One of the most significant, and little noticed, components of this year’s State budget is the “Executive Reorganization Act of 2011” (the “Act”). It confers on the Governor express statutory authority to reduce the number of State agencies, commissions, public authorities and other bodies (collectively, “agencies”), subject to the Legislature’s approval or disapproval. The Act marks the first time in New York history a Governor has been granted sweeping reorganization authority — and Governor Cuomo has made clear he plans on using the statute to eliminate at least 20 percent of the total number of State agencies.

The Governor’s goal is ambitious. He proposes nothing less than a fundamental reorganization of State government in order to streamline and modernize it. If he is successful, individuals, businesses and entire industries, long accustomed to working with a given agency, or even providing goods and services to it, may find that that agency no longer exists. Stakeholders could find themselves subject to the jurisdiction of newly-created regulatory bodies, with new missions, visions and values. Paradigm shifts of this nature will undoubtedly yield a multitude of benefits. But they just as clearly present profound challenges.

Companies and associations that interact with State agencies should assess whether the Act's implementation may affect critical policy and operations issues and determine how best to provide input into the process.

Governor Cuomo’s Pledge to Reduce the Number of State Agencies

In his campaign for Governor, then-candidate Andrew Cuomo placed before the electorate a plan for revitalizing New York State that he called “the New NY Agenda.” One of its pillars was “Rightsizing Government,” which reflected the Governor’s belief that “Government in New York is too big, ineffective and expensive.” He pledged to “enlist the best private sector minds to help overhaul our more than 1,000 State agencies, authorities and commissions and reduce their number by 20 percent.” He also identified specific areas — including transportation and housing — that should be carefully examined to determine if the State could, by consolidating overlapping agencies, save taxpayers money and improve government services.

Following the election, the Governor quickly acted on his campaign pledges. In his first State of the State address, he announced the establishment of the Spending and Government Efficiency (SAGE) Commission and gave it a simple charge: make recommendations that would result in the reduction of the number of agencies by at least 20 percent, in the interest of saving taxpayers’ money, increasing institutional responsibility, and improving the delivery of government services. (When fully empanelled, the SAGE Commission will consist of up to 20 members, including business leaders with experience in restructuring complex organizations and non-profit institutions; and members of the Legislature.)

Also in the State of the State, to ensure implementation of the SAGE Commission’s recommendations, the Governor said he would introduce legislation that would authorize him to submit a plan to the Legislature to eliminate, transfer and consolidate State agencies. Once given that authority, the Governor added, the SAGE Commission’s rightsizing plan would be submitted to the Legislature.

Executive Reorganization Act of 2011

The Legislature now appears to have embraced the Governor’s vision of rightsizing government and enacted, through the budget process, the Executive Reorganization Act of 2011. In a nutshell, the Act authorizes the Governor to examine the organization of all agencies and determine what changes are necessary to accomplish certain enumerated statutory purposes. One such purpose is “to reduce the number of agencies by consolidating those having similar functions, and to abolish such agencies or functions . . . as may not be necessary for the efficient conduct of the government.”

If the Governor decides to eliminate or otherwise reorganize one or more agencies, he may seek to do so by preparing a “reorganization plan” that is submitted to the Legislature. The required contents of a reorganization plan are comprehensively spelled out in the Act. The Governor must set forth findings justifying the reorganization, in addition to addressing a range of transition issues.

The Act gives the Legislature only 30 days to review a reorganization plan once submitted by the Governor. The Legislature is authorized to prescribe rules that will govern its review and disposition of reorganization plans. Regardless of whether the Legislature does so, however, each of its two houses must vote on the reorganization plan without amendment as submitted by the Governor.

Notably, the Governor may submit to the Legislature only one reorganization plan a year, and may amend that plan one time within the Legislature’s thirty-day review period. Also, the reorganization plan must be submitted to the Legislature no later than May 30 (unless both houses of the Legislature agree to extend the deadline). Given the Governor’s goals of eliminating 20 percent of all State agencies, it’s reasonable to assume that his annual reorganization plans will propose the elimination and reorganization of numerous agencies. In any event, a sunset provision in the Act deems the law repealed as of May 31, 2014.

The SAGE Commission

Contemporaneous with the Act’s passage, the Governor reiterated his plan on using the SAGE Commission to realize his vision of rightsizing the State government. It therefore appears the SAGE Commission will function in a manner roughly akin to so-called “base-closing commissions.” That is, SAGE will make its recommendations to the Governor, who, in turn, will incorporate them into reorganization plans submitted to the Legislature. Upon receipt of such plans, the Legislature will be obligated to accept or reject the reorganization plan in its entirety.

Conclusion

Time and again, the Governor has expressed his determination to redesign the face of State government by dramatically reducing the number of agencies. By adopting the Act, the Legislature has given the Governor a powerful tool to accomplish his goal. Accordingly, individuals, associations and industries that have matters before agencies subject to the SAGE Commission’s jurisdiction would do well to assess how the elimination or reorganization of such agencies may impact them and then determine how best to respond.