2009-2010 Executive Budget – Briefing Book


2008-09 Deficit Reduction Plan

In order to close a current-year shortfall of $1.7 billion, Governor Paterson has put forward a 2008-09 Deficit Reduction Plan as part of his Executive Budget.

Since he took office, Governor Paterson has taken significant actions to reduce state spending in response to dramatically deteriorating revenues caused by the national fiscal crisis. He has twice called for and implemented reductions in state agency spending that totaled 10 percent in the current year, and in August, 2008, the Governor worked with the legislature to enact $1.0 billion of savings over a two-year period, including $427 million of savings in 2008-09.

On November 12, 2008, Governor Paterson presented the Legislature with a comprehensive two-year $5.2 billion deficit reduction plan that would have entirely eliminated the state’s 2008-09 shortfall, guarded against further revenue deterioration, and made a substantial down payment on the 2009-10 deficit. These proposals would have produced $2.0 billion of savings in 2008-09 and $3.2 billion in 2009-10.

The Governor convened a special emergency session on November 18, 2008 for the Legislature to consider these proposals. At that session, the Legislature did not act on his plan.

The $1.7 billion Deficit Reduction Plan included in the Executive Budget contains many of the same proposals from the $2.0 billion plan presented to the Legislature in November. More than $1.0 billion of the previously issued savings proposals have been withdrawn, however, because they are no longer achievable before the end of the fiscal year. These include an $836 million School Aid reduction, $72 million in Medicaid savings, an increase in CUNY annual undergraduate tuition, a reduction in local aid payments to New York City by $41 million, and other actions.

These lost savings proposals have been replaced with $771 million in new actions. The proposals Governor Paterson has put forward rely more heavily on non-recurring actions than the previous plan because, with significantly less time left in the fiscal year, there are fewer options for recurring savings to close the current-year budget gap. The Financial Plan assumes that the Legislature acts on this Deficit Reduction no later than February 1 to ensure the budget will end the year in balance.

The Deficit Reduction Plan would also produce $2.0 billion in 2009-10 savings to help address that year’s $13.7 billion budget deficit. The 2009-10 Executive Budget gap-closing plan assumes enactment of these proposals.

2008-09 Deficit Reduction Plan ($ in millions)
2008-09
Medicaid/HCRA/Insurance (Includes Deferrals) 500
Higher Education 68
Increase SUNY Tuition $620 per SUNY Board 62
TAP Award Increases (9)
Reduce SUNY/CUNY Community College Base Aid 15
Other Education 7
Reduce Arts Grants 7
Local Governments 93
Change Timing of NYC STAR Payment 93
Human Services 15
Reduce Human Service COLA by 1% effective January 1, 2009 5
Delay Foster Care Bridges to Health Implementation to 2011-12 1
Reduce Prevention Funding 3
Eliminate Unified Services Enriched Funding 1
Eliminate NYCHA Operating Subsidy 3
Reduce Neighborhood and Rural Preservation 2
Other Actions 244
Reduce New 2008-09 Legislative Additions 50 Percent 30
EPF Reduction 50
Expand Bottle Bill and Sweep EPF 25
Housing Bond Financing (SONYMA/MIF) 25
Reduce Economic Development Programs 8
Other General Fund Transfers 106
Workforce 9
Rescind Vacation Exchange Program 5
Medicare Part B Premiums 3
Modify Retiree Contributions for Health Care 1
New Actions 771
NYPA Payments 306
Department of Law Litigation Settlements 91
Manhattan District Attorney Settlements 75
WCB Recalculation 50
Existing Fund Balances/Debt Reduction 100
No Member Item Transfer 45
Reduce Local Incentive Grant Programs 2
Transfer Accumulated Balance Volunteer Recruitment Scholarship 2
Statewide Spending Controls 100
Total Savings Measures: 1,707

Medicaid/HCRA/Insurance

$429 million of the 2009-10 Medicaid/HCRA/Insurance savings are attributable to 2008-09 actions effective January 1, 2009 that, due to the timing of payments, will not produce cash savings until 2009-10. Therefore, $429 million in other 2008-09 expenses outside of Medicaid/HCRA/Insurance will be deferred until early in the 2009-10 fiscal year to offset this timing related issue and ensure budget balance.

Medicaid/HCRA/Insurance
Proposal 2008-09
($ in millions)
2009-10
($ in millions)
Medicaid/HCRA/Insurance 500 1,240
Savings 71 1,669
Payment Deferral to Realize 08-09 Savings 429 (429)

Pharmacy
(2008-09 Savings: $0; 2009-10 Savings: $25.2 million)


Hospital/Clinics/HCRA
(2008-09 Savings: $55.2 million; 2009-10 Savings: $535.3 million)


Insurance
(2008-09 Savings: $0; 2009-10 Savings: $644.8 million)

Nursing Homes
(2008-09 Savings: $4.2 million; 2009-10 Savings: $252.4 million)

Home Care
(2008-09 Savings: $0; 2009-10 Savings: $142.3 million)

Other Actions
(2008-09 Savings: $11.1 million; 2009-10 Savings: $69.6 million)

Higher Education

Other Education

Local Governments

Human Services

Other Actions

Workforce

New Actions

 

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