Andrew M. Cuomo, Governor
Mary Beth Labate, Budget Director
Entire Five-Year Financial Plan (PDF, 3.60MB)
The Financial Plan provides greater detail about the budget, including revenue initiatives, savings initiatives, reserves, debt, and more.
The Executive Budget gap-closing plan (the “gap-closing plan” or “plan”) would fully eliminate the 2010-11 budget gap, including the $500 million deficit carried forward from 2009-10, and reduce the gap in 2011-12 by more than half, from $14.3 billion to $6.3 billion.5 The table below summarizes the gap-closing plan.
|REVISED CURRENT-SERVICES ESTIMATE (BEFORE ACTIONS)||(7,418)||(14,311)||(18,331)||(20,713)|
|Approved Deficit Reduction Plan (Dec. 2009)||692||811||876||854|
|State Agency Reductions||360||385||385||385|
|Aid to Localities Reductions||427||426||491||469|
|All Other Actions||(95)||0||0||0|
|Executive Budget Recommendations||6,726||7,214||6,967||7,632|
|Aid to Localities Reductions||3,639||3,899||3,784||4,433|
|State Agency Reductions/Fringe Benefits||1,221||1,404||1,496||1,651|
|Bonded Capital Reductions of $1.8 B (Debt Service Savings)||10||37||78||100|
|BUDGET SURPLUS/(GAPS) AFTER ACTIONS||0||(6,286)||(10,488)||(12,227)|
1. Gap estimate for 2013-14 is published for the first time in the 2010-11 Executive Budget.
The plan would, if enacted in its entirety:
The plan does not count on Congressional approval of additional Federal aid for states, either through an extension of FMAP or in other forms, which at this point remains speculative. It also does not advance any proposals to close the budget gaps with deficit borrowing, which would likely have an immediate adverse impact on the State’s credit rating and add to the long-term budget imbalance.
Nearly 95 percent of the gap-closing plan is comprised of recurring actions that help lower the budget gaps in future years. Under the proposed plan, the combined four-year gap (2010-11 through 2013-14) is cut in half, declining from $61 billion to $29 billion. The chart below summarizes the shares of the gap-closing plan by broad category.
Reductions to current-services spending total over $5 billion9 in the State Operating Funds ($5.6 billion in the General Fund) and constitute 75 percent of the gap-closing plan. The proposed reductions affect nearly every activity financed by State government, ranging from aid to public schools to agency operations to capital expenditures. (See “2010-11 Gap-Closing Plan — Spending Control” herein.)
The gap-closing plan includes $1.1 billion in tax and fee increases. These include a new excise tax on syrup used in soft drinks and other beverages ($465 million), a $1 per pack increase in the cigarette tax ($210 million), and an assessment on health care providers ($216 million), all of which are earmarked to help pay for existing health care expenses. The plan would also permit grocery stores to pay a franchise fee to sell wine ($92 million). In addition, audit and compliance activities are expected to increase the tax base by approximately $221 million annually. (See “2010-11 Gap-Closing Plan – Tax and Fee Increases” herein.)
Non-recurring resources, which comprise less than 8 percent of the actions proposed in the Executive Budget, total $565 million. Importantly, this is less than the annual growth in savings achieved by recurring gap-closing actions which grow in value by approximately $1.2 billion from 2010-11 to 2011-12. As a result, the non-recurring actions have no adverse effect on the gap in 2011-12 because they are more than offset by the growth in recurring savings. (See “2010-11 Gap-Closing Plan – Non-Recurring Resources” herein.)
The gap-closing plan provides for balanced operations in the General Fund in 2010-11. The gap for 2011-12 would be reduced by more than half, declining from $14.3 billion to $6.3 billion. Future gaps would total $10.5 billion in 2012-13 (a reduction of $7.8 billion from current-services levels) and $12.2 billion in 2013-14 (a reduction of $8.5 billion from current-services levels).
