaid efficiencies and fix, rather than eliminate, the Global Cap.
State education increases should be directed toward high need districts, while support for districts raising sufficient local resources should be held flat or reduced.
The Foundation Aid formula should be modernized to account accurately for support provided by local resources.
American Rescue Plan funds should be spread over the coming years to support the transition to a sustainable system that supports a sound basic education for all students.
Key Data
$9.6 billion
— Projected State surplus over the next 2 years if the Executive Budget is adopted as is.
$7 billion
— Annual new revenue generated by proposed tax increases on high income earners and businesses.
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.
$1 billion
— Annual amount provided to school districts that already raise enough resources locally to provide a sound basic education.
16.49 percent
— Combined State, City, and MTA tax rate for New York City businesses, which is the highest in the nation.
Federal aid provides a temporary bridge to stabilize New York's finances, but the state and city must use these funds to restructure government operations rather than supporting new ongoing expenses. By implementing efficiency initiatives, consolidating benefit funds, and targeting education aid to high-need districts, the government can close future budget gaps without raising taxes.
Recommendations related to Structural State Budget Balance
Focusing the state’s education aid on high-need districts instead of increasing funds to wealthy ones could provide significant savings.
The state should eliminate unproductive economic development programs and temporarily change financing of some capital programs.
The city should over two years phase in efficiency initiatives, totaling 3 to 5% of city-funded agency spending.
The 108 union-administered benefit funds could be consolidated, and employees could contribute to their health insurance like state employees and those in the private sector.
Sanitation routes could be lengthened so that trucks are filled before they are tipped.
Key Data
$5 billion
— Projected annual budget gaps the city faces in the future.
$25 billion
— Federal funds that will erase more than 40% of the state's pandemic-related revenue shortfall.
$1 billion
— Annual labor cost reduction potential through productivity enhancements and benefit changes.
3 to 5%
— Targeted efficiency initiatives of city-funded agency spending to be phased in over two years.
The American Rescue Plan offers a critical opportunity to stabilize New York's short- and long-term finances by using federal aid to bridge fiscal gaps while improving government efficiency. To ensure long-term stability, the state and city must align recurring revenues with the cost of essential services without relying on tax increases that could drive away residents and businesses.
Recommendations related to Structural State Budget Balance
The State and City should use federal money wisely to support COVID-related needs and spread aid over time while taking clear action to increase government efficiency.
The State and City must implement improvements in government efficiency, effectiveness, and quality over the long run to avoid kicking their fiscal reckoning down the road.
The State and City should ensure that recurring revenues are sufficient to support critical services without being so high that they risk driving away residents and businesses.
New York State should leverage significant federal aid and favorable tax projections to close near-term budget gaps without raising taxes or cutting essential services. To ensure long-term fiscal stability, the state must restructure spending, particularly in Medicaid and economic development, while rejecting unnecessary executive budget powers and cost shifts to local governments.
Recommendations related to Structural State Budget Balance
The State should not increase rates or delay cuts to personal income taxes to maintain economic competitiveness.
Legislators should use federal aid wisely to stabilize the State’s finances in both the near and long term rather than supporting recurring spending.
The Legislature should reject extraordinary Executive budget powers to reduce or hold back spending, transfer appropriations unilaterally, or issue debt for operating purposes.
The Enacted Budget should smooth year-to-year school aid and target spending to districts with the greatest need.
The State should prudently budget marijuana and mobile sports wagering revenues by allocating the vast majority in the budget process rather than dedicating them.
The State should reject and reverse cost shifts to local governments, including the NYC-specific cut to public health matching funds and the elimination of the State-share Medicaid Indigent Care Pool.
Legislators should reduce unproductive economic development spending and modify capital financing to offset harmful spending reductions.
The Legislature should reform other post-employment benefits (OPEB) financing by implementing a tiered cost-sharing structure for future retirees.
The State should enact the “rail-advantaged housing” proposal to encourage development in transit-oriented areas and improve housing supply.
The State should revive and transform the Medicaid Redesign Team into a Health System Transformation Team to identify efficiencies and address broader health system issues.
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 resources that could be provided over four years by shifting capital financing and reducing unproductive economic development spending.
$12.6 Billion
— The amount of direct federal aid New York State would receive under current congressional drafts.
$10.6 Billion
— The amount of federal aid provided to local governments under current congressional drafts.
$2.5 Billion
— The amount of recurring savings the Medicaid Redesign Team was reconvened to identify.
New York State can achieve a balanced budget without raising personal income taxes by utilizing updated tax receipt projections and federal aid, which are expected to exceed initial worst-case estimates. Long-term fiscal stability should be pursued through structural spending reforms, such as eliminating unproductive economic development expenditures and better targeting education aid.
Recommendations related to Structural State Budget Balance
The State should eliminate unproductive economic development spending to help balance the budget.
The State should appropriately finance capital investment as a means to achieve structural balance.
The State should target education aid to low wealth school districts to improve fiscal efficiency.
The State should take actions to restructure State spending to put the State on better fiscal footing in the long run.
Key Data
$6 billion
— The amount of additional federal aid characterized as the 'worst case' scenario for the state budget.
$1.6 billion
— The annual increase in projected tax receipts that offsets the cumulative value of proposed income tax changes.
20 percent
— The portion of the State Operating Funds budget financed by the top 1 percent of earners.
New York State's fiscal plan for 2022 relies on federal aid and tax increases to close significant budget gaps, but alternative strategies like debt financing for capital projects and pausing economic development spending could achieve balance without these measures. These structural adjustments would allow the state to avoid tax hikes and spending cuts while maintaining long-term fiscal stability.
Recommendations related to Structural State Budget Balance
If the State reduces its planned capital disbursements by 10 percent and finances up to 50 percent of the remaining paygo capital spending with debt, it would save $1.6 billion in fiscal year 2022.
A 50 percent reduction in proposed economic development capital spending plus financing 50 percent of the remaining paygo spending with debt would yield another $713 million in fiscal year 2022.
The State should smooth the year-to-year fluctuations in aid to avoid a sudden drop-off.
The overall distribution approach should focus on directing aid to high need districts and reducing aid to wealthier districts.
To avoid adding to already high outstanding debt levels, the State should focus its capital investments on the most critical projects during this period.
Key Data
$1.6 billion
— Savings in fiscal year 2022 from reducing planned capital disbursements by 10 percent and financing up to 50 percent of the remaining paygo capital spending with debt.
$713 million
— Yield in fiscal year 2022 from a 50 percent reduction in proposed economic development capital spending plus financing 50 percent of the remaining paygo spending with debt.
$3.1 billion
— Amount of federal education aid to be disbursed in fiscal year 2022.
$1.2 billion
— Amount of federal education aid to be disbursed in fiscal year 2023.
$1.6 billion
— Amount of State aid currently disbursed to high-income districts that already support a sound basic education without State funding.
$15 billion
— Initial estimate of annual tax receipts shortfalls caused by the pandemic.
New York State should avoid using long-term debt to fund operating expenses, relying instead on spending restraint and fiscal stability plans to close budget gaps. Any necessary borrowing must be strictly limited, transparently reported under Generally Accepted Accounting Principles (GAAP), and approved only after exhausting other less harmful strategies.
Recommendations related to Structural State Budget Balance
The State should balance this year’s budget without long-term borrowing for operating expenses.
The amount of borrowing used 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.
Any 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 such a 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 amount of debt the State is proposed to have the authority to issue for operations.
$1.7 billion
— The amount of Medicaid payments the State shifted by three days to obscure its fiscal condition.
$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.
New York State faces significant long-term fiscal challenges, with budget gaps extending beyond fiscal year 2023 despite projected tax receipts. To ensure financial stability, the state should prioritize structural spending reforms, such as reducing aid to wealthy school districts and shifting capital project funding to debt, rather than relying solely on federal aid or tax increases.
Recommendations related to Structural State Budget Balance
The State should pursue structural spending reforms to ensure that its finances are stable coming out of the recession.
The State should reduce aid to wealthy school districts as a less harmful measure before considering personal income tax increases.
The State should eliminate wasteful economic development spending as a less harmful measure before considering personal income tax increases.
The State should shift cash spending on capital projects to debt as a less harmful measure before considering personal income tax increases.
Key Data
$6 billion
— Baseline assumption of federal aid included in the Executive Budget.
$15 billion
— Amount of federal aid the State hopes to receive to wipe out near-term deficits.
New York State faces significant budget gaps, requiring a combination of spending cuts, federal aid, and revenue adjustments to achieve structural balance. The state must avoid fiscal gimmicks like shifting costs to local governments or converting short-term debt to long-term obligations, instead focusing on targeted spending reductions and realistic revenue projections.
Recommendations related to Structural State Budget Balance
The Executive Budget should present a plan to close the entire State budget gap if it does not receive federal aid.
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.
The State should avoid balancing this year’s budget using cost shifts or revenue intercepts that harm local governments.
The Fiscal Year 2022 Executive Budget should limit capital expenses to investments that are necessary to maintain critical infrastructure, preserve public health and safety, and provide demonstrable economic benefits.
The State should not convert short-term debt to long-term debt to fund current operations.
Key Data
$8.2 billion
— The reported budget gap for New York State in the current fiscal year.
$16.7 billion
— The projected budget gap for New York State in fiscal year 2022, absent recurring local aid cuts.
$2.6 billion
— The amount of payments to localities, school districts, nonprofits, and state vendors that the State had withheld as of the end of September.
$3.5 billion
— The amount of short-term debt the State reportedly plans to repay within the current fiscal year, which it should not convert to long-term debt.
$4.1 billion
— The amount of pay-as-you-go capital spending included in the Fiscal Year 2021 Enacted Budget.
New York State faces a $58 billion budget gap over the next four years, exacerbated by the pandemic and a history of using fiscal maneuvers to obscure spending growth. To achieve structural balance, the state must implement a transparent plan that includes reducing school aid to wealthy districts, eliminating unproductive economic development spending, and walking back tax policy expenditures.
Recommendations related to Structural State Budget Balance
The State should reduce school aid to wealthy districts to help close the $8 billion budget gap.
The State should finance capital projects with bond proceeds rather than on a pay-as-you-go basis.
The State should eliminate unproductive economic development spending to improve the structural budget balance.
The State should walk back tax policy expenditures to address the projected budget gaps.
The State should avoid relying on fiscal maneuvers and accounting shifts that have obscured spending growth and exacerbated budget pressures.
Key Data
$58 billion
— Projected budget gaps for the New York State budget over the next four years.
$8 billion
— The amount of unidentified budget balancing actions assumed in the spending targets to close the budget gap.
$69 billion
— The total receipts shortfall for the State budget without accounting for Fiscal Year 2021 Enacted budget actions.
$1.7 billion
— The amount of Medicaid payments deferred into fiscal year 2021.
New York can address its fiscal deficits by eliminating inefficient spending, such as $1.6 billion in aid to wealthy school districts and $4.4 billion in ineffective economic development programs, rather than implementing a stock transfer tax. The state should instead utilize its $3.5 billion in rainy day funds, bond $3 billion in capital investments, and consider delaying scheduled tax cuts or suspending specific sales tax exemptions to achieve a balanced budget.
