Tough Times Test New York’s Policymakers

November 10, 2009

In 2007, the State Legislature enacted a series of reforms designed to increase transparency and accountability throughout our budget process. These measures, formally known as the “Budget Reform Act of 2007,” require both houses of the State Legislature to submit their respective assessments of New York’s fiscal condition and offer some forward-looking financial analysis on critical areas such as projected deficits, state spending, school aid, Medicaid costs and public assistance, to name just a few. This analysis is commonly referred to as a “Quick Start” forecast, as it provides early, honest projections as to New York’s true fiscal condition that inform policymakers in their approach to crafting the State Budget and, ideally, help deliver a “quick start” to budget deliberations.

This past Thursday, our Conference released its Quick Start forecast that was the product of months of hard work and careful analysis compiled by our Assembly Minority Ways and Means Committee. Our figures typically represent one of the most accurate economic forecasts and reliable fiscal analysis offered from any Legislative Conference.

One inescapable conclusion drawn from our Quick Start forecast is that a growing state budget deficit, a poor economy, some of the nation’s highest taxes and an unsustainable growth in government spending are going to test the resolve, creativity and ability of New York’s policymakers like never before. As this weekly legislative column is being written, the U.S. Department of Labor has reported that our nation’s unemployment rate has risen to 10.2 percent, the highest rate since April of 1983, underscoring the severity of the fiscal challenges confronting all state governments.

Following are some of the estimates and analyses contained in our Quick Start forecast that was submitted to Governor David Paterson, Comptroller Tom DiNapoli and the other Legislative Conferences.

STATE BUDGET DEFICIT

The State Division of the Budget’s Mid-Year update projects that New York is facing a budget gap of $3.2 billion for this year and a $6.8 billion shortfall next year. Our Conference’s fiscal analysis has suggested that the shortfall is likely to be somewhat higher, coming in at a $3.7 billion budget deficit this year and $7.3 billion next year. These figures point to one inescapable conclusion: the state’s multi-billion dollar budget deficit is real and failure to address it will have serious consequences for all New Yorkers.

MEDICAID PROGRAM COSTS

The enormous costs imposed by New York’s Medicaid program – the most expensive of its kind in the country – continue wreaking havoc on state and local government finances. Our Conference has estimated that, in keeping with the economic downturn, Medicaid rolls will actually increase by 10.2 percent in the current fiscal year, translating into a total program enrollment of 4.3 million people, which is nearly one-fifth of our state’s population. Additionally, we estimated that our State’s share for the current fiscal year will be $14 billion and that 2010-11 Medicaid program enrollment will rise 4.7 percent, totaling 4.5 million New Yorkers, with the State’s share rising to $16.5 billion and a local cap of $902.3 million.

STATE SCHOOL AID

According to our Conference’s projections, State school aid is expected to increase by an estimated $453.5 million for the 2010-11 school year, which would bring total funding for annual State school aid to $22.04 billion. Of the major expense driven aid categories, Special Education is expected to increase the most, to $35.6 million. Usually, Foundation Aid would result in the largest increase in school aid, but it was frozen at the 2008-09 levels for 2009-10 and 2010-11.

WHAT THIS MEANS FOR TAXPAYERS

Our Conference believes that declining tax revenues, coupled with increased state spending on programs like Medicaid, make it more important than ever that next year’s Enacted Budget provide fiscally sound proposals and not raise a dime of new taxes or fees on already overburdened taxpayers and businesses. These challenges transcend political partisanship or Albany’s tired old blame game that have only impeded progress and prevented the types of non-partisan cooperation needed to deliver real solutions.

Governor Paterson has asked to address Members of the State Legislature next week during a special joint session of both houses to further outline the severity of New York’s budget deficit, along with other issues. Our Conference and I will be there, listening to what the Governor has to say and continuing to work in a non-partisan fashion with him and the other Legislative Conferences for an open and transparent process that yields a fiscally responsible, on-time State Budget which addresses the challenges facing New York’s taxpayers, economy and government. At the end of the day, we are all New Yorkers – we can best meet these challenges by always remembering that and working together.

As always, constituents wishing to discuss this topic, or any other state-related matter, should contact my district office at (315) 781-2030, or e-mail me at kolbb@assembly.state.ny.us.

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