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March 9, 2010



DiNapoli Proposes Reforms to End
New York’s Chronic Budget Crisis

 

New York State Comptroller Thomas P. DiNapoli today proposed a series of actions to repair New York’s recurring budget problems and out-year budget gaps. DiNapoli’s reforms require the state to address out-year budget gaps and attain multi-year budget balance, align spending with available resources, limit debt and curb the use of fiscal gimmicks.

“New York State has been addicted to unaffordable borrowing and unsustainable spending," said DiNapoli. Now is the time to break that addiction. These reforms are first steps, some of which we can take right now, that will start us on the road to recovery. It won’t be easy, but it is absolutely necessary. We’ve already delayed too long. The last thing New Yorkers need is a replay of last year’s buy-time budget. We need to get the budget in balance and keep it in balance.”

DiNapoli’s plan, implemented through statutory changes, Constitutional amendments and controls contained in bond covenants, to address long-standing deficiencies in the state’s budget process includes:

  • 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. For example, the Executive’s proposed budget only addresses next year’s projected budget gap, but it does little to address three-year cumulative gaps of at least $30 billion.
  • 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. 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. 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-shots 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. For example, in SFY 2010-11, the Executive’s proposed budget uses $11.3 billion in federal stimulus and other temporary funds.
  • 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. Currently, budget conference committees rarely meet and there is no requirement for public budget deliberations and discussions.
  • 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 state-funded debt was not approved by the voters. DiNapoli would introduce 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.
  • Mandate Budget Transparency: Dense budget documents make it nearly impossible for taxpayers to have a meaningful understanding of the budget. DiNapoli 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.

Click here for a copy of the report.

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