Recommendations related to Structural State Budget Balance
The state should eliminate the $1.6 billion in aid provided to school districts that already possess sufficient local resources to fund a sound, basic education.
New York should curtail $4.4 billion in economic development spending that has demonstrated little impact, particularly in upstate communities.
The state should utilize its $3.5 billion in rainy day funds to help balance the budget during the current financial crisis.
New York should finance $3 billion in capital investments through bonds instead of using cash to preserve essential services.
The state should consider delaying the Jan. 1, 2021 personal income tax cut as part of a sustainable and balanced budget package.
New York should consider suspending the sales tax exemption on clothing to help achieve a balanced budget.
Key Data
$1.6 billion
— Aid provided to school districts with more than enough local resources to fund a sound, basic education.
$4.4 billion
— Economic development spending that has demonstrated little impact, particularly in upstate communities.
$3.5 billion
— Available rainy day funds that can be used to balance the budget.
$3 billion
— Capital investments that can be financed through bonds instead of cash.
New York State and City face significant budget gaps in fiscal years 2021 and 2022, necessitating a focus on expenditure control and federal aid rather than tax increases that could harm economic competitiveness. High combined corporate and personal income tax rates already place New York at a competitive disadvantage, contributing to a declining share of the nation's millionaires and their associated tax revenues.
Recommendations related to Structural State Budget Balance
Improving the fiscal outlook for both the State and the City primarily requires controlling expenditures and advocating for federal aid.
Any consideration of tax increases should include the impact on State and local economic competitiveness.
As New York’s leaders look to close budget gaps, they must be cognizant that combined State and City PIT rates are the second highest in the nation, while combined CFT rates are the highest.
Key Data
$8 billion
— Potential budget gap for New York State in fiscal year 2021.
$15 billion
— Potential budget gap for New York State in fiscal year 2022.
$1.6 billion
— Potential budget gap for New York City in fiscal year 2021.
$6.9 billion
— Potential budget gap for New York City in fiscal year 2022.
16.49 percent
— The sum of the State effective tax rate, City rate, and MTA taxes on businesses operating in New York City.
12.696 percent
— The top personal income tax rate imposed in New York City when combining state and local rates.
New York State faces significant budget gaps through fiscal year 2024, requiring a combination of expenditure reductions, asset sales, and temporary tax policy changes to maintain fiscal stability. By applying a strategic framework to balance revenues and expenditures, the state can avoid the most severe cuts to essential services while preserving long-term economic competitiveness.
Recommendations related to Structural State Budget Balance
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 can reduce school aid by $800 million in the current year without undermining districts’ ability to fund a constitutionally guaranteed SBE if the distribution of cuts is based on district need.
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.
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.
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.
$800 million
— A local aid decrease of $800 million should be sufficient to help close the budget gap.
$774 million
— Temporarily suspending the sales tax exemption on clothing items costing less than $110 would generate $774 million in additional resources in fiscal year 2021.
$3.1 billion
— The State would need to use $3.1 billion of its reserves in fiscal year 2021 to help close the budget gap.
$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.
The Medicaid Redesign Team's proposals fall short of the $2.5 billion savings target by $851 million, leaving the state's financial plan with a significant deficit. Fundamental reforms to the Medicaid program, including improved transparency and structural changes to the Global Cap, are necessary to ensure fiscal goals are met without relying on fiscal gimmicks.
Recommendations related to Structural State Budget Balance
The State should implement needed improvements to transparency and the Global Cap’s accounting and design to prevent fiscal gimmicks.
The State should ensure critically important data is publicly provided regularly, including spending data for all Medicaid agencies and unit costs of services.
The final negotiated budget should include fundamental fixes to the Medicaid program that will ensure reforms meet fiscal goals while minimizing negative impacts on the state’s health care system and patients.
The Executive and Legislature should commit to making fiscal and statutory details available promptly.
Key Data
$2.5 billion
— Savings target for Medicaid in fiscal year 2021.
$851 million
— Shortfall in the State financial plan resulting from the MRT's proposals.
$890 million
— Recurring savings taken in fiscal year 2020.
$1.6 billion
— Total savings included in the MRT's own proposals.
$1.7 billion
— Payment delay resulting from fiscal maneuvers made in March 2019.
$1 billion
— Funding provided by the Indigent Care Pool to hospitals serving predominantly Medicaid and uninsured patients.
New York State faces significant fiscal uncertainty due to the pandemic, with projected revenue shortfalls potentially reaching $34 billion over three years and an existing $18 billion Medicaid budget gap. To maintain fiscal health, the state must enact a 'bare bones' budget that prioritizes essential services and pandemic response while avoiding tax increases and implementing structural Medicaid reforms.
Recommendations related to Structural State Budget Balance
The Governor and Legislature should quickly enact a “bare bones” budget that supports the estimated pandemic response need while limiting spending and avoiding the shifting of Medicaid costs to New York City and counties.
State leaders should not consider tax increases at this time because 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 about the economic and fiscal impacts of the pandemic.
The state should leverage and continue the work of the Medicaid Redesign Team (MRT) to design appropriate responses to the unsustainable, unbudgeted expenditure growth in the Medicaid program.
The state should appropriately use emergency federal aid to replace lost tax revenues or support the pandemic response, rather than using it to substitute for necessary structural reforms to the State Medicaid program.
Key Data
$4 billion
— Estimate of revenues 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 State’s $35 billion five-year budget gap caused by unsustainable, unbudgeted Medicaid expenditure growth.
$4.5 billion
— Potential relief provided through a temporarily increased federal share for Medicaid.
New York State's reported budget growth often masks higher actual spending through accounting maneuvers and reclassifications, such as shifting disbursements off-budget. The fiscal year 2021 budget, while targeting under 2 percent growth, relies heavily on achieving $2.5 billion in unspecified Medicaid savings to meet that benchmark.
Recommendations related to Structural State Budget Balance
The Legislature should be mindful that spending is already larger than it appears when considering the budget and its wish list.
Key Data
$2.5 billion
— Amount of Medicaid savings that the fiscal year 2021 budget is dependent on to hold spending growth below 2 percent.
$6.2 billion
— 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.
$110.4 billion
— Total proposed State Operating Funds spending in fiscal year 2021.
4.2 percent
— Rate at which State Operating Funds spending would increase absent the identified Medicaid savings.
$4.5 billion
— Amount of disbursements being shifted out of fiscal year 2021 State Operating Funds spending.
1.9 percent
— Reported State Operating Funds growth rate for fiscal year 2021.
New York faces a significant fiscal imbalance with a projected $28.8 billion four-year budget gap driven by accelerating spending in Medicaid and school aid rather than revenue declines. To address this, the state should prioritize restraining spending and identifying recurring savings rather than increasing taxes, which could harm economic competitiveness.
Recommendations related to Structural State Budget Balance
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
$28.8 billion
— The total four-year budget gap facing New York State.
$6.1 billion
— The projected budget gap for the next fiscal year.
$12.5 billion
— The amount of previously unbudgeted Medicaid spending contributing to the total four-year state budget gap.
$4.4 billion
— The amount New York spends annually on economic development programs.
$1.6 billion
— The amount of state school aid received by wealthy districts with sufficient local resources to provide a sound basic education.
$35 billion
— The potential revenue shortfall from a recession that could be added to the state's identified budget gaps.
New York State's financial plan adds billions in previously unbudgeted Medicaid spending, increasing the four-year budget gap by $14.5 billion. To address this structural imbalance, the state must move beyond payment deferrals and gimmicks to implement a comprehensive savings plan that includes reevaluating school aid and economic development programs.
Recommendations related to Structural State Budget Balance
The State should develop and implement a plan to solve the entire budget problem by considering other portions of the budget, including mistargeted school aid and unproductive economic development programs.
The State should present a comprehensive savings plan to address the Medicaid-driven budget gap rather than relying on payment deferrals and delays.
Key Data
$4 billion
— Previously unbudgeted Medicaid spending added to the financial plan in fiscal year 2020.
$3 billion to $4 billion
— Previously unbudgeted Medicaid spending added to the financial plan annually thereafter.
$14.5 billion
— The increase to the four-year budget gap resulting from the newly recognized Medicaid spending.
$2 billion
— The amount of a permanent payment deferral used to paper over the structural budget problem.
The state is considering 19 bills that would increase pension and disability benefits, creating significant long-term fiscal liabilities. These legislative proposals threaten the structural balance of the state budget by adding recurring costs without identifying sustainable funding sources.
Recommendations related to Structural State Budget Balance
Governor Cuomo should veto the 19 benefit sweetener bills to prevent unnecessary increases in state and local government pension and disability costs.
The state should reject legislative proposals that increase retirement and disability benefits without a clear, sustainable funding source to maintain fiscal stability.
Policymakers should avoid enacting new benefit enhancements that exacerbate the state's long-term fiscal liabilities and structural budget imbalances.
Key Data
$41.100 Million
— The estimated cost for establishing a 20-year retirement plan for law enforcement members, including officers in the Department of Environmental Conservation and regional state park police.
$15.700 Million
— The estimated first-year cost for requiring New York City paraprofessionals to join the Teachers' Retirement System.
$5.600 Million
— The annual cost increase associated with allowing retirement credit for New York City Police Department Cadet Program time.
$2.760 Million
— The cost associated with allowing Tier 6 uniformed court officers to retire without early age reduction upon attaining 30 years of service and age 55.
$2.090 Million
— The cost for granting Nassau County ambulance medical technician supervisors and technicians an enhanced disability benefit for injuries sustained in the performance of duty.
$1.520 Million
— The cost for allowing Nassau County sheriff and correction officers to receive performance of duty benefits due to intentional or reckless acts by civilians.
New York State's reported spending growth of 2 percent is misleading due to accounting maneuvers like shifting expenses off-budget and prepaying debt, which mask an actual spending growth of 4.9 percent. These practices undermine fiscal transparency and make it difficult to accurately assess the state's true budgetary trajectory.
Key Data
4.9 percent
— The projected growth of State Operating Funds spending in fiscal year 2020 when accounting for spending adjustments.
$4.7 billion
— The 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 resulting from shifting the Metropolitan Commuter Transportation Mobility Tax off-budget.
$1.5 billion
— The amount of debt service payments for fiscal year 2020 that were prepaid in fiscal year 2019.
$1.24 billion
— The amount by which State Operating Funds spending appears lower due to the reclassification of School Tax Relief benefits.
$1.7 billion
— The total decrease in reported State Operating Funds spending in fiscal year 2019 resulting from various shifts and reclassifications.
The proposed New York Health Act would require an unprecedented tax increase and federal waivers to fund, while potentially allocating 76% of the state budget to health, creating significant fiscal instability. Instead of this single-payer approach, the state should pursue targeted reforms like insurance mandates, low-cost public plan options, and value-based provider payments to improve access and affordability without destabilizing the budget.
Recommendations related to Structural State Budget Balance
The State should implement a State mandate requiring individuals to have insurance, which would likely increase coverage, reduce costs for some individuals, and lower the State’s uncompensated care costs.
The State should create a new, low-cost public plan that a defined population of individuals and groups could purchase at their own expense.
The State should promote increased use of mechanisms that promote competition and transparency, such as reference pricing and value-based provider payments.
The State could explore expanding insurance subsidies to noneligible immigrants and to those earning between 200 percent and 400 percent of the federal poverty level.
