New York state budget (2008-2009)
From Sunshine Review
[edit] Creating the budget
The initial phases in creating the state budget begin long before the fiscal year to which it applies. Every summer, the Division of the Budget (DOB) sends a call letter to state agencies that sets out the Governor’s priorities for the year, anticipated fiscal constraints and a schedule for submitting budget requests.[5] The DOB is responsible for analyzing agencies' requests and aiding the Governor in creating the final state budget. [5][1]
Agencies usually submit their budget requests to the DOB by early fall.[5] The DOB and State Comptroller must release a detailed estimate of anticipated income and expenses by November 5.[5] The DOB evaluates the budget requests in light of trends in income and spending, assesses the state’s economic situation and presents their recommendations to the Governor.[5]
By mid-January (or February 1st following a gubernatorial election year), the Governor must submit his budget plan to the legislature along with related appropriation, revenue and budget bills. [6] Along with the Executive Budget, the Governor must submit the State’s Five-Year Financial Plan, Five-Year Capital Program and Financing Plan, and any financial information supporting the Executive Budget. [6] The legislature then analyzes the Governor’s proposals, holds public hearings and works with the DOB in evaluating the proposed budget measures. [6] Both houses of the legislature must agree on the income and spending appropriations in the budget bill and submit the amended budget to the Governor for his approval. [6] The budget is then sent to the Governor for approval, and a final state budget is created for the upcoming fiscal year.[1]
In approving the final state budget, the Governor may use a line-item veto to cancel out specific provisions without having to veto the bill in its entirety. [6] The state legislature can override the Governor's veto only by a 2/3 vote by the members of each house.
[edit] Budget Status, 2008-2009
When its new fiscal year begins on Apri 1, 2009, the New York state budget will face a $14 billion gap between incoming revenue and anticipated spending projects.[7] In September, 2008, the DOB, a fiscal agency that works with the Governor to create the state budget, [5] estimated that the deficit for the 2009-2010 term alone would reach $5.4 billion. [8] In an effort to close this deficit gap, Governor David Paterson offered his budget proposal one month prior to the deadline in December of 2008; the overall budget is $121 billion. [9] Gov. Paterson's proposed $121 billion budget for the 2009-2010 term increases overall spending by $1.3 billion or 1.1%. [9]
Governor Paterson's plan initially called for a $1.7 billion spending initiative in an effort to avoid a buget shortfall for 2008. [9] By November, 2008, it became apparent that only $771 of the initiatives could be achieved by the end of the year.[9] In October of 2008, based on anticipated declines in revenue, the DOB predicted the following budget deficits for New York. [9]
| Fiscal Term | Projected Deficit |
|---|---|
| 2008-2009 | $1.7 billion |
| 2009-2010 | $13.7 billion |
| 2010-2011 | $17.1 billion |
| 2011-2012 | $18.6 billion |
| Total four-year deficit: | $51.1 billion |
Governor Paterson's plan, announced in December of 2008, aims to wipe out the deficit for the years 2008 through 2010 and to reduce the overal deficit to $5.8 billion by 2012. [9] The Governor's plan includes the following measures.[10]
- Reduces school aid in 2008-2009 by $398 million;
- Limits Medicaid expenses to $16 billion, which still leaves New York's Medicaid program as the most expensive in the country;
- Eliminates rebate programs for homeowners;
- Implements a 14% increase in CUNY and SUNY;
- Implements a New York Higher Education Program providing $350 million worth of student loans;
- Increases the welfare grant by 10% annually for 2009 through 2011;
- Eliminates 521 state jobs and 7 state agencies;
- Increases the minimum age of retirement for state employees receiving pensions from 55 to 62 years old;
- Holds Aid and Incentive Municipalities at current levels, eliminating a scheduled $61 million increase;
[edit] Suggested tax increases
The Governor's plan includes 88 tax increases. [11] Following are some of those tax proposals and differing views as to their approprateness and effectivness in fixing the state budget crisis.
