Eliminates Largest Deficit in State History, Reins in Spending;
Proposal Includes Reductions across Every Area of State Spending, Targeted
Increases in Revenue; and Represents a Balanced Plan for a Balanced Budget
Governor Paterson today delivered a balanced Executive Budget, more than one
month prior to the State constitutional deadline, which would eliminate the
largest budget deficit in State history – a $1.7 billion current-year shortfall
and a $13.7 billion 2009-10 deficit. This proposal includes a series of
difficult decisions across every area of State spending, as well as targeted
increases in revenue, to address an unprecedented fiscal and economic crisis.
The Budget also includes several reforms that will increase government
efficiency and lower taxpayer costs in the future.
“For years, record revenues from Wall Street allowed State spending to increase
at an unsustainable rate,” said Governor Paterson. “With the financial services
industry in the midst of an unprecedented crisis, we must fundamentally
reevaluate what our State can afford to spend. Change is unavoidable, and the
proposals I have put forward today begin the difficult process of adapting to a
new fiscal reality. Just like thousands of families across New York
Governor Paterson’s Executive Budget is structured in a unique manner in
order to address the challenge of closing a mid-year shortfall. It contains two
main components, both of which were delivered to the Legislature today. The
first component is a 2008-09 Deficit Reduction Plan. This stand-alone
legislation includes a series of actions that are necessary to close the
State’s current-year $1.7 billion shortfall. The State financial plan assumes
enactment of these actions by February 1.
The second component is Governor Paterson’s complete 2009-10 Executive
Budget proposal, which will close the 2009-10 fiscal year $13.7 billion
deficit. Consistent with Governor Paterson’s goal to start reducing State
spending as soon as possible, the savings actions included in that proposal
assumes the budget will be enacted by
Spending Growth
Under Governor Paterson’s Executive Budget proposal, 2009-10 General Fund
spending would remain flat compared to 2008-09 levels at $55.4 billion. State
Operating Funds spending would total $79.8 billion, an increase of $400 million
or 0.5 percent.
All Funds spending would total $121.1 billion, an increase of $1.3 billion
or 1.1 percent – which would represent the lowest level of growth since 1996-97
when the All Funds budget declined by 0.4 percent. Unlike in 1996-97, however,
Governor Paterson and the Legislature, have worked throughout the fiscal year
to reduce the size of the 2008-09 budget to address plummeting revenues. If
these reductions had not occurred, 2009-10 All Funds spending would have
declined compared to 2008-09 by $548 million or 0.5 percent.
2008-09 Deficit Reduction Plan
Governor Paterson’s 2008-09 Deficit Reduction Plan includes $1.7 billion in
savings initiatives that are necessary to close the state’s current-year state
budget shortfall. This proposal includes $1.0 billion in proposals that were
originally put forward for consideration by the Legislature at a November
special session as part of an overall $2.0 billion package. Major prior
recommendations that will be put forward again include $500 million in health
care savings; a $50 million reduction in Environmental Protection Fund (EPF)
spending and a $25 million sweep of uncommitted EPF funding; an expansion of
the 5-cent bottle deposit to non-carbonated beverages ($118 million in
2009-10); a $620 increase in SUNY annual undergraduate tuition from $4,350 to
$4,970, which has been approved by the SUNY Board of Trustees ($62 million); a
10 percent reduction in Community College Base Aid ($15 million); and others.
Of the original $2.0 billion in savings proposed in November, over $1.0
billion are no longer possible to achieve before the end of the fiscal year.
They have been replaced by $771 million in new savings put forward today.
These $771 million in new savings initiatives include the elimination of a
planned transfer to the Community Projects Fund for member items ($45 million);
the implementation of strict state agency spending controls to eliminate
non-essential spending ($100 million); the transfer of uncommitted funds from
the Department of Law’s special revenue account ($91 million); the transfer of
New York Power Authority assets and excess operating funds to the General Fund
($306 million); the use of $100 million from various other fund balances; and
other actions. A complete listing of each proposal included in the 2008-09 Deficit
Reduction plan is available at www.budget.state.ny.us.
2009-10 Executive Budget
Governor Paterson’s $13.7 billion Executive Budget General Fund savings
proposal includes $9.5 billion in recurring spending reductions, which
represent 70 percent of total actions. It also contains $3.1 billion in
recurring revenue actions, and limits non-recurring actions to eight percent of
the overall plan or $1.1 billion.
Governor Paterson said: “The Executive Budget proposal I have put forward
today represents a balanced plan for a balanced budget. The vast majority of my
plan focuses on recurring reductions across every area of state spending. In
order to protect core services, however, it also contains targeted increases in
revenue. Given the magnitude of our current crisis, the only way we are going
to overcome our budget problems is by acting comprehensively through shared
sacrifice.”