The State could pilot a geographic global budget, paying a coalition of providers a lump sum to care for the population in their area.
Key Data
$119 billion
— Projected annual funding required for the New York Health Act in 2022.
$179 billion
— Projected annual funding required for the New York Health Act in 2031.
156 percent
— Minimum tax increase required to fund the New York Health Act.
$139 billion
— First-year cost of the New York Health Act.
$210 billion
— Annual cost of the New York Health Act within 10 years.
$33.5 billion
— Potential annual tax revenue loss if 0.5 percent of top income bracket filers leave New York.
The New York State fiscal year 2020 budget agreement fails to adequately prepare for economic downturns by neglecting to build sufficient rainy day reserves while continuing to increase spending beyond necessary levels. Reliance on temporary revenue sources and the continuation of inefficient tax credits further undermines the state's long-term fiscal stability.
Recommendations related to Structural State Budget Balance
State leaders should restrain spending growth and increase the State's paltry rainy day funds to address potential budget imbalances.
The State should bolster reserves to a level needed to stave off the potentially damaging impacts of a recession.
Policymakers should limit fee exemptions for the congestion pricing program to preserve projected revenues and traffic reduction.
The State should phase out the temporary personal income tax surcharge to soften the impact of the federal cap on state and local tax deductions and ease options to raise revenues for future recessions.
Key Data
$3 billion
— The size of the Rainy Day Reserve fund, which is insufficient compared to potential recessionary gaps.
$34 billion
— The estimated three-year potential budget gap in the event of a recession.
$1 billion
— The amount by which school aid will grow in the adopted budget.
$840 million
— The amount of school aid allocated that exceeds what is needed to ensure a sound basic education.
$820 million
— The amount allocated to economic development capital spending.
$1.3 billion
— The cost to taxpayers for the property tax relief credit in fiscal year 2020.
New York State faces significant fiscal risk due to its heavy reliance on volatile personal income tax revenues from high-income earners, which could lead to multi-billion dollar budget gaps during a recession. To ensure long-term structural balance, the state must constrain operating spending growth to 2 percent and increase deposits into rainy day reserves to better prepare for inevitable economic downturns.
Recommendations related to Structural State Budget Balance
Final agreement on the Adopted Budget for Fiscal Year 2020 should constrain spending growth and make additional deposits to rainy day funds.
State leaders should reduce spending growth to at most 2 percent and increase reserves.
The state should amend statute (92-CC of the state finance law) to allow for deposits of more than 0.5 percent of general fund expenditures.
Larger deposits are required to forestall drastic service cuts and to prevent counterproductive tax increases in the midst of a recession.
Key Data
$2.6 billion
— Amount by which current-year personal income tax collections were lower than projected.
$22 billion and $44 billion
— Range of potential tax revenue shortfalls below projections over three years in the event of a recession.
$19 billion
— Annual personal income tax revenues collected from the top 1 percent of personal income tax filers.
$34.1 billion
— Three-year cumulative tax revenue shortfalls if a hypothetical recession begins in fiscal year 2021.
$33.4 billion
— Amount of budget gaps that would need to be closed by other actions, as current reserves are insufficient.
$2.5 billion
— Projected balance of the rainy day reserves at the end of fiscal year 2020.
New York State's reported State Operating Funds spending growth of 1.9 percent masks an actual growth rate of 3.4 percent due to various accounting maneuvers, such as shifting expenses off-budget and reclassifying items. The Legislature should be aware that actual spending growth is higher than reported when evaluating the budget and its associated spending plans.
Recommendations related to Structural State Budget Balance
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.
$4.1 billion
— Amount of spending shifted out of fiscal year 2020 State Operating Funds.
$2.5 billion
— Amount of spending shifted out of fiscal year 2019 State Operating Funds.
$106,154 million
— Actual State Operating Funds spending in fiscal year 2020.
$102,011 million
— Reported State Operating Funds spending in fiscal year 2020.
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 .
8 is the number of years Andrew Cuomo has served as the 56th Governor of New York State. CBC's David Friedfel and Patrick Orecki join the podcast to discuss the demographic, fiscal, and policy trends of the last 8 years.
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 self-imposed 2 percent spending growth cap has been undermined by accounting maneuvers, such as shifting expenses off-budget and reclassifying costs, resulting in an actual budget increase of 4.5 percent. These budgetary shifts and reclassifications artificially reduced state operating funds spending by $674 million in fiscal year 2018 and $3.107 billion in fiscal year 2019, masking the true growth of state expenditures.
Key Data
4.5 percent
— Actual increase in the state budget from fiscal year 2018, which exceeds the self-imposed 2 percent growth cap.
$3.107 billion
— Total decrease in fiscal year 2019 state operating funds spending resulting from accounting shifts and reclassifications.
$674 million
— Total decrease in fiscal year 2018 state operating funds spending resulting from accounting shifts and reclassifications.
$1.5 billion
— Amount of the Metropolitan Commuter Transportation Mobility Tax shifted directly to the Metropolitan Transportation Authority to reduce state operating funds spending.
$862 million
— Reduction in state operating funds spending in fiscal year 2019 due to changing School Tax Relief (STAR) benefits to a personal income tax benefit.
$435 million
— Amount of Master Settlement Agreement revenues used to reduce fiscal year 2019 state operating funds spending by paying Medicaid expenses off-budget.
The New York State Fiscal Year 2019 Budget relies on short-term measures to close budget gaps rather than implementing necessary spending reforms, while increasing school aid and economic development spending without sufficient accountability or targeting. Additionally, the budget forces New York City to contribute $418 million to the Subway Action Plan and extends $1.3 billion in property tax relief credits, despite the need for more sustainable fiscal policies.
Recommendations related to Structural State Budget Balance
New York State should prioritize restraint in and reform of spending commitments rather than relying on short-term measures to close budget gaps.
The State should implement substantial adjustments to better target school aid dollars to high-need school districts.
The State should implement a "database of deals" and other actions to improve the transparency, accountability, or efficacy of economic development investments.
State officials must vigilantly monitor and assess the effects of tax code changes on taxpayers and the economy.
State officials should design and adopt an Unincorporated Business Tax for pass-through entities during the Legislative Session.
Key Data
$1 billion
— The amount by which school aid will grow in the FY2019 budget without substantial adjustments to better target dollars to high-need school districts.
$600 million
— The minimum amount by which economic development spending will grow without actions to improve transparency, accountability, or efficacy.
$1.3 billion
— The annual cost of wasteful property tax relief credits that will be extended.
$418 million
— The amount the City of New York is forced to provide for the Subway Action Plan or face having its sales tax revenues withheld.
$1 billion
— The amount of an unplanned tax increase that will be eliminated by the State's decoupling from the federal tax code.
The state's reliance on speculative, one-time proceeds from health insurer conversions to fund recurring expenses like Medicaid creates structural budget instability. Instead of using these finite and unpredictable revenues for ongoing operations, they should be reserved for one-time costs, debt repayment, or capital investments.
Recommendations related to Structural State Budget Balance
The State budget and financial plan should not depend on $2 billion from this precarious source.
Any proceeds earned by the State should not be used for multiyear budget balancing.
These revenues are episodic and finite and should be used to bolster reserves or fund one-time costs after proceeds are received by the State.
Nonrecurring resources are best used to repay debt, support capital investments, increase reserves, or make possible other desirable one-time expenses.
Key Data
$3.75 billion
— The publicized price for the acquisition of nonprofit Fidelis by for-profit Centene.
$500 million
— The amount of annual revenue from conversion proceeds proposed to be used to help pay for the Medicaid program.
$2.7 billion
— The peak amount of receipts from conversions of insurers from nonprofit to for-profit status in a single year.
$95 million
— The actual amount of conversion proceeds received by the State following a $2.4 billion projection in the fiscal year 2009 enacted budget.
$4.6 billion
— The total amount generated for the State from the Empire conversion from fiscal year 2006 to fiscal year 2010.
$250 million
— The amount of annual revenue from conversion proceeds proposed to be put into a reserve to offset future federal cuts in health programs.
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 .
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…
The state faces significant fiscal challenges in the coming year amid changes on the federal level. In 2018, the state is estimated to have a budget deficit of as much as $4.6 billion. CBC's Director of State Studies David Friedfel joined Elizabeth Benjamin on Spectrum News's Capital Tonight to talk…
Read original article here . Governor Andrew Cuomo is back in New York after a rare, overnight trip to California, fundraising with Hollywood executives whose industry has benefited from New York's $420 million film tax credit program. "It's a glamorous form of coporate welfare," said Ken Girardin, Empire Center analyst.…
New York ranks 39th in fiscal health nationally, with its standing negatively impacted by high long-term debt and significant unfunded postemployment benefit liabilities. To improve its financial position, the state should prioritize pay-as-you-go capital funding, utilize public-private partnerships, and reform post-retirement health benefits.
Recommendations related to Structural State Budget Balance
New York's leaders should focus on decreasing long-term debt to improve the state's financial health.
New York's leaders should focus on reducing the State’s OPEB liabilities to improve the state's financial health.
New York must do a better job of funding its capital expenses on a pay-as-you-go basis to avoid increasing the state's debt burden.
The state should look to innovative development tools, such as public-private partnerships, to expand capital investment more efficiently.
The state should adopt proposals to reform post-retirement health benefits and begin contributing toward the new postemployment benefit trust fund.
Key Data
39th
— New York's overall rank out of 50 states for fiscal health.
$9.4 billion
— New York's All Funds cash balance at the end of March 2015.
$14.8 billion
— New York's All Funds cash balance at the end of June 2015.
$23.6 billion
— Total cash, cash equivalents, and investments on hand at the end of fiscal year 2015.
21st
— New York's national rank for trust fund solvency.
41st
— New York's national rank for cash solvency.
The Health Care Reform Act (HCRA) taxes, which generate over $4.3 billion annually, have become an inequitable and regressive method for funding state programs that should be replaced with broader-based revenue sources. Reforming these taxes would alleviate the burden on health insurance premiums while allowing the state to maintain necessary budget balance and re-evaluate its commitment to graduate medical education.
Recommendations related to Structural State Budget Balance
The Legislature should think creatively about how to replace the HCRA taxes in future budgets.
Shifting the financing to broader based taxes such as the income tax or sales tax would lower health insurance premiums and ease the burden on lower wage workers with insurance.
Alternative waivers or other special provisions should be explored to retain the federal funding while shifting to a more progressive revenue stream.
Whatever money the State decides to allocate to graduate medical education should be raised from a tax levied uniformly across the State.
The Governor and the Legislature should develop a new strategy for raising equivalent revenue in the future that is less burdensome for those who pay for health insurance.
Key Data
$4.3 billion
— Annual yield from the two major HCRA taxes.
$3.2 billion
— Total annual yield from the hospital revenue surcharge.
$1.1 billion
— Annual yield from the Covered Lives Assessment tax.
$4.5 billion
— Annual yield from the personal income tax surcharge on high-income households.
$185.33
— Annual Covered Lives Assessment rate per covered individual in New York City.
$9.08
— Annual Covered Lives Assessment rate per covered individual in the Utica/Watertown region.