- An 18% sales tax on non-diet soda and other sugary drinks containing less than 70% fruit juice. [12] Only 37% of New Yorkers support the tax as a method of fixing the state budget crisis. [13] Some refer to the proposal as "nanny statism at its platonic ideal". [13] Others support the tax, even stating that the tax will decrease the consumption of sugary drinks to 14%. [12] Citing studies that have tied the consumption of soda and other sugary beverages to obesity and diabetes, some argue that the tax will go far in the struggle against obesity. [12]
- A 4% increase in the sales tax on health club fees and other recreational services such as bowling, amusement parks, golf courses, etc. [14] [15] Governor Patterson believes these taxes will raise $53 million in the first year. [15] However, he has stated he will reconsider the taxes if given sufficient funding from the federal government's American Recovery and Reinvestment Act. [15] Some view this tax as being anti-business. [15] The fitness industry in particular is against the tax and believes the government should encourage fitness and the fight against obesity, not tax it. [14] Health clubs have already begun lobbying against the tax and asking members to contact their representatives to oppose the tax. [14] Accrding to the state's Deputy Health and Human Services Secretary, “The tax on health club memberships is something we're doing to raise revenue. There's plenty of other ways that folks can get out and exercise, particularly children." [14]
- An increase on the tax exemption on clothing and footware from $110 to $500. [12] This is projected to raise $462 million during the 2009 and 2010 fiscal term and $660 million for the 2010 and 2011 fiscal terms. [16] According to the Tax Foundation, a nonpartisan tax research group in Washington D.C., excluding consumer goods and services from taxation increases the taxes that are charged on other items to raise sufficient tax revenue. [16] "Such exclusions also create economic distortions, encouraging uneconomic consumption of the exempted goods. And when necessity goods are exempted from the base, sales tax revenues become more volatile, increasing the severity of state budget crises." [16]
- Creates an 18% sales tax on cable, sattelite television, radio services, theaters, sporting events, taxis, buses and limousines along with a 4% tax on downloading digital entertainment. [12] Gov. Paterson justified the tax by referencing 23 other states that tax video services. [17] Reaction to these taxes of services along with the "iPod tax" that includes taxing the sale of downloaded and other forms of digital entertainment has been almost entirely negative. [18] [19] [20] With regard to cable, theaters and transportation,
- Repeals an 8 cents per gallon sales tax cap on gasoline. [12] The cap on the sales tax of gas and diesel was signed into law by Governor Pataki and went into effect on June 1, 2006 as a way of providing fuel relief to New York's residents. [21] Environmentalists support this measure and view it as a means of providing incentives to people to seek out public transportation instead of driving, thereby reducing pollution and global warming. [22]
- Increases assessments on state utility companies to two percent, rather than 1/3 of one percent of gross intrastate revenues. [12] These assessments are estimated to bring in $651 million in revenue and are intended to help fund the New York Department of Public Service and the Public Service Commission. [23] However, some argue that the new state budget increases the assessments by as much as 500% to pay for activities that have nothing to do with utility regulation according to Kenneth Adams, CEO of the Business Council of New York State. [23]
[edit] Why the budget crisis exists
The financial crisis on Wall Street in 2008 deeply affected New York and contributed to the budget shortfall it faces. [24] In response to concerns about the new budget proposals and tax hikes, Gov. Paterson said, ""This is where we are. Maybe we should have thought about this when we were depending on what we thought was in exhaustive collections of taxes from Wall Street - and now those taxes have fallen off a cliff." [11]
From October 2007 to October 2008, New York City along lost 17,000 jobs. [25] At its height, the state dependend on the financial sector for 22% of its revenue. [25] In 2007, the financial industry paid about $12 billion in taxes to the state. [26] State Comptroller Thomas DiNapoli estimates tax collections from Wall Street will be down 38% or about $4.5 billion in the coming year. [26]
The decrease in real estate transactions has also affected the state's economy. The MTA, New York City's transportation provider, receives most of its income from a special tax assessed on the sale of property; this has decreased significantly as home sales have dropped. [26]
[edit] Spending transparency
New York government spending is partially transparent and currently has several transparency resources as listed below. The first two are government sponsored, while the third is sponsored by the Empire Center.
- www.openbooknewyork.com was created by State Comptroller Thomas DiNapoli
- Project Sunlight was created by State Attorney General Andrew Cuomo
- www.seethroughny.net was created by the Empire Center for New York State Policy
[edit] Government tools
The following table is helpful in evaluating the level of transparency provided by a state spending and transparency database:
| State Database | Searchability | Grants | Contracts | Line Item Expenditures | Dept/Agency Budgets | Public Employee Salary |
|---|---|---|---|---|---|---|
| Open Book New York |  |  | | | | |
| Project Sunlight | | | | | | |
[edit] Limitations and Suggestions for Improvements
Public employee salaries should be placed online, as should specific spending details and line-item expenditures.
[edit] Support for creation of the database
The National Taxpayers Union praised the creation of the Attorney General's Project Sunlight transparency website.[27]
[edit] Independent transparency sites
The Empire Center for New York State Policy has created an independent transparency website, www.seethroughny.net.
[edit] Public employee salary information
The Journal News' LoHud.com offers this database of public employee salaries in Yonkers. For the article introducing the project, click here.
