2008-2009 Budget: Frequently Asked Questions

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  1. What is the size of the Budget?
  2. How does the Budget impact State debt?
  3. How does the Governor’s proposal impact future Budget gaps?
  4. Does the Budget increase taxes?
  5. Does the Budget increase fees?
  6. What are the assumptions on revenue growth?
  7. What are the major causes for growth in spending?
  8. What are the major savings initiatives?
  9. How much does the Budget maintain in reserves?
  10. How does the Budget impact the State workforce?
  1. What is the size of the budget? (in billions)

    Size of the Budget
      2007-08 Budget
    Projected Spending    		Percent growth 2008-09
    Proposed    		Percent growth
    State Operating Funds 77.9  6.0% 81.8 5.0%
    All Funds 118.3 4.9% 124.3 5.0%
    General Fund 53.6 3.9% 56.4 5.2%
    Average Long-term Rate of Personal Income Growth   5.3%   5.3%

    • The General Fund is the main operating budget. It finances programs that benefit the State's local governments and supports the operating costs of all state agencies, the Legislature and the Judiciary.
    • State Operating Funds is all state spending excluding revenue from the federal government and capital spending.
    • All Funds includes state operating funds, plus capital spending and federal aid.

  2. How does the budget impact the State's debt? (in billions)

    Budget Impact on State Debt
      2007-08 Budget
    Debt    		2008-09 Proposed Percent Change
    from Prior Year
    Debt Outstanding (billions) 50.0 53.7 7.4%
    Debt Service 4.9 5.3 8.2%
    Debt Service as % of All Funds 4.2% 4.3% .1%

    The Executive Budget proposes increasing state-related debt by $3.3 billion. The primary drivers of this increase are capital projects for lower and higher education ($1.3 billion), transportation ($900 million), and economic development and housing ($800 million).

  3. How does the budget impact the future gaps? (in billions)

    Budget Impact on Future Gaps
      2008-09 Current
    Services Gaps    		2008-09 Proposed Gaps Change from Prior
    Projections
    2008-09 4.6 0 -4.6
    2009-10 6.6 3.6 -3.0
    2010-11 8.3 6.1 -2.2
    2011-12 9.9 7.2 -2.7

    • The budget fully closes the 2008-09 budget gap with $5 billion in actions that are sufficient to both balance the Budget and fund several new initiatives. This plan includes:
      • $2.5 billion in recurring savings, primarily from the Governor's continued effort to reform New York's health care system, a slower phase-in of Middle Class STAR than initially anticipated, the closure of underutilized corrections and youth detention facilities, and cost-saving initiatives in Public Assistance, state operations, and other areas.
      • $1.1 billion in additional recurring revenue. These funds are derived from several tax law and administrative reforms that promote equity, close unintended loopholes, and ensure compliance, as well as narrowly focused fees used either for dedicated purposes or to deter unlawful behavior;
      • $1.4 billion in non-recurring resources, including $337 million in labor reserves to finance expected collective bargaining costs.
    • Over the next four years, these actions will reduce the size of future budget gaps facing the state by a total of $12.5 billion.

  4. Does the Budget increase taxes?

    No.

  5. Does the Budget increase fees?

    The Executive Budget includes 46 increased or new fees that will produce $304.5 million in additional revenue in 2008-09. The majority of the increased fees (29) are changes in penalties for violating Department of Insurance laws and regulations, which will generate a total $1 million. The largest portion of the additional revenue provided by these actions is attributable to the following:

    • DOT/State Police: $145.2 million from an increased fee on insurance policies to fund the state police, anti-auto theft initiatives, and transportation projects;
    • Bottle Bill: $25 million from expanding the bottle bill to non-carbonated beverages and, with all of the unclaimed funds associated with both carbonated and non-carbonated beverages supporting the Environmental Protection Fund;
    • Real Property Transfer Fee: $21.5 million from increasing the Office of Real Property Services (ORPS) sales fee imposed during real estate closing for those making purchases in excess of $175,000, which will support property tax administration;
    • WHTI: $51.5 million from fees charged by the DMV for new Western Hemisphere Travel Initiative compliant licenses;
  6. What are the assumptions on All Funds receipts growth? (in billions)

    Assumptions on All Funds Receipts Growth
      2007-08
    Final Spending     		Proposed Budget
    2008-09    		Percent change
    from prior year
    Taxes 60.9 64.5 5.4%
    Misc. Receipts 20.2 21.7 6.2%
    Federal Grants 35.8 36.9 2.9%
  7. What are the major causes for growth in State Operating Funds spending?