New York State is operating under an emergency budget that extends spending levels from the previous fiscal year while allocating $2.5 billion for water infrastructure. To achieve a fiscally sound budget, the Governor and Legislature must prioritize reforms to the Foundation Aid formula, enhance transparency in economic development spending, and maintain overall fiscal discipline.
Recommendations related to Structural State Budget Balance
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
— Amount allocated for water infrastructure in the emergency budget legislation.
New York State faces a $78 billion liability for retiree health benefits, which is currently managed through a costly pay-as-you-go system that lacks long-term funding. Adopting proposed reforms to increase employee cost-sharing and establishing a dedicated, funded trust could reduce this massive liability by over 36 percent and improve the state's long-term fiscal stability.
Recommendations related to Structural State Budget Balance
The Legislature should adopt the Executive Budget's proposals to reduce the State's OPEB liability and develop a plan to require regular deposits to the proposed trust fund.
The State should develop a plan for making regular deposits into the OPEB Trust Fund to ensure it is not left empty.
Legislators should establish a codified policy for when withdrawals from the OPEB Trust Fund are appropriate to maximize the benefits of the fund.
Key Data
$78 billion
— The total value of New York State's liability for other post-employment benefits (OPEB).
$28.2 billion
— The total amount by which the proposed OPEB reforms would reduce the State's long-term liability.
$3.3 billion
— The projected annual required contribution (ARC) for OPEB as of fiscal year 2016.
$1.3 billion
— The current annual cost of the State's pay-as-you-go approach to retiree health insurance premiums.
New York State's heavy reliance on volatile personal income taxes makes its budget highly susceptible to economic downturns, with a potential recession causing a revenue shortfall of up to $59 billion over four years. To mitigate these risks and maintain structural balance, the state must prioritize building financial reserves to avoid necessary tax increases or spending cuts during future economic contractions.
Recommendations related to Structural State Budget Balance
In order to counter the potential impacts of an economic downturn, the State should build its reserves now.
Key Data
$59 billion
— The potential cumulative impact of a recession on the current financial plan could be as high as $59 billion over four years.
18.2 percent
— A recession of the size and scope of the 2009-2012 period could result in a revenue shortfall of 18.2 percent of tax revenues over four years.
$3 billion
— The current personal income tax surcharge on high income earners provides approximately $3 billion in revenue each year.
41.5 percent
— Between 2002 and 2015, the contribution from the top 1 percent of taxpayers increased to 41.5 percent of personal income tax revenues.
63 percent
— The State’s reliance on personal income tax revenues has increased over time, growing to 63 percent of tax revenues in 2016.
New York's Medicaid program, which serves 6.3 million residents and costs over $60 billion annually, has undergone significant redesign efforts since 2011 to control costs and improve care quality. While these initiatives have successfully slowed expenditure growth and reduced per-enrollee costs, achieving long-term fiscal stability requires overcoming challenges related to managed care enrollment and the implementation of value-based payment models.
Recommendations related to Structural State Budget Balance
New efforts should be made to work with federal officials to develop procedures that encourage and perhaps require such enrollment in managed care plans and Health Homes in the future.
More aggressive savings goals exceeding 3 percent might be appropriate.
Continued strong monitoring of the evolution of Performing Provider Systems and their action plans is essential.
Changes in the state regulations about the permissible extent of risk shifting and related reserve requirements may need revision to better protect consumers.
Renewed efforts to expand enrollment in Health Homes seem warranted.
Key Data
6.3 million
— Number of New York residents enrolled in Medicaid as of 2015.
$60 billion
— Annual amount of taxpayer money used to fund the Medicaid program.
$53.8 billion
— Total Medicaid spending in New York during federal fiscal year 2011.
4.8 million
— Total managed care enrollment in Medicaid at the end of 2015.
$8.0 billion
— Total federal funds provided over five years to plan and establish Performing Provider Systems.
$10,432 to $8,620
— Decline in average annual cost per Medicaid enrollee between 2010 and 2014.
The 2016-17 state budget agreement relies on optimistic economic growth projections to address projected out-year deficits of $1.2 billion, $3 billion, and $3.4 billion. While the budget includes significant spending increases in education and Medicaid, it missed opportunities to secure long-term financial stability by failing to implement reforms like rationalizing retiree health insurance shares and capping STAR benefits.
Recommendations related to Structural State Budget Balance
The state should rationalize retiree health insurance shares to help secure the state's financial future.
The state should cap STAR benefits to improve the long-term structural balance of the budget.
The state should extend rational funding plans for SUNY and CUNY to ensure fiscal sustainability.
The state must hold the line on agency spending to balance the financial plan if the economy grows as forecast.
The state should extend the personal income tax surcharge on high-income earners to address projected deficits.
Key Data
$1.2 billion, $3 billion, and $3.4 billion
— Projected out-year deficits for state fiscal years 2018, 2019, and 2020.
$24.8 billion
— Total state education spending, which grew by 6.5 percent.
$4.2 billion
— Annual savings for taxpayers by 2025 resulting from personal income tax decreases for married couples.
3.4 percent
— The growth rate of state Medicaid spending in the adopted budget.
$54 billion
— The total value of the approved five-year transportation capital plan.
$600 million
— The amount of public university and Medicaid expenses that were rejected from being shifted from the state to New York City.
New York State faces a $63 billion long-term unfunded liability for retiree health benefits, which could be reduced by approximately $17.5 billion through proposed reforms to premium subsidies and Medicare reimbursements. These changes, which include freezing Medicare Part B reimbursements and adjusting subsidies based on years of service, are projected to generate $42 million in annual savings by fiscal year 2020.
Recommendations related to Structural State Budget Balance
The Legislature should end reimbursement for the IRMAA, as paying for this additional Medicare premium provides higher income individuals with a larger State subsidy than lower income retirees.
The Legislature should freeze reimbursement for the regular Medicare Part B premium to limit the State’s cost for this benefit.
The Legislature should moderately reduce the State’s premium subsidy for retirees with less than 30 years of service to help reduce the State’s future cost for retirees’ health insurance.
The Legislature should adopt the Governor’s Executive Budget proposals to reform the State’s payment for retiree health insurance.
Key Data
$1.3 billion
— Cost to taxpayers for retiree health benefits in fiscal year 2016.
$1.7 billion
— Projected cost to taxpayers for retiree health benefits by fiscal year 2020.
$8,171
— 2016 total annual premium for an individual Empire Plan.
$16,234
— 2016 total annual premium for a family Empire Plan.
$6 million
— Annual savings from ending reimbursement for the IRMAA.
$1 million
— Savings in fiscal year 2017 from freezing reimbursement for the regular Medicare Part B premium.
New York State's recent legislative package adds nearly $1.5 billion in annual obligations, relying on projected budget surpluses that are unlikely to materialize given existing out-year budget gaps reaching $4.2 billion by fiscal year 2019. To maintain fiscal stability, lawmakers must implement significant cost-saving measures to offset these new expenditures and address the structural imbalance between spending and revenue growth.
Recommendations related to Structural State Budget Balance
Lawmakers must be prepared to enact cost-saving measures to produce the surpluses they just spent.
The state should avoid relying on projected budget surpluses that depend on unspecified future savings and limitations in overall state spending.
Key Data
$1.5 billion
— New annual state obligations created by the new legislative package.
$1.3 billion
— Annual cost of the new property tax relief rebate program when fully implemented.
$4.2 billion
— Projected out-year budget gap in fiscal year 2018-2019.
$1.6 billion
— Projected surpluses in fiscal year 2019 that the state is relying upon.
$2.0 billion
— Projected out-year budget gap for the upcoming year.
$250 million
— Additional aid to nonpublic schools included in the new state obligations.
New York State's recent end-of-session agreement includes fiscally concerning spending commitments, such as a new property tax rebate program costing $1.3 billion annually and a $250 million increase in aid to nonpublic schools. Relying on projected surpluses to fund these additions is premature, as achieving such surpluses requires continued economic growth and strict limitations on overall state spending.
Recommendations related to Structural State Budget Balance
The state must prioritize limitations in overall state spending rather than relying on premature projections of future surpluses to fund new commitments.
Legislators and the general public should be afforded time to read legislation of such importance before its adoption to ensure proper scrutiny of fiscal agreements.
Key Data
$1.3 billion
— Estimated annual cost of the new property tax rebate program.
$250 million
— Increase in aid to nonpublic schools included in the agreement.
New York State's practice of borrowing from public employee pension funds to balance the budget creates long-term fiscal risks and interest costs that outweigh short-term relief. Instead of continuing these deferrals, the state should utilize its $5.4 billion windfall from bank settlements to pay down existing pension debt and restore the funds' long-term stability.
Recommendations related to Structural State Budget Balance
The State should end the practice of borrowing from public employee pension funds and not extend 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 stop deferring pension contributions to avoid jeopardizing the long-term fiscal health of the pension funds.
Key Data
$5.4 billion
— Unexpected revenue from bank settlements.
$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.
$395 million
— Proposed pension deferral for next year.
$1.1 billion
— Total deferrals from fiscal year 2016 through 2020.
The FY2016 Executive Budget utilizes bank settlement proceeds for one-time expenditures while attempting to address a $1.8 billion baseline gap through spending reductions and agency efficiencies. Despite these efforts, the plan relies on speculative economic development investments and lacks comprehensive reforms for school aid formulas and long-term transportation capital needs.
Recommendations related to Structural State Budget Balance
It is time to 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 the capital plan funding gaps.
Agency productivity should be improved by pairing unit costs with effectiveness measures on the NY Performs platform.
The State should avoid future year budget gaps by extending lower personal income brackets in conjunction with higher-income brackets.
Key Data
$1.8 billion
— The true baseline gap in the FY2016 Executive Budget.
$5.7 billion
— The amount of bank settlement proceeds used for one-time expenditures and investments.
$92 million
— Savings achieved by holding state agency spending flat.
$1.4 billion
— Amount subtracted from planned spending in local government assistance.
12,581 positions
— The reduction in the Executive-controlled workforce from FY2010 to FY2016.
9.5 percent
— The percentage reduction in the Executive-controlled workforce from FY2010 to FY2016.
New York's fiscal year 2016 Executive Budget maintains a 2 percent spending cap and strengthens rainy day reserves, yet it relies on questionable pension payment deferrals and lacks a rational distribution plan for a significant school aid increase. While the proposal includes positive steps like permanent design-build procurement and Medicaid cost controls, it also commits substantial one-time settlement funds to uncertain economic development projects rather than prioritizing infrastructure needs.
Recommendations related to Structural State Budget Balance
The Legislature should refrain from adopting large, long-term spending commitments or tax reductions because the financial plan relies on placeholder savings to show aspirational surpluses.
The State should prioritize repaying all outstanding liabilities, as further deferral of pension payments is unwise and unwarranted.
The $1.5 billion in one-time settlement funds should be better invested in infrastructure needs rather than excessive economic development spending.
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 Governor or legislature should eliminate or modify misguided elements, such as the pension payment deferral, during the budget adoption process.
Key Data
$3.2 billion
— Amount of required pension payments the State will have deferred by the end of the current fiscal year.
$1.1 billion
— Proposed school aid increase in the fiscal year 2016 Executive Budget.
$1.5 billion
— Amount of bank settlement funds proposed for an Upstate Revitalization fund.
