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April 19, 2011

 

DiNapoli Proposes Budget Reforms to Prevent Budget Gimmicks and Increase Transparency


Sounding the call for fiscal reform, New York State Comptroller Thomas P. DiNapoli today renewed his appeal for series of actions to prohibit the use of gimmicks to balance the state budget, increase transparency in the state’s budget process and force the state to plan for long-term fiscal solvency.  DiNapoli’s reforms would require the state to address out-year budget gaps and attain multi-year budget balance, align spending with available resources, limit debt, curb the use of fiscal gimmicks and publicly negotiate the budget.

“The enacted budget avoided much of the fiscal gimmickry of the past to attain budget balance, and it starts to address the long-term implications of the structural imbalance in the state’s finances,” DiNapoli said. “Now we need to set these important changes in stone. We need long-term solutions that take away the temptation to use short-term fiscal gimmicks that continually push the state’s budget woes to future years.”

DiNapoli’s plan includes statutory changes, Constitutional amendments and controls contained in bond covenants that would address long-standing deficiencies in the state’s budget process.  In addition to supporting multi-year and GAAP-based budgeting, the Comptroller’s proposal includes the following:

  • Require Gap-Closing Plan:  DiNapoli’s plan requires the Governor to identify actions to close the out-year gaps as part of the state’s Financial Plan.
  • Impose Binding Revenue Forecast:  Current state law requires the Executive and Legislature to agree on a revenue forecast of expected tax revenues by March 1, which is not binding. Absent an agreement, the Comptroller provides a non-binding forecast by March 5. DiNapoli’s proposal would expand the forecast to include all revenues and resources available for spending to provide a more accurate picture of available means, and would set a binding framework to the budget. If the parties could not agree, the State Comptroller’s revenue forecast would be binding.
  • Increase Reserves:  DiNapoli’s proposal increases reserves to cushion against budget shocks. Under his proposal, in any year in which the state incurs a surplus, 50 percent of the surplus must be paid into the Rainy Day Fund until it reaches the maximum level of five percent of General Fund spending. Currently, these deposits are restricted to just 0.2 percent of annual General Fund spending with the maximum balance capped at 2.0 percent of General Fund spending.
  • Restrict the Use of One-Shots:  DiNapoli’s proposal prohibits using one-shot budget gimmicks to pay for ongoing expenses. One-time revenues could only be used to pay down debt or finance non-recurring expenses, such as emergency or capital spending.  The state has repeatedly paid for recurring spending with one-time revenues.
  • Require Public Negotiation of Budget:  DiNapoli’s proposal requires joint legislative conference committees to meet publicly to negotiate the budget and give a greater voice to individual legislators in forming the final budget.
  • Strengthen Capital Planning:  DiNapoli proposes establishing a new Capital Asset/ Infrastructure Council that would look out 20 years to identify the state’s most critical construction needs and develop a five-year capital plan. Currently, each state agency has its own capital plan process, but the plans rarely extend beyond five years. There is little coordination or consistency among the plans and there is no mechanism that comprehensively identifies priorities.
  • Enact Real Debt Reform:  More than 94 percent of all outstanding state-funded debt was not approved by the voters.  DiNapoli’s proposal calls for a constitutional amendment to ban backdoor borrowing by public authorities, restore voter control over debt, require that state debt is issued by the Comptroller, impose a binding cap on the amount of state debt, and prohibit the issuance of debt for non-capital purposes.
  • Require Budget Transparency:  Dense budget documents make it nearly impossible for taxpayers to have a meaningful understanding of the budget.  DiNapoli’s proposal would require the Executive to report three years of detailed spending information, including more detailed cash flow projections and spending for new programs. DiNapoli would also prohibit the use of blanket sweeps and require information on how sweeps affect programs.

To view the bill memos for DiNapoli’s proposed legislation, visit:
http://osc.state.ny.us/press/releases/apr11/oscm3.pdf
http://osc.state.ny.us/press/releases/apr11/oscm4.pdf

To view DiNapoli’s proposed legislation, visit:
http://osc.state.ny.us/press/releases/apr11/oscb3.pdf
http://osc.state.ny.us/press/releases/apr11/oscb4.pdf



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