The Peru Gazette

DiNapoli: Executive Budget Reduces Out-Year Gaps, Diminishes Independent Oversight
Federal Funding Questions Pose Increased Risk for State

The $162.2 billion Executive Budget includes proposals to address infrastructure needs while reducing out-year gaps, but shifts some spending off-budget and would expand Executive authority to reshape spending and programs without legislative input, according to a report released today by New York State Comptroller Thomas P. DiNapoli.
“The 2017-18 Executive Budget seeks to balance spending and revenue and proposes much needed capital investments in clean water projects while increasing funding for education, health care and other programs,” DiNapoli said. “Still, several proposals raise issues regarding checks and balances over use of the public’s dollars and would diminish independent oversight.”
The budget projects total All Funds spending of $162.2 billion in state fiscal year (SFY) 2017-18, up 3.8 percent from the current year. These figures include federal aid associated with the Affordable Care Act and disaster-related assistance, which the Division of the Budget (DOB) excludes from its primary presentation of $152.3 billion in All Funds spending.
The budget proposal comes at a time of significant risk involving the federal budget. It includes $54.3 billion in federal assistance, or one in every three dollars in total. These funds are critical to help pay for essential investments in human services, transportation, education, environmental programs and health care. Federal Medicaid support has increased by billions of dollars as a result of the Affordable Care Act and other policy changes and is projected to rise another $3.3 billion over the next four years. The current budget debate in Washington threatens much of that funding.
Total revenue is projected at $160.4 billion, an increase of 4.4 percent. Although DOB estimates tax revenues in the current year to remain relatively flat, it expects such revenues to rise by $4.2 billion, or 5.6 percent, in SFY 2017-18, in part because of the Executive’s proposal to extend the higher personal income tax (PIT) rate for upper-income earners for an additional three years. Federal aid is projected to rise by $1.4 billion, or 2.6 percent, in the coming year and by $4.2 billion through SFY 2020-21.
DOB projects that spending will exceed revenues in the General Fund by an average of $2.1 billion in the three years starting in SFY 2018-19. Such projected gaps are substantially reduced from earlier projections in large part because of the proposed extension of the top PIT rate and various spending shifts which change reported expenditure levels and growth.
The budget includes several proposals potentially affecting the expenditure of tens of billions of dollars that would give the Executive expanded authority to reshape the budget after it has been adopted by the Legislature. These include the ability to increase or decrease planned expenditures, change the identified purpose of spending and reallocate spending to other state agencies and public authorities. For example, numerous Local Assistance appropriations would authorize the Director of the Budget to reduce planned spending if receipts – including but not limited to federal aid – are lower than projected.
Certain other aspects of the Budget raise concerns with respect to transparency, accountability and oversight. These include:
A lack of clarity regarding spending levels and growth;
Continued use of lump-sum appropriations; and
Additional proposed limits on the Comptroller’s independent oversight of the use of public resources, including review of various contracts and debt issuances.
Eliminating these provisions creates risk of misuse of such resources and higher costs for taxpayers.
General Fund reserves at the end of the current fiscal year are projected to total $6.8 billion, down by $2.1 billion from a year earlier. They are projected to decline by another $1.2 billion by the end of SFY 2017-18. DOB anticipates a $150 million deposit to the Rainy Day Reserve in SFY 2017-18, if fiscal conditions permit.
The budget proposes increased bonding authorization for state-supported debt of nearly $8.9 billion, or 6.8 percent, over existing authorizations. None of these authorizations would require voter approval. Spending under the proposed five-year Capital Program and Financing Plan is projected to total $66.2 billion, an increase of $2.8 billion, or 4.4 percent, from the current Plan.
The Executive Budget also:
Projects slower employment growth in 2017 and 2018 compared to the past year, but stronger gains in overall economic activity, wages and personal income.
Includes numerous provisions that obscure the picture of state revenue and spending, including several that would reduce reported State Operating Funds expenditures in the coming year by more than $1.2 billion.
Increases school aid by $961 million, or 3.9 percent, on a school year basis, including a $428 million increase in Foundation Aid.
Projects state-funded Medicaid spending to rise by 5.1 percent to $23.4 billion in SFY 2017-18, with federal support for the program at $33.5 billion in the coming year.
Proposes the Excelsior Scholarship program to make State University of New York (SUNY) and City University of New York (CUNY) tuition-free for certain full-time students, at a projected cost of $71 million in the coming fiscal year, and reaching $163 million in SFY 2020-21. It also authorizes SUNY and CUNY to raise undergraduate tuition for state residents by up to $250 annually over five years, and proposes the DREAM Act to make certain undocumented immigrants eligible for state-funded college aid.
Includes a proposed Clean Water Infrastructure Act authorizing $400 million annually over five years, with $75 million planned to be spent in SFY 2017-18.
Projects spending on state economic development programs to rise by $82 million, or 3.3 percent, to $2.6 billion, in the coming year. Major new authorizations would include $700 million for the Moynihan Station project in New York City, $400 million to expand the “Buffalo Billion” initiative, $300 million for research and development in the life sciences industry, and $207.5 million for a program intended, in part, to continue work on projects of the SUNY Polytechnic Institute.
Includes proposals to raise the age of juvenile jurisdiction, reduce pre-trial detention of suspects, remove mandatory prison terms for certain low-level felonies and provide funding to improve legal defense services for indigent defendants.
Read DiNapoli’s report, or go to: http://osc.state.ny.us/reports/budget/2017/review-of-executive-budget-2017.pdf