Major actions include:
Education: The Executive Budget reduces School Aid in 2009-10
by $698 million or 3.3 percent from 2008-09 while maintaining a commitment to
both long-term increases in education investments and the formulas created to
equitably allocate these funds. Even after reductions, funding for School Aid
would still total $20.7 billion in 2009-10, a 42 percent or $6.2 billion
increase compared to 2003-04. Proposed reductions are structured progressively
based on district fiscal resources and student need. Savings are also achieved
through reductions or eliminations in categorical programs to prevent further
reductions in direct aid to schools. Governor Paterson remains committed to the
education investment plan advanced in 2007-08 to increase School Aid by $7.0
billion over a multi-year period. But significant
funding increases in Foundation Aid and Universal Prekindergarten that were
scheduled to be phased-in over a four-year period will now be phased-in over an
eight year period to reflect the need to adapt to the difficult fiscal
environment. The Executive Budget also proposes mandate relief measures
to help school districts control costs.
Medicaid/Health Care: If no actions were taken to control
costs, State Funds Medicaid spending would grow 12 percent to $17.3 billion.
The Executive Budget proposes taking actions to limit State Funds Medicaid
spending to $16.0 billion, an increase of 3.8 percent from 2008-09. The
recommendation focus on reforming ineffective hospital, nursing home and home
care reimbursement systems to direct spending to more appropriate primary and
community based settings. Even after these actions, total federal, state and
local Medicaid spending would still increase by $432 million or 1.0 percent
compared to 2008-09 to a total of $45.4 billion, and
STAR: The
Executive Budget eliminates the STAR rebate
program ($1.4 billion). The rebate is a check issued to homeowners and has no
relation to an individual’s property tax bill. A corresponding enhanced New
York City personal income tax credit ($364 million)
added in conjunction with the rebate will also be eliminated. The value of the
credit will return to pre-rebate levels, declining from $290 to $125 for
married couples and $145 to $62.50 for individuals. Funding for the STAR exemption program, which directly shields a portion of an individual’s assessed
home value from local property taxation, as well as the standard New York City
rebate will still total $3.3 billion – approximately equivalent to spending on
the program prior to the creation of the rebate.
Higher Education: Based on the
recommendations of the New York State Commission on Higher Education, the
Executive Budget would establish the New York Higher Education Loan Program
(NYHELPs) which will provide a minimum of $350 million in loans to
approximately 45,000
higher education institutions. The loans will be offered at rates well below those currently available in the private loan market.
Additionally, a SUNY ($620, 14 percent) and CUNY (up to $600, 14 percent) tuition increase tied to an investment plan is also recommended, which will provide a year-to-year increase in core instructional budget resources for those universities.
Human Services: For the first time
in 18 years, the Executive Budget would increase the basic welfare grant. The
grant would increase by 10 percent, from $291 to $320 in January 2010; by
another 10 percent to $352 in January 2011; and by a final 10 percent to $387
in January 2012. The budget also preserves funding for core programs such as
foster care, adoption, child and adult protective services, and domestic
violence services. Savings are achieved by reducing or eliminating a number of
non-mandated services, many of which have provided valuable services but are
supplemental to the state’s core mandated programs.
State Workforce: The state workforce is expected to total
196,292 in 2009-10, a decrease of 3,108 compared to the prior year. This would
still represent, however, an increase of 8,927 compared to 2003-04. The 2009-10
decline includes an estimated 521 layoffs, which are mostly limited to the
impact ofagency consolidations, facility closures, or program eliminations.
The Budget also advances proposals to reduce spending for state employees in
ways that will minimize further layoffs during a time of economic distress and
avoid service disruptions in critically important programs. Proposals include
deferring five days of salary payments until a state employee leaves service or
the fiscal crisis is declared to have ended; eliminating a scheduled three
percent general salary increase for 2009-10; and requiring state employees and
retirees to contribute greater amounts to health care coverage. Even after
these proposed actions, most public employees will have received a general
salary increase of 20 percent compared to 2003-04.
Pension Reform: The Executive Budget creates a new tier of
pension benefits (Tier V) for state and local employees. Many of the
requirements for Tier V would simply remove pension enhancements added in
recent years to Tier IV, including restoring the minimum retirement age to 62
instead of 55, requiring employees to contribute to the pension fund after
their tenth year of service, restoring the minimum years of service required to
draw a pension from five to ten, and others. New requirements for Tier V
include excluding overtime compensation when calculating pension benefits,
which will prevent “salary spiking” in an employee’s final years of service.
Under the state constitution, Tier V requirements can only apply to new
employees. The Executive Budget also includes a
proposal to implement a new tier of pension benefits for newly hired City of
Aid and Incentives for Municipalities (AIM):The Executive Budget achieves savings by maintaining AIM funding at current year levels, which would eliminate a previously scheduled
$61 million increase, and by eliminating New York City’s
AIM payment. Even after these actions, AIM Funding for municipalities outside of New York City will still have increased
by $290 million or 62 percent compared to 2004-05 and total $755 million.
Unlike other municipalities, which rely more heavily on the AIM program, AIM payments represent 0.5 percent
of NYC’s overall revenues. To help offset recommended reduction in AIM and other local government assistance, the Budget advances a range of cost-saving mandate relief initiatives and local revenue
enhancements. In particular, Tier 5 pension reform, additional Wicks Law
relief, and an expanded red light camera program will provide substantial
fiscal benefits for New
York City
. Other municipalities will also benefit from revenue actions such as removal of sales tax exemptions.