These budget gaps, which remain relatively high by historical standards even after the substantial reductions recommended in the gap-closing plan, are significantly affected by the expected end of extraordinary Federal stimulus aid for Medicaid, education, and other governmental purposes. ARRA is expected to provide approximately $4.4 billion in Federal aid in 2010-11 for expenses that would otherwise need to be paid for with State resources or eliminated. If extraordinary Federal aid were to be extended at levels comparable to 2010-11, the budget gaps would total approximately $1.7 billion in 2011-12, $6.2 billion in 2012-13, and $8.0 billion in 2013-14, assuming the gap-closing plan is enacted as proposed. (See “Outyear Budget Gaps” herein.) However, in DOB’s view, the fiscal outlook for the Federal government makes it unlikely that aid will be continued at such levels.
|EXECUTIVE BUDGET GAPS||( 6.3)||(10.5)||(12.2)|
|FMAP Extension (2010-11 Est. Benefit)||3.4||3.4||3.4|
|State Fiscal Stabilization Relief||1.2||1.2||1.2|
|GAPS WITH HYPOTHETICAL ARRA EXTENSION 1||(1.7)||(5.9)||(7.6)|
1. For illustration only. The Financial Plan does not assume extension of ARRA.
Governor Paterson has asked Lieutenant Governor Ravitch to develop a plan to eliminate the structural imbalance within four years. The Lieutenant Governor has assembled a working group of fiscal experts to develop and evaluate options to help bring the long-term growth in spending in line with receipts.
State Operating Funds spending, which excludes Federal operating aid and capital spending, is projected to total $79.9 billion in 2010-11, an increase of $745 million (0.9 percent) over the revised estimate for 2009-10. Compared to the current-services forecast, State Operating Funds spending would be reduced by approximately $5 billion. The proposed growth is approximately $840 million below the level that would be permitted under the Governor’s proposed spending cap. The Executive Budget proposal would hold spending growth, by all standard measures, to less than 2 percent. The table below summarizes the annual change in spending.
|Before Actions||After Actions|
|2009-10 Revised||2010-11 Base||Annual $ Change||Annual % Change||2010-11 Proposed||Annual $ Change||Annual % Change|
|State Operating Funds||79,182||84,917||5,735||7.2%||79,927||745||0.9%|
|General Fund *||48,731||53,898||5,167||10.6%||48,304||(427)||-0.9%|
|Other State Funds||25,455||25,151||(304)||-1.2%||25,765||310||1.2%|
|Debt Service Funds||4,996||5,868||872||17.5%||5,858||862||17.3%|
|All Governmental Funds||133,172||139,741||6,569||4.9%||133,958||786||0.6%|
|State Operating Funds||79,182||84,917||5,735||7.2%||79,927||745||0.9%|
|Capital Projects Funds||7,975||9,070||1,095||13.7%||8,858||883||11.1%|
|Federal Operating Funds||46,015||45,754||(261)||-0.6%||45,173||(842)||-1.8%|
|General Fund, including Transfers||54,129||60,162||6,033||11.1%||54,522||393||0.7%|
* Excludes transfers.
The annual spending growth in State Operating Funds is affected by the rapid annual increase in debt service and fringe benefits, which are difficult to control in the short term due to existing constitutional, statutory, and contractual obligations. Together, these costs are projected to increase by a total of $1.3 billion in 2010-11. Debt service on State-supported debt is projected to increase by $844 million (17.1 percent) in 2010-11, with approximately 35 percent of the growth due to the “restructuring” of certain transportation-related debt in 2005 that deferred substantial debt service costs until 2010-11. Spending on fringe benefits is projected to increase by $437 million, an increase of 9.9 percent. Growth in fringe benefits is principally due to increases in the State’s annual contribution to the State Retirement System and the cost of providing health insurance for active and retired State employees. Pension costs are expected to increase by $374 million (32.7 percent) in 2010-11, even with the amortization in 2010-11 of contributions in excess of 9.5 percent, as proposed in the gap-closing plan.
|Non-Personal Service/Fixed Costs||5,144||5,082||(62)||-1.2%|
In contrast, spending for local assistance and agency operations, two areas of the budget that are responsive to immediate cost reduction efforts, decline by $536 million (-0.8 percent) from 2009-10 levels, assuming the Executive Budget is enacted in its entirety. Annual spending declines for personal service by $391 million (-3.6 percent), non-personal service by $62 million (-1.2 percent) and for local assistance by $83 million (-.02 percent).
