Municipal Government

Analysis of Budget

April 5, 2011
By Anthony M. Figliola

 
Governor Andrew M. Cuomo, Senate Majority Leader Dean Skelos and Assembly Speaker Sheldon Silver today announced an agreement on a 2011 – 2012 budget that eliminates a $10 billion deficit. The agreement includes reforms that redesign state government, create efficiencies through consolidation, cap spending increases for education and Medicaid, and transform the future budgeting process.
 

The approximately $132.5 billion budget will reduce spending overall by over 2 percent from the current year, eliminate 3,700 prison beds, establish regional economic development councils, bring performance funding to education, redesign Medicaid, and cap next year’s education and Medicaid spending.

This budget reaches its financial goals with no new taxes and no borrowing, and will also cut next year’s projected budget deficit from $15 billion to about $2 billion.

Recent changes to the budget include an additional $272 million in education, which includes restoration of funding for schools for the blind and deaf (4201) and summer school special education. Human services funding of $91 million was added and $86 million for higher education including SUNY hospitals, SUNY and CUNY community colleges. There are also miscellaneous program additions of $33 million including aid to localities and agriculture programs. There were also $54 million in miscellaneous cuts. As a result, the net add spending to this budget is approximately $250 million. In addition, there are no new member items.
 
The 2011-2012 Budget agreement
 
Changing Permanent Law and Provides 2 Year Appropriations and Caps for Education and Medicaid: Education will be increased at a rate of personal income growth next year roughly 4 percent. Medicaid will be increased at a rate tied to healthcare CPI that is roughly 4 percent. Together, these actions reduce next year’s deficit from about $15 billion to about $2 billion and change decades old practice of overspending.
 
Redesigning the Medicaid System:
The budget includes a global cap on State Medicaid expenditures of approximately $15 billion and implementation of the majority of recommendations by the Medicaid Redesign Team (MRT) to redesign and restructure the Medicaid program to be more efficient and get better results for patients. There are reallocations within the MRT cap that reduce some areas while targeting increases to others. Among the notable changes: the cap on medical malpractice is not included and EPIC is increased by $22 million. The MRT reduction of $2.8 billion and the overall spending cap to the state will be enforced by the Department of Health’s “superpower” provision, whereby the commissioner has authority to make reductions during the year to enforce the cap.
 
Creating Regional Economic Development Councils
: The budget establishes 10 Regional Economic Development Councils, chaired by Lieutenant Governor Robert Duffy. These councils will create a region based approach to allocate economic development funds to speed up the creation of jobs. They will act as one stop shop for all State supported economic development and business assistance programs in each region, and will be supported with $130 million in capital that is reprogrammed from existing resources.
 
Local Government Efficiency Grants:
$44 Million will go to one time grants to local governments and special districts to reorganize, consolidate, or achieve performance improvements. Also money will be allocated to cover the costs associated with local government efficiency projects such as: planning and implementation of shared service programs and regionalized delivery of services.
 
Recharge NY Power Program: Recharge New York will enhance and make permanent the current Power for Jobs Program that will significantly boost the state’s economy by creating and maintaining hundreds of thousands of jobs. Recharge New York will improve upon the existing program by opening it to new participants and allocating a blend of stable, low cost hydropower and market power for use by businesses that seek to grow and create jobs in New York State.
 
Authorizing the SAGE Commission: The budget authorizes Governor Cuomo’s Spending and Government Efficiency (SAGE) Commission to reduce the number of agencies, authorities, and commissions by 20 percent. Currently, the consolidation of Parole and Corrections will save $16.8 million, the merging of NYSTAR into Department of Economic Development will save $1.9 million, and the merging of Consumer Protection into the Department of State will save $500,000.
 
Creating the Department of Financial Services:
The budget merges the state’s Banking and Insurance Departments into a new Department of Financial Services.
 
Authorizing Governor to Close Prisons
: The state will eliminate 3,700 prison beds throughout New York at the sole discretion of the administration in consultation with the Legislature.
 
SUNY Flexibility (UB 2020):
The Governor has also agreed to hold a summit with stakeholders to discuss how to make UB 2020 a reality. Left out of the conversation is the provision for SUNY Albany, Binghamton, and Stony Brook University. Look for the three left out groups to become more involved in the process this session.
 
Reforming the Juvenile Justice System: The budget includes significant reforms of the state’s juvenile justice system by encouraging greater use of community-based alternatives, downsizing the state juvenile facilities system by more than 30 percent, and investing resources into enhanced services for juveniles that remain in OCFS custody.
 
Education Performance Grants:
The budget enacts initiatives Governor Cuomo proposed to make districts more efficient and improve student performance. Funds totaling $500 million will be awarded competitively to districts that demonstrate significant improvements in student performance and to districts that undertake long term structural changes to reduce costs and improve efficiency. The budget also restores $270 million in education related funding.
 
Improving the Excelsior Jobs Program:
As proposed in the executive budget, the budget strengthens the Excelsior Jobs Program, which was created in 2010 to provide job creation and investment tax credit incentives to businesses in targeted industries.
 
 

 
 
 

April 3, 2011

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