The Times Herald-Record offers this analysis of public salaries in the Hudson Valley with a searchable database of payroll records.
A great resource is See Through NY, a new website offering "New Yorkers a clearer view of how their state and local tax dollars are spent."
[edit] Economic Stimulus Transparency
- The Economic Recovery and Reinvestment Act of 2009 designated $787 billion to be spent throughout the U.S. Of that $787 billion stimulus package, it is estimated that 69%, or over $541 billion, will be administered by state governments.[28]
- New York will receive an estimated $11,798,038,219 [29]
- The economic recovery website to show how legislators and government officials in New York are spending Federal funds is available here.
[edit] See Also
New York taxpayer-funded lobbying
[edit] External links
- Model transparency legislation from the American Legislative Exchange Council is available at this link.
- Empire Center for New York State Policy
- Manhattan Institute for Policy Research
- Indiana Policy Review Foundation
- Indiana State Budget Agency
- Indiana Government spending
[edit] References
- ↑ 1.0 1.1 1.2 1.3 1.4 Governor’s Office of Employee Relations, Executive Budget Process
- ↑ Division of the Budget, Agency Budget Preparation
- ↑ New York State, 2009-2010 Executive Budget – Briefing Book
- ↑ Fiscal Policy Institute, “Understanding and Evaluating the New York State Legislature’s proposed Budget Process constitutional amendments” by Frank J. Mauro
- ↑ 5.0 5.1 5.2 5.3 5.4 5.5 Division of the Budget, Division of the Budget Review
- ↑ 6.0 6.1 6.2 6.3 6.4 Division of the Budget, Legislative Action
- ↑ Star-Gazette, State Deficit Grows by $1.2 billion, February 11, 2009
- ↑ Division of the Budget, 2009-2010 Executive Budget Call Letter, September 5, 2008
- ↑ 9.0 9.1 9.2 9.3 9.4 9.5 New York State, Governor Paterson's Executive Budget Eliminates Largest Deficit in State History, Reigns in Spending, Press Release, December 16, 2008
- ↑ Except where otherwise indicated, the following figures are all taken from a December 16, 2008 Press Release from the Governor's office.Governor Paterson's Executive Budget Eliminates Largest Deficit in State History, Reigns in Spending, Press Release, December 16, 2008
- ↑ 11.0 11.1 NY Daily News, Gov. David Paterson unveils dire New York state budget that includes new taxes, layoffs and cuts", December 17, 2008
- ↑ 12.0 12.1 12.2 12.3 12.4 12.5 12.6 New York Daily nes,Want a healthier state? Save Gov. Paterson's tax on sugar soda, February 18, 2009
- ↑ 13.0 13.1 Opposingviews.com, The Center for Consumer Freedom, OPINION: No Support for New York's Obesity and Soda Tax, February 19, 2009
- ↑ 14.0 14.1 14.2 14.3 Capital News 9, Gym tax could hurt fight against obesity, February 18, 2009
- ↑ 15.0 15.1 15.2 15.3 TheDailyNewsOnline.com, Dear Gov. Paterson, don't tread on the bowlers of New York State, February 19, 2009
- ↑ 16.0 16.1 16.2 The Tax Foundation, New York Governor David Paterson's Tax and Fee Proposals A Mixed Bag, January 22, 2009
- ↑ Benton Foundation, New York Latest to Propose Cable, Satellite Taxes, December 17, 2008
- ↑ Gear Live, Gov. Paterson Proposes iPod Tax, January 5, 2009
- ↑ Crunch Gear Blog, NY governor proposes iPod tax (among others) to make up budget shortfall, December 17, 2008
- ↑ Fountainhead Zero Blog, New York State Budget Crisis: iPod Tax?, December 17, 2008
- ↑ Trucking News, "New York Governor signs bill capping sales tax on fuel", May 24, 2006
- ↑ Environmental Advocates of New York, 2009 Budget Priorities for the Environment
- ↑ 23.0 23.1 The Central New York Business Journal, Business groups want stimulus money to wipe out proposed state taxes, February 27, 2009
- ↑ Gotham Gazette, How to Balance the State Budget, February 2, 2009
- ↑ 25.0 25.1 The Atlantic, How the Crash Will Reshape America, March 2009
- ↑ 26.0 26.1 26.2 The Albany Budget, New York State Crisis, January 5, 2009
- ↑ National Taxpayers Union, "Citizen Group Praises New York Project to Open Government Online," November 5, 2007
- ↑ National Taxpayers Union, "A Letter to the Nation's Governors: Ensure Transparency and Accountability by Posting Stimulus Expenditures Online," March 10, 2009
- ↑ [1]
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