DiNapoli: Budget passed on time, but New York's fiscal challenges remainby jmaloni
The enacted state budget was completed on time, sending a positive signal to bond markets and taxpayers, according to a preliminary report released Friday by New York State Comptroller Thomas P. DiNapoli.
"The governor and the Legislature deserve credit for once again adopting budget bills ahead of the April 1 deadline," DiNapoli said. "Nevertheless, New York continues to struggle to meet serious fiscal challenges. The recently passed state budget restrains spending growth, but it also contains temporary resources and revenue assumptions that may fall short. Instead of reining in the state's reliance on backdoor borrowing, it expanded the use of public authority debt."
The enacted budget relies on more than $4 billion in temporary and non-recurring resources, excluding $5.1 billion in extraordinary federal assistance for "Superstorm" Sandy expenses. At least $467 million in new temporary resources to be used in 2013-14 - including a $250 million transfer from the state insurance fund - are included in the budget. In total, the enacted budget authorizes the transfer of at least $1.75 billion from assessment reserves held by the SIF to the general fund through SFY 2016-17.
DiNapoli said the enacted budget reflects the difficult decisions needed in response to a painfully slow recovery from a deep recession and multiple extreme weather events. The budget continues efforts to prioritize the recovery and rebuilding after "Superstorm" Sandy, to minimize long-term negative consequences and improve the state's ability to respond to such events in the future.
The comptroller's report noted that, while timeliness has improved, transparency was compromised in this year's budget process. Major new provisions, some with multi-year cost implications, were not openly discussed before enactment, including $385 million in new public authority debt for state and local facilities, and $750 million in public authority debt related to unspecified transportation needs.
DiNapoli said the creation of a new debt structure backed by state sales tax revenue allows new borrowing by public authorities without seeking voter approval. Additionally, a new debt structure for SUNY dormitories moves debt service spending off-budget, reducing transparency and allowing the state to circumvent statutory debt caps.
The comptroller noted several cases where estimated revenues and savings may not materialize, leaving the state to contend with possible gaps, including:
•The consensus revenue forecast of the executive and the Legislature estimated that tax receipts will be $200 million higher than the executive budget's combined projections for the previous and current fiscal years. Given continuing uncertainty in the economy, tax receipts may fall short of those expectations, as has happened in each of the previous five years;
•The enacted budget makes no provisions to deal with the impact of federal budgetary sequestration. Federal funds information for states estimates sequestration could reduce aid for various programs by $290 million in the first six months of the state fiscal year; and
•The enacted budget assumes $600 million in newly available federal Medicaid funding and $500 million in state Medicaid actions to offset the loss of $1.1 billion in federal assistance for services for the developmentally disabled. Negotiations with the federal government regarding $250 million of the anticipated aid have not been resolved.
The enacted budget includes more than two-dozen tax and other revenue-related provisions that are preliminarily projected to increase receipts by more than $5 billion cumulatively through SFY 2016-17, compared to previous law.
The Division of the Budget is required to issue an updated financial plan within 30 days of the budget's enactment. DiNapoli's office will release a comprehensive review of the enacted budget financial plan once it is made available.
For a copy of the report, click here (DOWNLOAD): http://www.osc.state.ny.us/reports/budget/2013/2013-14_enacted_budget_prelim_report.pdf.