$64.5 billion
— Projected cumulative budget gaps over the four-year financial plan in January 2011.
$14.2 billion
— Projected cumulative budget gaps over the four-year financial plan in the budget released in January 2015.
$850 million
— Amount set aside for a possible settlement of a rate dispute with the federal government over Medicaid payments.
New York State's financial plans artificially project surpluses by using savings targets to meet a 2% spending growth cap, while actual projections indicate significant budget gaps. To achieve true fiscal balance, the state must address rising costs in school aid, Medicaid, debt service, and pensions before committing to new programs.
Recommendations related to Structural State Budget Balance
Agencies and state-funded programs must be tasked with bringing spending growth down to make projected surpluses a reality.
Savings in every area should be under consideration before any new financial commitments are made.
The state must reduce projected spending growth by $2.1 billion in fiscal year 2016, $3.6 billion in 2017, and $5.5 billion in 2018 to close budget gaps.
Key Data
$1.8 billion
— Projected budget gap for fiscal year 2016.
$4.0 billion
— Projected budget gap for fiscal year 2018.
$2.1 billion
— Reduction in projected growth required in fiscal year 2016 to close budget gaps.
$3.6 billion
— Reduction in projected growth required in fiscal year 2017 to close budget gaps.
$5.5 billion
— Reduction in projected growth required in fiscal year 2018 to close budget gaps.
$950 million
— Cuts to other spending required in fiscal year 2016 to meet the 2 percent overall spending cap.
Five proposed legislative bills threaten to reverse 2012 pension reforms by creating new benefit sweeteners that would increase costs for the state and local governments. Vetoing these measures is necessary to protect previous fiscal savings and maintain long-term budgetary responsibility.
Recommendations related to Structural State Budget Balance
The Governor should veto A7862/S5644, which would transfer SUNY police officers to a more expensive retirement system, generating a one-time cost of $10 million and new annual obligations of $1 million for the State.
The Governor should veto A9162/S7716, which would allow certain police and firefighters to join an optional 20-year retirement plan without employee contributions, circumventing a recent court ruling and increasing pension costs.
The Governor should veto A9392/S7120, which would automatically enroll members in a more expensive, optional 20-year plan, likely increasing the number of employees in more costly pension plans and raising costs for local governments.
The Governor should veto A8160/S5153, which would increase disability pensions for Suffolk County probation officers, costing the County $218,000 annually and $1 million upfront.
The Governor should veto A9051/S6810, which would provide new disability pensions for certain classes of ambulance personnel in Nassau County, at a cost of $170,000 annually.
Key Data
$10 million
— One-time cost for the State resulting from the transfer of SUNY police officers to the Police and Fire Retirement System.
$1 million
— New annual obligations for the State resulting from the transfer of SUNY police officers to the Police and Fire Retirement System.
$218,000
— Annual cost to Suffolk County for increasing disability pensions for probation officers.
$1 million
— Upfront cost to Suffolk County for increasing disability pensions for probation officers.
$170,000
— Annual cost for providing new disability pensions to certain classes of ambulance personnel in Nassau County.
New York is set to receive a $4 billion settlement windfall, which presents an opportunity to improve the state's fundamental finances rather than funding short-term expenditures. By prioritizing debt reduction, capital investments, and reserve fund contributions, the state can achieve lasting fiscal benefits and avoid future budget crises.
Recommendations related to Structural State Budget Balance
The state should reduce long-term debt by paying off $4 billion of 30-year bonds with 4% interest to save $231 million annually.
The state should increase pay-as-you-go capital investments to avoid debt service and accelerate reaching state-of-good-repair for key assets in the transportation and transit systems.
The state should reduce other long-term liabilities, such as unfunded pension obligations and other-post-employment-benefit (OPEB) liabilities, to improve its fiscal health.
The state should increase the Rainy-Day Reserve Fund to help prevent drastic service cuts and tax hikes by partially offsetting cyclical revenue losses.
The state should make one-time investments that provide multiyear benefits, such as purchasing information-technology systems or establishing a revolving-loan fund for localities.
Key Data
$52.2 billion
— Total of New York state's long-term debt.
$174 billion
— Total capital needs across 47 state agencies and public authorities in the 10-year statewide capital plan.
$66.5 billion
— New York's estimated OPEB liability.
$2.2 billion
— Current amount in rainy-day and other reserve funds.
$350 million
— Amount currently in the Rainy Day Reserve Fund.
$4 billion
— Amount of the revolving-loan fund earning 4% annually for school districts.
New York State's reliance on unspecified "future savings" ranging from $2.1 billion to $4.9 billion to meet its 2 percent spending cap masks actual budget gaps projected to reach $3.4 billion by fiscal year 2018. To achieve structural balance, the state must replace these accounting placeholders with concrete savings plans, such as targeting school aid to the neediest districts and reforming reimbursement formulas.
Recommendations related to Structural State Budget Balance
The State must replace placeholder savings with concrete savings plans to close budget gaps that grow from $1.8 billion to $3.4 billion by fiscal year 2018.
State officials should reform overly rich reimbursement formulas for functions such as transportation and capital construction to achieve baseline reductions in school aid.
Resources for school aid should be better targeted to the neediest districts to achieve baseline reductions.
The State should return to a straightforward and transparent financial plan that shows the baseline budget gaps resulting from current budget actions.
Key Data
$2.1 billion to $4.9 billion
— The range of unspecified "future savings" used to plug gaps in the fiscal year 2016 to fiscal year 2018 financial plan.
$1.8 billion to $3.4 billion
— The projected growth of actual budget gaps by fiscal year 2018 that require concrete savings plans.
42 percent
— The portion of the state operating fund budget comprised by school aid and Medicaid.
$730 million
— The amount the Department of Health absorbed through the creation of a "stabilization fund" for mental hygiene services in fiscal year 2014.
$7.6 billion
— The amount of new bond authorizations included in the adopted budget that will add to debt service costs.
16 percent
— The projected growth of school aid, Medicaid, pension contributions, and debt service from fiscal years 2015 to 2018.
New York's fiscal plan relies on unspecified spending reductions of up to $3.6 billion to achieve a projected $2 billion annual surplus, a goal that requires holding state operating fund spending growth to 2 percent or less. Achieving this balance necessitates difficult choices, as current projections for major budget items like school aid and Medicaid exceed this growth cap.
Recommendations related to Structural State Budget Balance
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.
Policymakers must make hard choices regarding spending reductions to replace the unspecified placeholders currently used to balance the financial plan.
The state must address projected budget gaps beginning in fiscal year 2015-16 if proposed tax cuts are adopted or equivalent spending commitments are added.
Key Data
$142.1 billion
— The total value of the fiscal year 2015 Executive Budget presented by Governor Andrew Cuomo.
$2 billion
— The projected annual surplus beginning in fiscal year 2016-17 that relies on strict spending growth limits.
2 percent
— The growth cap for state operating fund spending required to achieve the projected budget surplus.
$92.0 billion
— The proposed state operating funds spending plan for fiscal year 2014-15.
$3.6 billion
— The amount of unspecified spending reductions inserted in the financial plan for fiscal year 2017-18.
$3.5 billion
— The projected budget gap in fiscal year 2017-18 without the inclusion of unspecified spending reduction placeholders.
New York State's plan to generate a $2 billion surplus through tax cuts requires limiting annual State Operating Funds spending growth to 2%, a target that necessitates significant reductions in agency operations and other spending areas because major programs like Medicaid and school aid are growing faster. Achieving this goal is difficult because many spending categories, such as debt service and fringe benefits, are relatively fixed or have already undergone years of cost-cutting measures.
Recommendations related to Structural State Budget Balance
Keeping State Operating Funds spending growth under 2 percent will require continued discipline and serious efforts at agency reform and redesign.
Amid the discussion of how to “spend” a surplus it will be a challenge to rein in the expectations of legislators and interest groups that growth in state spending is needed.
Spending expectations for all other areas of local government assistance will also need to be managed.
To achieve the 2 percent spending growth goal, the State must implement offsetting reductions to agency operations to compensate for the faster growth of Medicaid and school aid.
The State must manage debt service and fringe benefit costs as options for controlling this growth are limited.
Key Data
$2 billion
— The amount of tax cuts proposed by the Governor that are intended to be paid for with surplus funds.
2 percent
— The annual growth rate cap for State Operating Funds disbursements required to generate a surplus.
$36.7 billion
— The amount of total State Operating Funds spending comprised by Medicaid and school aid.
$13.1 billion
— The cost of debt service and fringe benefit costs for health insurance, pensions, and other benefits in fiscal year 2013-14.
200,742
— The size of the State workforce in fiscal year 2013-14, down from 209,231 in fiscal year 2010-11.
New York's fiscal year 2013-14 budget should prioritize long-term financial stability by maintaining spending growth under 2 percent and treating unanticipated revenue as non-recurring resources for debt reduction or rainy day funds. Policymakers should also reject proposals that use taxpayer dollars unwisely, such as the pension "stabilization" plan, while continuing necessary reforms in Medicaid and state operations.
Recommendations related to Structural State Budget Balance
The Legislature should follow the pattern set in the last two years and keep state operating funds spending growth under 2 percent.
If unanticipated resources materialize in the 2013-14 fiscal year, they should be treated as non-recurring and used prudently for investments, such as debt reduction and/or rainy day fund deposits, to help improve the State’s long-term financial standing.
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 covering recurring operating expenses.
The Legislature should reject the pension “stabilization” plan, as its adoption could threaten the viability of the pension funds and erode New York’s historically good practice of paying pension bills on time.
New York should not increase expenditures for economic development until the State more systematically scrutinizes and justifies its subsidies for business.
The Legislature should support the extension of the efforts of the Medicaid Redesign Team (MRT) to cap state-funded Medicaid spending based on national growth in healthcare prices.
Key Data
$21.1 billion
— The Governor’s budget proposes $21.1 billion in school aid for the next school year.
$888 million
— The Governor’s budget proposes an increase of $888 million in school aid.
$2 billion
— Accounting changes at the State Insurance Fund will result in $2 billion in excess reserves.
$800 million
— The proposed budget increases by more than $800 million spending for economic development activities.
$50 million
— Out of a $50 million pool for school year 2012-13, only $17 million was awarded to 36 of the State’s 696 districts.
2 percent
— The Governor’s proposed 2 percent cap on awards for fiscally distressed employers is a good way to begin the debate about how to better control labor costs.
Trading short-term budget relief for significantly higher long-term costs through pension contribution deferrals is imprudent fiscal policy. The state's amortization plan adds approximately $1 billion in interest expenses, which is why most jurisdictions have rejected it.
Recommendations related to Structural State Budget Balance
New York State and localities should avoid taking short-run budget relief in exchange for far greater long-run costs, as this is not prudent fiscal policy.
Jurisdictions should reject the comptroller’s amortization plan, as it is an expensive way to extend an already “smoothed” payment plan.
Key Data
$1 billion
— The total added interest expense for the state alone under the comptroller’s amortization plan.
New York State faces a projected $3.2 billion budget gap for fiscal year 2013, necessitating a shift from revenue-raising measures to structural reforms that address rising costs in pensions, school aid, and Medicaid. To achieve long-term fiscal stability, the state must reduce reliance on fiscal gimmicks and one-shot revenues while improving the efficiency of existing spending programs.
