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CBC: New York State Budget and Jobs Summit

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New York State Budget and Jobs Summit: …

New York State Budget and Jobs Summit:
The FY 2010-11 Budget and the Longer Run

Presentation by the Citizens Budget Commission

Published in: News & Politics, Business, Sports

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  • 1. New York State Budget and Jobs Summit: The FY 2010-11 Budget and the Longer Run A Presentation by the Citizens Budget Commission February 23, 2010
  • 2. Presentation Overview ► Budget Challenges this Year Pattern of high spending growth combined with large revenue losses creates large budget gaps The Executive Budget is a down payment but does not do enough ► TheBig Picture- Going off the Cliff or Avoiding it by Restructuring Meaningful spending reductions Avoiding taxes and deficit financing More strategic investment of limited resources 2
  • 3. Budget Challenges this Year ► Governor’s plan includes actions to close a $7.5B gap in FY 2010-11 ► Counts on $1B added federal Medicaid aid ► Positives of the plan: Largely recurring and mostly spending reductions; one- shots minimized New taxes limited Creative proposals around SUNY/CUNY and agency mergers ► More savings needed in Medicaid and workforce 3
  • 4. Summary of the FY 2010-11 Executive Budget Proposed growth is 0.0% for State Operating Funds and 0.9% for All Funds Gap Closing Plan Value of the Proposals No Growth-Low Growth Proposed Fiscal Year 20010-11 $ in millions Percent for Next Year Budget Gap ($7,476) 100% (dollars in billions) Spending Actions $4,609 62% $160 School Aid * 1,838 134 135 Medicaid 822 $140 Operating Efficiencies 707 $120 Labor 250 $100 79 79 Other ** 992 $80 Revenue Actions $1,465 20% $60 Tax on Sugar Syrup 465 $40 Cigarette Tax Increase 210 $20 Medicaid Provider Tax 216 $- Other 574 State Operating All Funds, incl One-shots/Borrowing $827 11% Funds fed Federal FMAP Extension $1,060 14% Remaining (Gap)/Surplus $485 6% FY 2009-10 FY 2010-11 * Includes changes to the STAR program ** Include $302 M in AIM reductions to NYC 4 Source: New York State Division of Budget, Financial Plan Projections, 30-Day Amendments, February 10, 2010.
  • 5. School Aid Reductions Reasonable ► Budget proposes reductions Total Spending on Schools in NYS that represent 2% of total (dollars in millions) spending; $1.1B in total $60,000 ► Over 10 yrs school spending $52.1B up $25B; State aid up 115% $50,000 In 2009-10 average spending $40,000 $25,967 per pupil reached $20k; U.S. Avg. $11k in 2006-07 $30,000 $27.3B ► Reductions targeted; Salmon $20,000 $15,205 River (poorest in NYS) will $10,000 $23,599 increase $550 per pupil while $10,963 115% Scarsdale (top 20 richest) will $- 1997-98 2007-08 decrease $110 per pupil Federal State Local 5 Source: New York State Department of Education
  • 6. Medicaid Slowed this Year but Up Rapidly in Subsequent Years ► Current proposal = $1.7B; Sources of General Fund Spending Growth $800M in reductions and $900M in new dedicated FY 2010-11 to 2011-12 “sin” taxes All Other $758m, 11% ► Reduces state operating Medicaid funds baseline spending $4,318m, 63% growth from 8.7% to 3.6% School Aid $1,751m, 26% ► 412,000 additional enrollees expected Medicaid ► More work needed on rate Driving reform, utilization patterns, Spending and eligibility loopholes Growth 6 Source: New York State Division of Budget
  • 7. Labor Expectations Out of Sync with Economic Reality ► Financial plan “plug” of ► Health insurance and $250M insufficient; 3.3% of pensions up 9% and 19% the gap-closing compared per yr on avg. to 2013-14 to 23% share of budget Changes from 08-09 to 09-10 ► Average total comp per State 7.0% 5.8% employee in coming year 6.0% Employee $90,224 5.0% Compensation ► Just 700 positions to be 4.0% 3.0% eliminated this year; 0.5% of 2.0% workforce 0.8% 1.0% ► Wage freezes, greater PI 0.0% headcount reductions, and -1.0% -0.3% CPI more fringe benefit savings 7 Source: New York State Division of Budget needed
  • 8. The Longer Run: NY Faces a Cliff ► Assumes a slow and steady recovery with tax revenue growth averaging 3 percent per year Significant Budget Gaps Loom (After Executive Gap-Closing Actions) $70,000 General Funds Disbursements $65,000 General Fund Receipts w/Net Transfers millions of dollars $60,000 $12,397 $55,000 $10,656 $5,386 $50,000 $45,000 $40,000 2010-11 2011-12 2012-13 2013-14 8 Source: New York State Division of Budget, Financial Plan Projections, 30-Day Amendments, February 10, 2010.
  • 9. Raising Taxes is Not the Answer ► Taxes have already been raised significantly – Last year’s budget included $8B in measures to increase revenues ► The Tax Foundation ranks New York #49 among states on its business climate index naming the state among the ten states whose tax systems “are the most inhospitable to economic growth” ► Censusdata show that our combined state and local tax burden per $1,000 of personal income is 36 percent above the U.S. average – NY ranks as having 2nd highest burden among states 9
  • 10. Borrowing or Pushing Down More on Local Governments Also Ruled Out New York Deeply in Debt Highest Local Taxes in U.S. ► $50B owed; much ► Burden per $1,000 PI is more than is 77% above average affordable $84 ► $11B outstanding for Medicaid, $10 prior deficits School Spending, $47 ► Budget cuts $1.8B in $30 capital spending over All Other, $44 5 yrs. to stay under statutory debt cap U.S. Average New York from 2000 Source: U.S. Bureau of the Census, State and Local Government Finances, 2007 10
  • 11. A Longer Run Agenda ► Rejecttax increases or borrowing to fund operating expenses ► Lower State spending on Medicaid, Education, Compensation and Benefits Give management more leverage in collective bargaining Prioritize services for the neediest New Yorkers ► Adopt new, strategic approach to investment that promotes economic growth and infrastructure modernization 11

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