Governor Andrew M. Cuomo presented his proposed 2011-2012 Executive Budget. The Governor's proposal transforms the state budget process to conform to fiscal realities and eliminates a $10 billion deficit without raising taxes or borrowing.]
"New York is at a crossroads and we must now make the tough decisions needed to get on the path to prosperity," Governor Cuomo said. "Our state can no longer afford to continue spending beyond our means and lean harder and harder on the backs of our taxpayers to make up the difference. Long Islanders know this. They have felt the burden of rising taxes for far too long. With this budget, New York will face fiscal realities and make essential reforms in order to better manage our government and save money for taxpayers."
Our state spending has grown at over 5.7 percent per year over the last decade, outstripping tax receipts (3.8 percent), personal income (3.7 percent), or inflation (2.4 percent). Not only do we spend too much, but we get too little in return. Our state is number one in spending on education and number 34 in results. We are number one in spending on healthcare and number 21 in results. The goal is to return fiscal responsibility to the state so that we may strengthen the economy and create jobs.
A key step in beginning to redesign and realign New York's government is taking a look at the process used to create the budget.
First, we are redesigning how the budget is created. We are rejecting a system of automatic and unrealistic budget increases that, for years, has caused spending to skyrocket to unsustainable levels.
Second, the process is not just a budget exercise, but a management exercise. That means that we cannot just keep throwing money at the problem. More funds do not mean better healthcare, better schools, or better programs. The changes must start with a look at the programs: do they work for the patient, the student, or the New Yorker.
Third, we must work together to fix our dismal financial situation. That means bringing stakeholders to the table and making everyone part of the solution. From Medicaid to education to government reform to mandate relief, government cannot do this alone. That is why the Governor appointed key working teams in Medicaid redesign and local mandate reform. He also created the SAGE commission on government efficiency to revamp the state government structure.
Fourth, in order to lead by example, we have made the largest percentage cuts in state operations, reducing general fund spending by 10 percent. Though there is much pain to go around, this decision spares local governments the worst of the budget cuts.
Governor Cuomo's Executive Budget proposal eliminates the projected 2011-12 gap with $8.9 billion in recurring spending actions, or nearly 90 percent of the total plan. The remainder of the gap is eliminated through $340 million of revenue enhancements, such as tax modernization to improve collections and lottery proposals; one new fee; and $805 million in non-recurring actions. This budget proposes gapclosing actions in almost every area of state spending and includes year-to-year reductions in the two largest drivers of State expenditures, Medicaid and School Aid.
State Operating Funds spending increases by 1 percent while all governmental funds spending declines by 2.7 percent. As the Governor has made clear, closing the gap means cutting growth in projected spending. Without actions, spending was projected to grow by 12 percent, due largely to provisions in state law mandating higher spending. This has become an unsustainable process. This budget is designed to reduce or eliminate the impact of many of these provisions and recalibrate spending to sustainable levels to help repair New York's fiscal condition.
With these actions, the Executive Budget proposes
- All Funds spending of $132.9 billion in the fiscal year that begins April 1, 2011, a decrease of 2.7 percent or $3.7 billion from 2010-11.
- State Operating Funds spending of $88.1 billion, an increase of $900 million, or 1 percent. State Operating Funds exclude federal funds and long-term capital spending.
- State Operating Funds are adjusted to reflect the loss of significant one-time federal funding received in 2010-11 to cover Medicaid costs normally paid from State funds and other actions, as well as other extraordinary expenses, at an increase of 1 percent.
The actions proposed in the Executive Budget reduce the projected four-year deficit by 86 percent, from $64.6 billion to $9.2 billion. Following the Executive Budget, the projected budget gaps drop to $2.3 billion for 2012-13, $2.5 billion for 2013-14, and $4.4 billion for 2014-15.
Assemblyman Tom McKevitt said, "Governor Cuomo recognizes that we need to make a dramatic change in how our state operates and delivers services to New Yorkers. I commend his vision to reform our government and stand ready to work with his administration to make our state affordable for our residents."
Redesigning and Rightsizing State Government
Reducing the Cost of State Government. The Governor's budget proposal reduces General Fund State Operations spending by 10 percent at State agencies. Commissioners and agency heads will be instructed to maximize savings in non-personal services. To achieve the rest of the savings, the Governor intends to seek a partnership with the State employee labor unions to seek savings in personal service spending in a way that causes the least disruption to State employees while ensuring the continued provision of necessary services for the citizens of New York. Management employees would also contribute to these savings. If workforce saving cannot be accomplished jointly, as a last resort up to 9,800 layoffs would be necessary. Contracts covering the vast majority of State employees are up for renewal at the outset of the 2011-12 State fiscal year.
Merging and Consolidating State Agencies. The Executive Budget proposes to merge or consolidate 11 separate State entities into four agencies to streamline and eliminate duplicative bureaucracy, better align State responsibilities with need and improve services through superior coordination. Proposals include merging the Banking and Insurance departments and the Consumer Protection Board into a new Department of Financial Regulation; merging the Department of Correctional Services and the Division of Parole into the new Department of Corrections and Community Supervision; consolidating the Office for the Prevention of Domestic Violence, the Office of Victim Services and the State Commission of Correction into the Division of Criminal Justice Services; and consolidating the New York State Foundation for Science, Technology and Innovation into the Empire State Development Corporation.