Recommendations related to Structural State Budget Balance
The State should close the remaining budget gap with structural reform measures that slow down the fastest cost drivers, specifically pensions, school aid, and Medicaid.
The Governor should implement the proposed pension tier for new hires that increases the retirement age and vesting period and reduces pension spiking from overtime.
The State should reopen the basic formulas by which school aid is distributed to better address the great disparities in local districts’ wealth and capacities to fund their schools.
The State should phase out the inequitable local financing scheme for Medicaid, which requires poorer counties with greater Medicaid populations to shoulder an unfairly large share of the program costs.
The State should end the use of fiscal gimmicks, such as the deferral of business tax credits and the amortization of pension payments, while taking a hiatus from one-shot revenues.
Key Data
$3.2 billion
— The estimated budget gap for New York State’s fiscal year 2012-13.
$120 billion
— The projected savings over 30 years from the Governor's proposed pension tier for new hires.
$15 billion
— The amount by which total spending in fiscal year 2012 is higher than in fiscal year 2008.
$970 million
— The amount of business tax credits the state plans to defer as a fiscal gimmick.
$782 million
— The amount of pension system payments the state plans to amortize as a fiscal gimmick.
$800 million
— The total amount of "one-shot" resources used by the state in the previous year to close budget gaps.
New York City's current method of defining a balanced budget relies on outdated accounting standards that allow for significant deficits when measured against more comprehensive, modern benchmarks. Adopting a more rigorous standard that accounts for long-term liabilities like retiree health benefits and asset depreciation is essential to ensure current residents do not unfairly burden future generations.
Recommendations related to Structural State Budget Balance
New Yorkers should be giving much more attention to the financial results disclosed under the new GAAP rules.
Municipal leaders should adopt a more meaningful standard for a balanced budget that accounts for long-term liabilities and asset depreciation.
The City should move away from the current self-deluding standard for a balanced budget to a more comprehensive framework.
Key Data
$5 million
— The surplus reported by the Comptroller for the City’s fiscal year 2011 based on the exemption from GASB rules.
$282 million
— The deficit the City would have faced in fiscal year 2011 if GAAP were strictly applied.
$287 million
— The amount of remediation expenses funded with borrowed money in fiscal year 2011.
$9.6 billion
— The deficit in fiscal year 2011 under the new GAAP standard.
$53.3 billion
— The added expense in fiscal year 2006 when the accumulated OPEB liability was first recognized.
$11.7 billion
— The amount of red ink under the new GAAP standard in fiscal year 2010.
New York State has achieved roughly half of its $2.2 billion Medicaid savings target for fiscal year 2012, though concerns remain regarding the timely implementation of remaining cost-saving measures. While the Global Medicaid Spending Cap has successfully kept spending below thresholds, potential economic downturns and rising enrollment in programs like Family Health Plus threaten the state's ability to meet long-term fiscal goals.
Key Data
$2.2 billion
— Budgeted savings target for fiscal year 2012.
$1 billion
— Savings from reform proposals that have been implemented.
$80 million
— Savings from the State’s new indemnity fund for infants with neurological injuries.
$640 million
— Savings considered to be “in progress” from the Global Medicaid Spending Cap.
$173 million
— Amount by which Medicaid spending was below the threshold in August.
3.6 percent
— Increase in Family Health Plus enrollment since April.
New York State should avoid using mid-year revenue fluctuations to fund new spending or tax cuts, as the likelihood of a true surplus is remote due to volatile economic indicators and federal deficit reduction. Instead, any unexpected revenue should be prioritized to address existing fiscal challenges, such as labor savings targets, reliance on $2 billion in budget gimmicks, and a projected $2.4 billion gap for the upcoming fiscal year.
Recommendations related to Structural State Budget Balance
Talk of a surplus and using it for new initiatives should end immediately.
New York should reduce reliance on existing gimmicks, particularly ones that add to long-term costs.
Any surprise surplus should be used in ways that help lower the gap (like paying down debt or reversing deferrals), not in ways that make the gap grow.
The Governor and the Legislature should view any unexpected revenues as a temporary blessing and keep the lid on the piggy bank sealed shut.
Key Data
$799 million
— Amount by which tax collections for the first quarter of the fiscal year exceeded original projections.
$1.2 billion
— Amount by which disbursements came in below projections for the first quarter of the fiscal year.
$351 million
— Amount by which receipts fell short during the month of July.
$377 million
— Remaining savings from labor that the Governor and unions still need to finalize in the current budget.
$2 billion
— Total value of undesirable fiscal gimmicks in the current-year budget that should be replaced.
$2.4 billion
— Minimum budget gap projected for the start of the next fiscal year.
New York's pension costs have escalated significantly, squeezing municipal budgets and forcing difficult choices like layoffs. Implementing structural pension reforms for future employees, such as increasing the retirement age and capping benefits, would generate substantial long-term savings and improve the fiscal health of state and local governments.
Recommendations related to Structural State Budget Balance
The state should increase the retirement age to 65 to align with Medicare eligibility and reduce the length and cost of benefit payouts.
The state should raise required employee contributions to 6 percent for their entire length of service to bring them closer to national norms.
The state should eliminate "pension padding" by calculating benefits based on the highest five years of earnings rather than the highest three.
The state should cap maximum eligible wages at $179,000 for pension benefit calculations.
The state should exclude overtime pay from the earnings used to calculate pension benefits.
Key Data
$93 billion
— Projected savings for state and local governments over 30 years from the proposed pension reforms.
$30 billion
— Projected savings for New York City over 30 years from the proposed pension reforms.
$1.5 billion to $7 billion
— The increase in New York City pension costs between 2002 and 2011.
$8.7 billion
— Projected New York City pension costs in 2015.
9 to 1
— The ratio by which employer contributions to pension funds currently exceed employee contributions.
$179,000
— The proposed cap on maximum eligible wages for pension benefit calculations.
New York State faces a structural budget gap driven by spending growth that outpaces its tax base, necessitating a shift away from temporary revenue measures and one-time fixes. To achieve long-term fiscal sustainability, the state must restructure spending commitments to align more closely with its actual revenue growth.
Recommendations related to Structural State Budget Balance
It is time to allow temporary revenue measures to phase out and to begin to restructure spending commitments.
Spending growth must be more closely aligned with long-term revenue growth to avoid a perpetual reliance on one-shot revenues and tax increases.
Key Data
$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 due to the recession.
$21.2 billion
— The projected budget gap for next year without the inclusion of revenue measures.
$19.4 billion
— Total revenue enhancements and temporary revenues currently benefiting New York.
$8.4 billion
— Amount by which state-funded spending in the current fiscal year is higher than in fiscal year 2007-08.
$6.6 billion
— Federal funding from the American Recovery and Reinvestment Act (ARRA) received by the state this year.
Governor Cuomo's executive budget proposes closing a $9 billion gap through significant belt-tightening, including school aid cuts and Medicaid reductions. To achieve long-term sustainability, the state must focus on rationalizing high-cost Medicaid services and reducing public employee compensation costs rather than relying on across-the-board layoffs.
Recommendations related to Structural State Budget Balance
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 so that many employees do not have to lose their jobs.
The state should rationalize care for high-cost populations as the primary source of Medicaid savings.
Localities need to make changes in pensions and compensation to address budget constraints, as 70% of local expenses are for labor.
The state should avoid across-the-board layoffs, which would damage essential services.
Key Data
$9 billion
— The total value of the budget gap closure proposed in the executive budget.
$2.9 billion
— The amount of school aid cuts proposed to help close the budget gap.
$2.9 billion
— The savings target set for the Medicaid Redesign Team.
$1.4 billion
— The amount of cuts proposed for state agency operations.
72%
— The portion of Medicaid expenses that go toward services for the elderly or disabled.
$50,000
— The average cost per year for individuals receiving long-term care in nursing homes.
New York State and City could achieve significant budget savings by eliminating the reimbursement of Medicare Part B premiums for retirees, a benefit rarely offered by other employers. Additionally, increasing retiree health insurance premiums to 50 percent of the total cost would help mitigate the financial burden of rising healthcare expenses.
Recommendations related to Structural State Budget Balance
New York State and City should eliminate the public employee fringe benefit of reimbursement for Medicare Part B premiums to achieve immediate budget savings.
The State and City should increase premiums for retiree health insurance to 50 percent of the cost to relieve the burdens of rampant cost escalations.
Key Data
$140 million
— Total costs of Medicare Part B reimbursements for New York State in fiscal year 2010.
$213 million
— Total costs of Medicare Part B reimbursements for New York City in fiscal year 2010.
$312 million
— Projected cost of Medicare Part B reimbursements for New York City by 2014.
$20 million
— Minor relief provided by the State limiting reimbursements to 90 percent for individual coverage and 75 percent for family coverage.
New York faces a $9 billion projected budget deficit, driven in part by rapidly escalating public employee retirement costs that have grown from $100 million to $1.5 billion in a decade. Controlling these retirement benefit expenses is essential to ensuring that state and local governments can continue to provide necessary public services.
Key Data
$9 billion
— projected budget deficit for New York state for the next year
$100 million
— annual pension contributions paid by New York state ten years ago
$1.5 billion
— current annual pension contributions paid by New York state
$6.3 million
— pension costs for teachers and other employees in Rochester ten years ago
$50.2 million
— current pension costs for teachers and other employees in Rochester
800 percent
— growth in pension costs for teachers and other employees in Rochester over the last 10 years
New York's Medicaid program is the most expensive in the nation, with total spending reaching approximately $50 billion and per-capita spending more than double the national average. To address rising costs, the state has implemented various initiatives, including managed care expansion and fraud prevention, which have generated over $1 billion in annual savings.
Recommendations related to Structural State Budget Balance
State officials should examine the substantial rates of increase in long-term care spending to isolate their causes and determine whether cost containment and program management actions are warranted.
The state should conduct further analysis on prescription drug spending growth to evaluate the impact of the Medicare Part D program and the increased use of generic drugs.
Policymakers should examine the dramatic increase in spending on community rehabilitation services to determine if cost containment and program management actions are warranted.
The state should continue efforts to more effectively manage the Medicaid program by considering additional cost containment initiatives in areas that account for significant spending growth.
Key Data
$50 billion
— Total annual Medicaid spending in New York State, which is the highest in the nation.
$2,283
— NYS Medicaid spending per capita in Federal Fiscal Year 2007, more than twice the national average of $1,026.
$1.02 billion
— Annual reported cost savings (State share) from Medicaid fraud, waste, and abuse control activities in State Fiscal Year 2009-10.
$289 million
— Gross savings attributable to the Preferred Drug Program in State Fiscal Year 2008-09.
$468 million
— Total cost savings reported by the Office of the Medicaid Inspector General for the first quarter of Calendar Year 2010.
New York faces a $9 billion budget gap that is projected to grow to $14.6 billion by 2012, necessitating structural reforms to the state's three largest spending areas: school aid, Medicaid, and public employee compensation. To achieve fiscal stability, the state must eliminate aid to wealthy school districts, impose greater discipline on Medicaid spending, and negotiate public employee contract concessions.
Recommendations related to Structural State Budget Balance
Aid to the wealthiest school districts, which can raise more than the national average per pupil on their own, should be eliminated.