    The primary factors driving spending growth include increases in school aid ($1.4 billion), continued, though significantly slowed, growth in Medicaid spending ($803 billion), collective bargaining settlements ($197 million), transportation initiatives ($221 million), judicial pay raises ($189 million), increases in Aid and Incentives to Municipalities payments ($200 million), debt service ($342 million), as well as fully funding both the federal and state share of expanding access to health care for every child in New York State ($37 million).

  8. What are the major savings initiatives?

    Major reductions come from restructuring our health care system to improve the quality, accessibility, and affordability of health care, generating State savings of more than $1.1 billion in 2008-09; slowing the phase-in of a Middle Class STAR rebate increase, as well as other changes to that program ($354 million); requiring increased operating efficiencies in virtually all areas of state government ($336 million); and requiring counties and the City of New York to pay a greater share of costs for public assistance benefits and the full cost of local youth detention facilities ($76 million).

  9. How much does the Budget have in reserves?

    The 2008-09 Executive Budget maintains nearly $2.2 billion in reserves, equal to 3.9 percent of General Fund spending. This is $400 million below the projected general fund closing balance at the end of 2007-08, which primarily reflects the planned use for potential collective bargaining agreements. Of the total $2.2 billion in reserves, $1.2 billion are undesignated reserves, including $1.0 billion in the State's Tax Stabilization Reserve and $175 million in the Rainy Day Reserve fund. Reserves designated for specific purposes total nearly $1.0 billion and include $708 million for potential collective bargaining agreements and other financial plan risks, as well as $291 million in the Community Projects Fund to finance legislative initiatives.

  10. How does the Budget impact the State workforce?

    Under the Budget proposal, the State workforce will increase from 199,324 to 201,170, an increase of 1,846 or 0.9%. Major increases include:

    • Enhancing the utilization of State staff for bridge maintenance and inspection, equipment maintenance and information technology while reducing the reliance on contractors to perform these functions for the Department of Transportation (+394);
    • Improving the monitoring of inmates with serious mental illnesses at the Department of Correctional Services (+238);
    • Strengthening Medicaid audit and fraud prevention activities at the Office of the Medicaid Inspector General through the addition of 75 new staff and the hiring of currently authorized staff (+227);
    • Adding staff to support the Sex Offender Management and Treatment Act (SOMTA); expand mental health programs and services in prisons and develop alternatives to solitary confinement for mentally ill inmates; the Psychiatric Clinical Knowledge Enhancement System (PSYCKES); and develop workplace violence prevention programs for employees working with high risk consumers at the Office of Mental Health (+215);
    • Hiring needed staff to develop workplace violence training and investigation programs for employees working with behaviorally-involved consumers, and to support the development of State-Operated Individual Residential Alternatives under the auspices of the Office of Mental Retardation and Developmental Disabilities (+152);
    • Pursuing a 70 percent level of instruction taught by full-time faculty at the City University of New York (+140);
    • Adding staff to accommodate the increasing number of license renewals and to staff the Western Hemisphere Travel Initiative and the new Internet Point Insurance Reduction Program at the Department of Motor Vehicles (+114); and
    • Investigating and prosecuting of Medicaid provider fraud, and supporting the Real Estate Finance Bureau, Project Sunlight, and a new initiative (Nowhere To Hide), which holds landlords accountable when they allow their property to be used for drug dealing and other criminal activities (+61).

    These increases are partially offset by staffing decreases in the following areas:

    • The Department of Correctional Services, due to a decline in minimum-security inmates, will close three correctional camps. In addition, the Department will also close a medium security facility to address current excess facility capacity (-505);
    • The Office of Children and Family Services, as previously announced, will close seven underutilized youth facilities and downsize one facility to right-size a system with a 50% vacancy rate at its non-secure facilities. Savings from these closures will be partially reinvested in community-based programs to improve outcomes for youth (-254);
    • The Division of Parole will further streamline its operations by making greater use of technology, supervising parolees based on risk to the community, closing an unneeded field office in New York City, and realigning SOMTA needs to reflect projected number of parolees. A share of the achieved savings will be reinvested in community housing for sex offenders (-96); and,
    • The Capital Defender Office will close by September, as no death-notice cases remain and the return of the death penalty to the State is unlikely (-7).
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