New York state is in a stronger financial position, reflecting better budgeting and financial practices and an improved economy, according to a report on the 2014-15 state Financial Plan released today by New York State Comptroller Thomas P. DiNapoli. More remains to be done to align recurring revenues with recurring spending and to limit the use of temporary resources.
"New York has made significant budgetary improvements since the Great Recession to put it on solid financial footing, and the result is that the state’s fiscal condition is the best it has been in years. Still, some budgetary challenges persist," DiNapoli said. "The SFY 2014-15 budget limits spending growth and holds future budget gaps to manageable levels, but efforts to keep spending in line with revenues must continue along with addressing our debt burden."
DiNapoli estimates that projected out-year gaps for the fiscal years ending in 2016 through 2018 average $2.5 billion annually, or 3.7 percent of average projected General Fund revenues, much lower than the levels of five and ten years ago. The Executive has instituted a goal of limiting annual growth in State Operating Funds expenditures to 2 percent in the coming years, and projects that such spending restraint could lead to an operating surplus by State Fiscal Year 2015-16.
New York state ended fiscal year 2013-14 with General Fund reserves at $2.2 billion, the highest level since the end of SFY 2007-08. State Operating Funds spending is projected to rise this year by 1.8 percent, according to the Division of the Budget (DOB). The lower projected spending growth is achieved through a combination of actual spending limitation and other actions, such as prepayments and shifting spending off-budget or otherwise outside the scope of State Operating Funds.
The Financial Plan relies on $3.6 billion in temporary resources, excluding extraordinary federal disaster assistance. Such resources include more than $2 billion from changes to the personal income tax that are scheduled to expire at the end of 2017, a $1 billion transfer from the State Insurance Fund, revenue from an assessment on utilities, the use of reserves, and transfers from two public authorities. These temporary resources are partly offset by approximately $785 million in temporary tax-reduction initiatives.
The Financial Plan also benefits from $1.4 billion in prepayments and advances that lower spending in SFY 2014-15, including $668 million in debt service payments and $509 million in lower General Fund transfers to Capital funds. If projections are adjusted to offset the impact of actual and planned prepayments, projected spending growth in SFY 2014-15 would increase from 1.8 percent to 3.5 percent.
DiNapoli noted both Moody’s and Fitch recently upgraded New York’s bond rating and moved the state’s outlook to stable. Both organizations cited the strong, well-funded state pension system as one of the reasons for the upgrade.
DiNapoli’s report also notes:
- The Financial Plan anticipates reserves to equal approximately 3.5 percent of SFY 2014-15 General Fund disbursements at the end of the fiscal year. This would represent the fifth consecutive year that the reserve-to-spending ratio has remained below 4 percent. Reserves are projected to change little in the next few years, according to the Financial Plan. Reserves were $3.3 billion at the end of SFY 2005-06, equal to approximately 7 percent of General Fund disbursements that year.
- The Capital Plan increases the total amount of projected capital spending to nearly $47.9 billion over the next five years, compared to $46.8 billion in the Executive’s proposed Capital Plan for the same five-year period, an increase of about $1 billion.
- At the same time, the Capital Plan projects transfers from the General Fund to the Capital Projects Fund will decline $1 billion compared to the Executive proposal over the life of the Financial Plan. As a result, the Capital Projects Fund is projected to carry a negative balance of more than $600 million in each of the five years of the Capital Plan, reflecting a 48 percent larger average negative balance compared to the previous ten year period.
- The five-year Capital Plan projects that state-supported debt will increase $6.5 billion, or 12.4 percent, from SFY 2013-14 through 2018-19. State-funded debt (a more comprehensive measure) would rise by $9.5 billion or 15 percent over the same period. The Enacted Budget includes the proposed $2 billion Smart Schools Bond Act, which will be placed on the November ballot for consideration by voters.
For a copy of the report visit: http://www.osc.state.ny.us/reports/budget/2014/2014-15_financial_plan_enacted_budget.pdf