Greater fiscal discipline is needed regarding Medicaid spending on the elderly and disabled, which accounts for 72% of total expenses.
Since public employee contracts will expire on March 31, 2011, savings should be negotiated to adjust to new fiscal realities.
Key Data
$9 billion
— The budget gap the new governor must close upon taking office.
$14.6 billion
— The projected budget gap in 2012 following the expiration of federal stimulus aid and the personal income tax surcharge.
$650 million
— The amount of state tax dollars currently allocated to the wealthiest school districts.
72%
— The portion of total Medicaid expenses accounted for by spending on the elderly and disabled in New York.
two-thirds
— The portion of state revenue absorbed by school aid, Medicaid, and employee compensation.
New York State faces significant long-term fiscal pressure from public pension and retiree health insurance obligations, with total unfunded retiree health liabilities estimated at over $200 billion. These retirement costs are escalating rapidly, driven by generous benefits and investment performance, necessitating a shift toward more sustainable funding models to ensure future affordability.
Key Data
$200 billion
— Total estimated State and local unfunded actuarial liabilities for retiree health insurance and other benefits.
$55.9 billion
— State liability for retiree health insurance and other benefits.
$2.1 billion
— Projected State pension contributions by fiscal year 2014.
$33,270
— Average annual pension received by employees retiring in 2010.
9:1
— Ratio of employer to employee pension contributions in New York in 2008, which is significantly higher than the national average.
$46.3 billion
— Future cost of retiree health insurance obligations for the State as of March 31, 2010.
New York should consider alternatives to a state spending cap, such as more rigorous balanced budget requirements and moving to an accrual-based accounting system, as evidence from other states suggests caps often have limited effectiveness and can lead to unintended consequences. Instead of formulaic limits, the state should focus on enhancing its rainy day fund and implementing a new constitutional debt limit to better manage fiscal health.
Recommendations related to Structural State Budget Balance
Establish a more rigorous and comprehensive balanced budget requirement to improve fiscal discipline.
Move the executive and legislative budgets from a cash basis to an accrual system in accordance with generally accepted accounting principles.
Enhance the allowable size of the state’s rainy day fund and require that funds are dispersed only in an emergency.
Impose a new constitutional debt limit to rein in state borrowing.
Provide more timely and meaningful fiscal information to legislators and to the public.
Key Data
$17 billion
— Estimated amount state spending would have been curbed in fiscal year 2007-08 under Governor Paterson's proposed cap.
$60.3 billion
— Hypothetical spending cap amount for fiscal year 2007-08 based on the three-year rolling average of the national inflation rate.
$77 billion
— Actual expenditures in state operating funds during fiscal year 2007-08.
$3.2 billion
— Total amount of rebate checks sent to Colorado taxpayers between fiscal year 1996-97 and fiscal year 2000-01.
$55.2 billion
— Hypothetical spending cap amount for fiscal year 2004 using a fixed base year.
$1.2 billion
— Difference in fiscal year 2004 between a fixed base year cap and a cap using the actual prior year's spending.
Legislative efforts to enhance benefits for state and local employees and retirees threaten to increase costs for an already unaffordable pension system. Vetoing these bills is necessary to maintain fiscal responsibility and avoid adding further structural expenses to the state budget.
Recommendations related to Structural State Budget Balance
The Governor should veto the bills enhancing benefits for state and local employees and retirees.
The Governor should continue to stand for fiscal responsibility and veto these bills and any others that come before him.
Key Data
$1.1 million
— Annual added contributions for New York City teachers resulting from bill A8664-A/S5748A.
25
— Number of bills enhancing benefits for state and local employees and retirees tracked on the annual Sweetener Scorecard.
3
— Number of bills already sent to the Governor for consideration during the week of July 22, 2010.
New York City and State retirement benefits for public employees have become a significant and rapidly growing fiscal burden, with required pension contributions for the City alone rising from $615 million in 2000 to a projected $4.7 billion by 2008. To address this, the state and city should transition to defined contribution plans and reform existing health and pension benefits to align more closely with private sector practices and reduce long-term taxpayer costs.
Recommendations related to Structural State Budget Balance
Require retirees to pay 50 percent of the premium for health insurance for themselves and their dependents.
Stop reimbursing retirees for Medicare Part B premiums.
The long-run goal of pension reform should be to convert from defined benefit to defined contribution plans.
The New York systems should increase required employee contributions, and not limit them to ten years.
The New York system should raise the minimum age requirement for retirement, perhaps with a lower minimum for police officers and firefighters.
The FAS should be based on five years’ experience and should take into account only base salary, excluding overtime and other supplements subject to manipulation.
The current system's provisions for work-related disabilities should be revised to set more rigorous standards.
Eliminate the variable supplements available to some retired New York City uniformed workers.
Key Data
$4.7 billion
— Projected required contributions to City pension funds in fiscal year 2008.
$6.3 billion
— Combined cost of employer health insurance payments for City and State workers and retirees in 2008.
$1.5 billion
— Total cost to the City and State for health insurance for retirees in 2004.
43%
— Percentage of retired New York City firefighters receiving additional benefits due to a disability deemed to be job related.
$35.16
— Average total compensation cost per hour among public employers in 2004.
$23.90
— Average total compensation cost per hour among private sector employers in 2004.
New York State faces a projected $12.4 billion budget gap by fiscal year 2013-14, driven largely by unsustainable growth in public employee compensation, including pensions and health insurance. To address this, the state must implement structural reforms such as increasing employee premium contributions, transitioning to defined contribution pension plans, and reducing the workforce by leaving vacant positions unfilled.
Recommendations related to Structural State Budget Balance
The state should increase the employee share of health insurance premiums for single policies from 10 percent to 20 percent and for families from 25 percent to 30 percent.
New York should discontinue the practice of allowing retirees to buy down the future costs of health care premiums by applying unused sick days.
The state should end the reimbursement for the cost of Medicare Part B premiums for retirees.
New York should add a defined contribution option to the pension system for all State employees.
The state should refrain from filling 16,000 vacant positions to achieve estimated savings of $800 million.
Key Data
$12.4 billion
— The projected budget gap for fiscal year 2013-14 if all current Executive Budget proposals are accepted.
$56.3 billion
— The estimated unfunded liability for providing retiree health care for State employees.
$581 million
— The estimated fiscal benefits associated with increasing employee health insurance premium contributions.
$800 million
— The estimated savings from not filling 16,000 vacant positions in State government.
$194 million
— The estimated savings for the State if 10 percent of the workforce were enrolled in a new defined contribution pension plan by fiscal year 2013-14.
$18.9 billion
— Total employee compensation, including wages, salaries, health insurance, and pensions, in fiscal year 2009-10.
New York State's long-term debt burden, including bonds and unfunded post-employment benefits, places it in a "danger zone" with $120.0 billion in total obligations as of 2008. To exit this precarious fiscal position, the state must reduce these liabilities by $20.4 billion, either through cutting long-term bonds or addressing unfunded retiree health benefits.
Recommendations related to Structural State Budget Balance
In order for New York to be below the danger zone threshold, it would have to lower its long-term liabilities from the 2008 level of $120.0 billion by $20.4 billion.
Since New York has no unfunded pension liability, the reduction would be in OPEB liability and/or in long-term bonds.
If all the reduction were in long-term bonds, then that debt would have to be lowered from $71.9 billion to $51.5 billion.
Key Data
$120.0 billion
— New York's total long-term liabilities in 2008.
$20.4 billion
— The amount New York must reduce its long-term liabilities to exit the 'danger zone'.
$71.9 billion
— New York's long-term bond debt in 2008.
$51.5 billion
— The target level for long-term bonds if the entire required reduction were achieved through bond reduction.
$5.6 billion
— New York's annual debt service as of 2010.
$7.1 billion
— New York's projected annual debt service in four years from 2010.
New York faces a $6.7 billion budget deficit for the 2010-11 fiscal year, with projections indicating a $12.2 billion gap by fiscal year 2013-14. To address this, the state should adopt the Governor's proposal for recurring spending reductions, particularly in school aid and Medicaid, while avoiding reliance on nonrecurring one-shot measures.
Recommendations related to Structural State Budget Balance
The Legislature should seize the opportunity to move the State's finances toward structural balance by embracing the Governor's proposal for real and recurring spending reductions.
The State must implement more spending reductions beyond the Governor's current proposals to address the projected $12.2 billion budget gap in fiscal year 2013-14.
Key Data
$6.7 billion
— The size of the budget hole facing the State in the 2010-11 fiscal year.
$12.2 billion
— The projected budget gap for fiscal year 2013-14 even if all of the Governor's proposals are adopted.
$4.6 billion
— The amount of spending control initiatives proposed by the Governor to fill the budget hole.
$565 million
— The amount of one-shot measures proposed to close 8.4 percent of the budget gap.
$1.1 billion
— The projected increase in State operating funds dedicated to school aid next year without action.
$1.6 billion
— The projected increase in State operating funds dedicated to Medicaid next year without action.
New York State's current budgetary process relies on an outdated General Fund construct and cash-based accounting, which obscures the true fiscal health of the state. To improve transparency and structural balance, the state should adopt broader reporting measures that encompass all government activities and transition to accrual-based accounting to accurately reflect long-term liabilities and deficits.
Recommendations related to Structural State Budget Balance
The basis for reporting and budget reform should be broadened to encompass all of the activities of state government rather than relying on the General Fund.
The State should adopt a unified presentation that includes all funds used to support governmental activities, consistent with Governmental Accounting Standards Board (GASB) standards.
The State's capital budget should be separated from its annual operating budget plan and 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 is presented.
A simpler, more transparent budget format that tracks cash disbursements should be developed so that legislators and the public can easily understand the relationship between executive budget language and enacted bills.
Key Data
$121.6 billion
— The All Funds cash total for the state last year.
$54.6 billion
— The General Funds portion of the total state spending last year.
45 percent
— The portion of total state spending represented by the General Fund.
$3 billion
— Personal income tax revenues transferred out of the General Fund for the School Tax Relief program (STAR) annually.
$13.5 billion
— The deficit the state ran on a GAAP basis last year.
$1.9 billion
— The positive year-end balance shown in the state's cash report.
The state's recent Deficit Reduction Program falls short of the Governor's target by $400 million and relies heavily on non-recurring items, which now account for 59 percent of the $3.2 billion deficit solution. While a new pension tier for state and local employees marks a significant step toward fiscal sustainability, concessions regarding retiree health insurance for teachers threaten to limit future cost-containment efforts.
Recommendations related to Structural State Budget Balance
The Legislature must refrain from the past practice of passing various 'sweetener' bills that raise costs to ensure the new pension tier remains effective in bending the cost curve.
The Governor and all future Governors will need to stand firm against other employee groups demanding the same permanent health insurance benefit protections granted to teachers' unions.
Key Data
$2.8 billion
— The total value of the Deficit Reduction Program (DRP) passed by the Legislature.
$400 million
— The amount by which the Deficit Reduction Program falls short of the Governor’s proposed target.
$3.2 billion
— The total current-year deficit that the state is attempting to address.
40 percent
— The share of the current-year deficit covered by non-recurring items in the Governor's initial proposal.
59 percent
— The share of the current-year deficit covered by non-recurring items in the final Deficit Reduction Program package.