The following table summarizes the major sources of annual change. It is adjusted to account for the impact of ARRA funding on Medicaid and school aid, and other significant cash-basis transactions that affect annual change (see notes to the table).
|Before Actions||After Actions|
|2009-10 Revised||2010-11 Base 1||Annual $ Change||Annual % Change||2010-11 Proposed||Annual $ Change||Annual % Change|
|School Aid 2||20,385||21,468||1,083||5.3%||19,939||(446)||-2.2%|
|School Aid Without ARRA Funding||21,578||22,386||808||3.7%||20,815||(763)||-3.5%|
|Other Education Aid||1,606||1,608||2||0.1%||1,475||(131)||-8.2%|
|Medicaid (incl. administration)3||10,984||12,581||1,597||14.5%||11,892||908||8.3%|
|Medicaid Without Enhanced FMAP||14,139||15,464||1,325||9.4%||14,775||636||4.5%|
|2008-09 CUNY Payment Deferral 4||300||0||(300)||-100.0%||0||(300)||-100.0%|
|Local Government Assistance||1,085||1,094||9||0.8%||769||(316)||-29.1%|
|Exec. Agencies – Retroactive Settlements5||320||0||(320)||-100.0%||0||(320)||-100.0%|
|Department of Law||126||118||(8)||-6.3%||115||(11)||-8.7%|
|Audit & Control||115||116||1||0.9%||114||(1)||-0.9%|
|Collective Bargaining Reserve||0||274||274||100.0%||274||274||100.0%|
|All Other Fringe Benefits||503||382||(121)||-24.1%||344||(159)||-31.6%|
|Non-Personal Service/Fixed Costs||5,144||5,430||286||5.6%||5,082||(62)||-1.2%|
|TOTAL STATE OPERATING FUNDS||79,182||84,917||5,735||7.2%||79,927||745||0.9%|
|Capital Projects (State Funded)||5,457||6,449||992||18.2%||6,222||765||14.0%|
|TOTAL STATE FUNDS||84,639||91,366||6,727||7.9%||86,149||1,510||1.8%|
|Federal Aid (Including Capital Grants)||48,533||48,375||(158)||-0.3%||47,809||(724)||-1.5%|
|TOTAL ALL FUNDS||133,172||139,741||6,569||4.9%||133,958||786||0.6%|
1. Includes the value of recurring savings from the December 2009 Deficit Reduction Plan.
2. State fiscal year basis. ARRA funding represents State-financed gap-closing benefit. Spending from Federal Funds will differ.
3. Department of Health Medicaid spending only, excludes other State agency spending. FMAP benefit represents State Medicaid costs financed by the Federal government beyond the normal 50 percent matching rate.
4. A payment of $300 million to CUNY scheduled for 2008-09 was deferred to 2009-10 as part of the 2008-09 Deficit Reduction Plan.
5. Retroactive payments for NYSCOPBA , PBA and BCI labor settlements ($258 million, $42 million and $20 million, respectively) for contract years 2007-08 and 2008-09.
5 The gap-closing plan consists of two parts: the Executive Budget proposals introduced on January 19, 2010 and the recurring value of the DRP approved in December 2009.
6 State Operating Funds combines activity in the General Fund, State-financed special revenue funds, and debt service funds and is intended to measure the portion of the State budget that supports operations (as distinct from capital) and that is financed by State resources (as distinct from Federal aid).
7 The proposed cap would limit State Operating Funds increases to the average of inflation over the past three years (2 percent in 2010-11)
8 Revised spending estimate for 2009-10, including the impact of the DRP. Agency operations include fixed costs.
9 Includes value of the DRP. See “Explanation of the Deficit Reduction Plan” herein.