Reducing the Size of State Government. To help redesign and transform government, Governor Cuomo has created the Spending and Government Efficiency (SAGE) Commission. As part of this effort, Governor Cuomo has directed the Commission to make recommendations to reduce the number of agencies, authorities, and commissions by 20 percent over the long term. The SAGE Commission is directed to submit to the Governor a rightsizing plan to reduce the number of agencies by May 1, 2011. Under legislation proposed by the Governor, the Governor would then submit the rightsizing plan to the Legislature for action with the plan going into effect pursuant to a resolution of the Legislature.
Reducing Excess Capacity. The Governor's Executive Budget proposes to reduce excess capacity in prisons, youth detention and mental hygiene facilities. Governor Cuomo will reduce excess capacity using rational processes and will propose to eliminate the statutory 12-month notification prior to closures. Actions for youth and mental hygiene facilities will be taken following careful analysis of vacancy rates, service utilization, and other factors. For prisons, actions will be implemented pursuant to recommendations of a task force created by Executive Order to examine excess capacity and recommend specific prison closures of the enactment of the bill appropriating funds for State operations. If the task force does not recommend a sufficient plan of action, the Commissioner of Correctional Services would implement facility closures. Recognizing the impact of facility closures on host communities, the Executive Budget directs $100 million in economic development aid for affected areas.
With the Executive Budget, Governor Cuomo is advancing a new and inclusive approach that will bring New Yorkers into the process of developing proposals to provide critical health care services at lower costs. Following years of unsustainable growth, the Executive Budget reflects a year-to-year All Funds decrease of nearly $1 billion ($982 million), or two percent, in Medicaid spending in 2011-12.
Gap closing actions totaling $2.85 billion for 2011-12 will be advanced by the Medicaid Redesign Team. Established pursuant to Executive Order No. 5, the Medicaid Redesign Team's 27 members will bring vast experience as health care providers, consumers and industry experts to address the challenge of refocusing our health care system to provide quality health care at lower costs. The team, which also includes State legislators, is conducting a comprehensive review of New York's Medicaid Program and is to report its findings and recommendations for cost reductions to the Governor by March 1, 2011 for consideration in the budget negotiation process.
In addition, these proposals will limit future Medicaid Program State Funds growth to the 10-year rolling average of the medical care component of the Consumer Price Index (currently four percent).
Regional Approach to Economic Development
The Executive Budget establishes 10 Regional Economic Development Councils, which will be chaired by Lieutenant Governor Robert Duffy, to create a more regionally-based approach to allocating economic development funding and to act as one-stop shops for all State-supported economic development and business assistance programs in each region. Recognizing that strategies to revitalize different parts of the State depend upon numerous factors unique to each region and that the best ideas come from the people who live in those regions, Governor Cuomo is proposing a process that will include and engage local stakeholders in developing and executing sustainable long-term, regional economic development strategies.
The Executive Budget reprograms more than $340 million in existing economic development capital resources for major regional initiatives. Besides assisting communities affected by state facility closures, these funds will be used to provide more than $130 million for competitively determined economic development projects put forward by the Regional Councils, $100 million for the Metropolitan Transportation Authority's capital program and $10 million towards the State's existing commitment for the New York City Empowerment Zone. The Executive Budget also strengthens the Excelsior Jobs Program, which was created in 2010 to provide job creation and investment tax credit incentives to businesses in targeted industries.
Restructuring Aid to Encourage Results and Efficiency
One of the guiding principles of Governor Cuomo's Executive Budget is that government must become more efficient and demand results. The budget proposal redirects formula and reimbursement aid into competitive grants in a number of areas and encourages community solutions rather than State mandates. These include:
- Funding of $79 million for programs designed to encourage and reward local governments that consolidate or achieve efficiencies and performance improvements. That includes $35 million for Citizen
Empowerment Tax Credits and Citizens Re-Organization Empowerment Grants and $40 million for the Local Government Performance and Efficiency Program. Of the Citizen Empowerment Tax Credit, at least half of the bonus the program provides to governments that consolidate - 15 percent of the combined entities' tax levy - would have to be used toward local property tax relief.
- Redirecting a portion of mental hygiene funding from State-operated services to community-based programs to improve the quality of care for this vulnerable population.
- Converting a portion of current formula-based funding for agriculture and markets research, economic development, local government and juvenile detention programs into competitive, performance-based funding program.
The Budget maintains the current year funding level of $134 million for programs supported by the Environmental Protection Fund. Appropriations include $10.8 million for solid waste programs, $52.7 million for parks and recreation and $70.5 million for open space programs.
Despite the current fiscal crisis, Governor Cuomo's Executive Budget continues prior year funding levels for the core transportation capital programs supported by the Dedicated Highway and Bridge Trust Fund, providing $501 million for highway and bridge construction, $363.1 million for the Consolidated Highway Improvement Program (CHIPS) and $39.7 million for the Marchiselli program for local governments, and $16.9 million for Amtrak service subsidies and additional rail capital investments.
The Executive Budget also provides a modest increase in cash operating support for the Metropolitan Transportation Authority (MTA) of $43 million, bringing total cash operating support to $3.8 billion, and for other transit systems of $2 million, bringing their combined total to $401 million.
Although the budget also provides $100 million to the MTA's capital program from redirected economic development funds, it also proposes using $165 million of Metropolitan Mass Transportation Operating Assistance Account funds to pay debt services on State bonds previously issued for the MTA capital program that otherwise would be paid from the General Fund and transferring $35 million in MMTOA funds to the General Fund.