New York's reliance on one-time revenue sources, such as federal stimulus funds, to close a $3.2 Billion deficit has increased to 52%, deferring larger fiscal challenges. To avoid drastic service cuts when the budget gap reaches an expected $19.5 Billion in fiscal year 2012-13, the state must implement recurring spending reductions and structural reforms like a new pension tier.
Recommendations related to Structural State Budget Balance
The State must reduce spending in meaningful ways that have recurring value to avoid a slash and burn assault on services in 24 months.
The State should add a new pension tier to provide significant long-term local budget relief.
Key Data
$3.2 Billion
— Deficit this year that the state is attempting to close using one-shots.
52%
— Percentage of one-shots used to close the $3.2 Billion deficit.
$19.5 Billion
— Expected budget gap in fiscal year 2012-13.
23%
— Expected increase in employee compensation in the next three years.
$45 Million
— State savings expected from the Medicaid measure involving the gross receipts tax.
New York faces a projected budget gap of at least $4.6 billion, which is expected to grow to $18.2 billion by 2012-13 due to declining revenues and unsustainable growth in Medicaid, personnel, and education spending. To avoid future painful across-the-board cuts, the state must implement aggressive spending reductions rather than relying on tax increases, borrowing, or passing costs to local governments.
Recommendations related to Structural State Budget Balance
The state must implement aggressive spending reductions to address the growing budget gap.
New York should reform its Medicaid spending, which is growing at unsustainable rates.
The state needs to address personnel costs, including overly generous fringe benefits and pension contributions.
New York should reallocate education aid by stopping payments to wealthy districts that have abundant resources.
Key Data
$4.6 billion
— The projected budget gap for next year.
$18.2 billion
— The projected budget gap by 2012-13.
36%
— The expected growth in Medicaid spending over the next three years.
24%
— The expected growth in expenses for compensation of state employees over the next three years.
65%
— The amount more New York spends per pupil compared to the national average.
$58 billion
— The amount of outstanding state-supported debt planned by 2013-14.
New York faces a massive structural budget deficit that will grow to $18.6 billion by fiscal year 2011-12, necessitating significant spending reforms rather than tax increases. To achieve balance, the state should implement targeted reductions in Medicaid, school aid, public employee benefits, and institutional capacity while avoiding revenue measures that stifle economic recovery.
Recommendations related to Structural State Budget Balance
The state should limit new revenue measures to no more than $2 billion to avoid excessive reliance on increased taxes that discourage investment.
Legislators should tighten Medicaid eligibility for long-term care to save $400 million annually.
The state should eliminate high tax aid and hold harmless provisions in school aid formulas to save $875 million.
The Legislature should require a greater share of health insurance premiums to be paid by current and retired public employees to bring contributions in line with other public sector workers.
The state should reduce the size of the workforce in key agencies to fiscal year 2006-07 levels to achieve $283 million in annual savings.
Key Data
$14 billion
— The projected budget gap for the upcoming fiscal year.
$18.6 billion
— The projected budget gap for fiscal year 2011-12.
$400 million
— Annual savings from tightening Medicaid eligibility for long-term care.
$670 million
— Savings from dropping hold harmless provisions in school aid.
$280 million
— Annual savings from reducing Department of Correction staff and facilities.
$1.9 billion
— Total revenue increases mis-categorized as spending reductions in the Executive Budget.
New York's Medicaid nursing home payment system is inefficient and costly, with per diem rates significantly higher than the national average despite failing to deliver superior care. Transitioning to a standardized, performance-based payment system could generate $1.2 billion in annual savings while improving staffing levels and patient outcomes.
Recommendations related to Structural State Budget Balance
New York State should change from a facility-specific to a standardized base rate system that varies primarily by differences in patient-specific characteristics and in geographic labor costs.
New York homes should be staffed at the federally recommended level of 4.1 hours of care per patient per day.
The state should implement financial incentives to provide measurable quality outcomes to reward homes that meet quality measures.
An auditing system should be developed to detail whether the level of staffing assigned to a patient meets the criteria required according to the patient’s RUG category.
It is necessary to seek legislative changes in order to revise the payment system, as the current system is outdated and inefficient.
Key Data
$1.2 billion
— Annual savings from changing the Medicaid nursing home payment system.
$45 billion
— Projected cost of New York's Medicaid program in fiscal year 2008-09.
$187
— Average daily Medicaid payment to nursing homes in New York.
$130
— Average daily Medicaid payment to nursing homes for the rest of the nation.
$1.2 billion
— Annual cost of avoidable hospitalizations for nursing home patients.
$6.5 billion
— Total Medicaid spending on nursing homes in 2004.
New York's Empire Zone program, originally designed to stimulate economic growth in distressed areas, has devolved into an ineffective and costly system that fails to meet job creation targets. Given the state's significant budget constraints, this program should be eliminated to prevent the continued waste of scarce public resources.
Recommendations related to Structural State Budget Balance
The time has come to end the Empire Zone program.
Increasingly scarce public resources should no longer be spent in this unproductive way.
With the State budget under enormous stress, the Empire Zone program should be a prime target for elimination.
Key Data
$582 million
— The cost of the Empire Zone program in 2008, which grew from $30 million in 2000.
$900 million
— The amount of unused tax credits firms have that can be used in future years.
$514 million
— The total amount of Empire Zone tax credits claimed in 2006.
$391 million
— The amount of tax credits claimed by just 500 firms, representing 76 percent of the total program cost in 2006.
$127 million
— The amount of tax credits claimed by Fortune 1000 firms in 2006, accounting for 25 percent of total annual claims.
$50 million
— The savings target included in the Executive Budget for fiscal year 2008-09 regarding the program.
New York State's budget process suffers from a lack of long-term fiscal stewardship, characterized by imbalanced budgets, excessive reliance on debt, and inadequate rainy day reserves. To improve fiscal health, the state should adopt more rigorous, GAAP-based balanced budget requirements, establish meaningful constitutional debt limits, and implement a comprehensive approach to performance measurement.
Recommendations related to Structural State Budget Balance
The requirement should be applied either to (a) a wider range of governmental funds (all funds or all funds excluding capital funds) or (and preferably) to (b) the Statement of Activities for primary government.
If the scope of activity is defined using governmental funds, then GAAP accounting rules should be applied instead of the cash basis.
A more meaningful debt limit should be constitutional rather than statutory.
The limit should apply to all forms of state-supported debt, and no “back-door” should be left open via public authorities created by state or local governments.
The SRDF and the TSRF should be combined and be subject to the constitutional constraint on the TSRF.
The Legislature should establish budget committees with jurisdiction over appropriation bills.
Reliable sources of information in addition to the staff accountable to the majority leaders should be created, such as an independent budget office.
Funds should be appropriated only for specific programmatic purposes, and more competitive procedures established for determining who receives the grant or contract.
Key Data
$11.2 billion
— Long-term borrowing authorized by the State since 1991 to help support operating expenses.
$39.4 billion
— Amount of "back-door" debt outstanding as of the end of fiscal year 2007, representing 92 percent of all State-supported debt.
$1,031 million
— The balance of the Tax Stabilization Reserve Fund (TSRF) at the end of fiscal year 2006-07.
$175 million
— Amount appropriated to the new Statutory Rainy Day Reserve (SRDR) in the fiscal year 2007-08 budget.
$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 2007 budget process was criticized for being secretive and resulting in a 9 percent spending increase, which is three times the rate of inflation. The state faces a $5 billion budget gap and a debt load exceeding $60 billion, necessitating reforms to spending, Medicaid, and the budget process itself to achieve long-term fiscal stability.
Recommendations related to Structural State Budget Balance
The state should close the loopholes in this year's new budget-reform law to prevent a breakdown in the budget process.
The state should move the start of its fiscal year from April 1 to July 1 to allow for more accurate revenue estimates.
To curb spending, the state should reduce the size of its workforce through productivity gains.
To control Medicaid costs, the state should tighten the eligibility rules for long-term care and stimulate the private insurance market.
It is past time to fix the state's broken debt limit, as New York's debt load will soon exceed $60 billion.
The new school funding formula should operate only on the basis of need, rather than being distorted by last-minute political deal-making.
Key Data
$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.
9 percent
— The rate by which this year's budget inflated spending, more than three times the rate of inflation.
$121 billion
— The size of the budget legislators had less than two hours to review.
$10 billion
— The amount by which New York's debt load exceeds what is affordable under reasonable standards.
18 months
— The timeframe in which the state has to close a budget gap of about $5 billion.
New York State faces significant fiscal challenges, including a projected general fund deficit of about $1.6 billion and a looming budget gap of nearly $4.2 billion in the next fiscal year. To address these issues, the state must implement structural reforms, such as reducing Medicaid costs, managing state debt more effectively, and improving the transparency and accountability of the annual budget process.
Recommendations related to Structural State Budget Balance
Discontinue issuance of State-funded debt to cover operating deficits.
Reduce State-mandated local government Medicaid costs more than authorized by the 3 percent cap on local growth enacted in 2005.
Redesign the State-mandated pension benefits for future state and local government workers through changes such as raising the minimum retirement ages, increasing the required employee contributions, eliminating inclusion of overtime in benefit calculations, and eliminating variable supplements for uniformed workers.
Prepare more extensive multi-year financial plans to improve budget accountability.
Subject public authority borrowing to more rigorous financial review by an enhanced Public Authorities Control Board or by the Division of Budget.
Key Data
$105.8 billion
— Total debt outstanding for the State and its authorities at the end of fiscal year 2004–05.
$4.2 billion
— Projected budget gap in the next fiscal year.
$5.8 billion
— Estimated annual savings from changing Medicaid policies.
$1.6 billion
— Projected general fund deficit for the current year.
New York's budget process is plagued by persistent lateness and structural dysfunction, driven by a professionalized legislature that has seized power through independent revenue estimating and discretionary member items. To restore fiscal responsibility and accountability, the state must reform its budget process, adopt independent redistricting, and implement public campaign financing.
Recommendations related to Structural State Budget Balance
The state should shift the beginning of the fiscal year to July 1 to allow the legislature more time to consider the executive budget proposal.
New York should establish an authoritative and politically disinterested consensus process for revenue estimating to remove it from the three-way negotiating process.
The state should implement a staged, inclusive process for legislator participation in budgetary decision-making, including the use of conference committees to resolve inter-house differences.
New York should adopt legislative redistricting by commission to enhance fairness and mitigate the appearance of self-interest.
The state should implement public financing of legislative election campaigns to reduce the influence of money in politics and improve competitiveness.
The constitution should be amended to require the adoption of a balanced budget certified by an outside body to ensure greater fiscal accountability.
Key Data
$170 million
— Total amount appropriated in 2003 to fund projects advanced by Senate Republicans and Assembly Democrats.
$1.5 billion
— Total funds available to Governor Pataki, Speaker Silver, and Majority Leader Bruno to separately allocate in the 1998 election year.
$10,750,658
— Proposed budget for legislative fiscal staffs for the 2003-2004 fiscal year.
$30-40 million
— Estimated cost of a public financing program for state legislative races in New York.
$7,506,885
— Total funds raised by Assembly Democrats in 2002 to defend and extend their majority.
$14,736,106
— Total funds raised by Senate Republicans in 2002.
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