Empire Zone Reform: The Executive Budget would require all of the current Empire Zone program participants to demonstrate that they are producing at least $20 in actual investments and wages for every $1 that the state invests in order to remain in the program. The reformed program will continue until its sunset date of June 30, 2011, excluding certain sectors such as utilities, retail, and real estate from future participation. These actions are expected to produce savings of $272 million in 2009-10, $292 million in 2010-11, and $310 million when fully annualized. A portion of the demonstrated savings from these reforms would be redirected to a new job creating grant program administered by ESDC and to new research and development tax credits. These initiatives will receive $100 million when fully annualized by 2011-12.
Rightsizing State Government: The 2009-10
Executive Budget lays a strong foundation for improving state operations,
beginning the process of streamlining state government by eliminating
duplicative services, consolidating overlapping state agencies, closing
underutilized facilities, lowering the cost and size of the state workforce,
and consolidating back-office operations. To achieve this goal, seven state
agencies would be eliminated, merged or integrated with existing agencies. These include the New York State Foundation for Science,
Technology and Innovation (NYSTAR) and Department of Economic Development,
which would integrate with the Empire State Development Corporation (ESDC); the
State Employment Relations Board, which would merge with the Public Employment
Relations Board; The Northeastern Queens Nature and Historical Preserve
Commission and the Hudson River Valley Greenway Communities Council and
Conservancy would merge into the Department of State; The New York State
Theatre Institute would merge with the Empire State Plaza Performing Arts
Center Corporation (“The Egg”) and the Office of the Welfare Inspector General
would merge with the Office of the Medicaid Inspector General.
In addition, the Executive Budget would also
establish a new Council on Shared State Operations to oversee the development
of a “shared services” model in New York
Facility Closures/Downsizing: Several underutilized state
facilities would be eliminated or downsized. The Executive Budget recommends
closing four prison camps and several annexes, three Office of Children and
Family Services (OCFS) evening reporting centers and six underutilized OCFS
youth facilities, as well as downsizing two OCFS youth facilities.
Additionally, the Office of Mental Health would eliminate 450 beds (11 percent)
from its inpatient psychiatric system, moving those patients to more
appropriate settings, and the Office of Alcohol and Substance Abuse Services
would close its
.
Revenue Actions: The Executive
Budget includes a balanced package of revenue enhancements. These proposals do
not include any broad-based income tax proposals, but do include $3.1 billion
in recurring General Fund revenue actions. These proposals ensure that tax
burdens are fairly distributed, improve consistency with other taxing
jurisdictions, and close loopholes, among other objectives. The budget also includes
new or increased fees or fines, most of which finance specific activities and
have not been changed in several years.
Some notable revenue increases include: A new, additional 18 percent
sales tax on non-diet soft drinks to combat obesity and related diseases, with
revenues directed to health care; eliminating the sales tax exemption on
clothing and footwear under $110, replacing it with two exemption periods
during which clothing and footwear under $500 would not be subject to sales
tax; imposing a sales tax on cable and satellite TV/Radio services consistent
with the practice of 23 other states; conforming the state sales tax to New
York City’s practice of taxing personal services, such as barbering, massages,
and hair salons, and credit rating services; repealing an ineffective sales tax
cap on gasoline, for which there is no documented evidence provides savings
that are passed on to consumers; permanently increasing the assessment on utility companies from 1/3 of one
percent to one percent of gross intrastate revenues plus an additional one
percent temporary surcharge on those revenues; and other actions.
Budget Deficits
In October, the Division of the Budget projected budget deficits of $1.5
billion in 2008-09, $12.5 billion in 2009-10, $15.8 billion in 2010-11, and
$17.2 billion in 2011-12 – a cumulative total of $47.0 billion. Based on
greater than anticipated declines in projected revenues, this budget deficit
has increased to $1.7 billion in 2008-09, $13.7 billion in 2009-10, $17.1
billion in 2010-11, and $18.6 billion in 2011-12 – a total of $51.1 billion.
Governor Paterson’s proposal would eliminate the 2008-09 shortfall and
2009-10 deficit, as well as make important strides toward long-term structural
balance. After implementing the actions contained within the Executive Budget,
which will produce $45.2 billion in savings over the next four years, the
state’s out-year budget deficits would total $1.8 billion in 2010-11 and $4.0
billion in 2011-12 – a cumulative total of $5.8 billion.
Reserve Levels/State Debt
The 2009-10 Executive Budget proposal maintains $1.2 billion in reserves, equal to 2.2 percent of General Fund spending. State debt is projected to grow by $2.6 billion (5.0 percent) to $54.2 billion, largely due to investments in economic development, transportation, and higher education.
I got a grant from the federal government for $12,000 in financial aid, see how you can get one also at
http://couponredeemer.com/federalgrants/
Posted by: stella jordon | December 24, 2008 at 07:24 AM