DIVISION OF THE BUDGET
DAVID A. PATERSON, GOVERNOR
March 29, 2009 CONTACT: Jeffrey Gordon
ENACTED BUDGET AGREEMENT ACHIEVES GOVERNOR PATERSON’S KEY PRIORITIES OF FISCAL RESPONSIBILITY AND GOVERNMENT REFORM
Governor David A. Paterson today announced that the Enacted Budget agreement achieves the key priorities he laid out for his administration beginning from his first day in office: strengthening the State’s long-term finances, enacting critical reforms to make government more accountable to taxpayers, and implementing significant, recurring spending reductions.
The Enacted Budget agreement closes a $17.7 billion budget gap – the largest in State history – and reduces the State’s out-year gaps by over 80 percent from approximately $60 billion to $11 billion. It also includes a record $6.5 billion in recurring spending reductions – nearly twice as much as in any other budget.
The Enacted Budget agreement institutes long-overdue reforms that Governor Paterson identified as key priorities, including overhauling the State’s Rockefeller Drug Laws, Medicaid reimbursement system, Empire Zone Program and the Bottle Bill. Additionally, it makes key investments in a new $350 million annual student loan program, the State’s film tax credit, and the first increase in the basic welfare grant in nearly two decades. Additionally, it finally closes three underutilized State prisons and six underutilized youth facilities after years of unsuccessful attempts.
“From the first day I took office, I said we needed to face up to our budget problems honestly and forthrightly,” said Governor Paterson. “I laid out a path for action that balanced the difficult choices necessary to reduce spending with needed reforms that will make our government more accountable to taxpayers, and the Legislature has been a strong partner in that effort.”
In April 2008, the State’s projected budget deficit totaled $5 billion. Over the course of the last year, that deficit increased at a staggering rate. Today’s agreement closes a $17.7 billion budget gap. In the last two months alone, the deficit has increased by $4.7 billion from $13 billion to $17.7 billion.
Throughout the year, Governor Paterson has taken action to address the deteriorating economy. As his first act in office, he proposed across-the-board spending reductions for all State agencies. In July, as the economy began to deteriorate, he again instituted across-the-board spending reductions and imposed a hiring freeze and strict cash controls to manage the flow of State spending. In August, he called the Legislature to the Capitol for an extraordinary emergency economic session and achieved $1 billion of mid-year reductions. He also fought hard in Washington for federal stimulus funding to help the State address its budget difficulties, including advocating for more education dollars.
Today’s budget agreement builds on these efforts and includes many of Governor Paterson’s key priorities and proposed reforms.
Spending Reductions/Fiscal Responsibility. The budget agreement achieves $6.5 billion in spending cuts – nearly twice as much as any governor in State history (previous record is $3.3 billion in 2003-04). It closes the largest budget gap in State history of $17.7 billion and reduces the State’s multi-year deficit by over 80 percent from $60 billion to approximately $11 billion.
Health Care Reform. The budget achieves a $2.3 billion health care savings plan – the largest in State history – which is nearly double the previous record in 2005-06. Additionally, the budget institutes major, permanent reforms to the way health care is delivered in New York to rationalize our Medicaid reimbursement system and provide increased investment in primary and preventive care.
Rockefeller Drug Law Reform. The budget agreement achieves Rockefeller Drug Law reform, which will help end the cycle of addiction by focusing on treatment rather than incarceration.
Student Loan Program. The budget created the New York Higher Education Loan (NYHELPs) program championed by Governor Paterson, which will annually provide $350 million in lower-interest student loans to over 45,000 New York residents.
Increase Basic Welfare Grant. For the first time in nearly two decades, the State will increase the basic Welfare Grant.
Expand Bottle Bill. In every year since 2000, legislation expanding the Bottle Bill was introduced, and every year it failed to become law. This budget agreement finally expands that law to include bottled water, which will help prevent litter and improve the environment. The updated Bottle Bill will also require that unclaimed deposits be turned over to the State, which will provide $115 million in new revenue each year. The State will receive 80 percent of the unclaimed deposits.
Close Underutilized State Facilities. In six of the last seven budgets, governors proposed closing prisons to no avail. This budget shutters three minimum security camps so that taxpayers no longer have to subsidize half-empty facilities. It also closes six underutilized youth facilities – two of which house no children whatsoever.
Reform Empire Zone Program. The Enacted Budget reins in long-documented abuses in the Empire Zone program. It decertifies “shirt-changers” and firms producing less than $1 in actual investment and wages for every $1 in State tax incentives, while balancing the concerns of the business community to ensure that the State continues to create jobs. To accelerate future reforms, the Empire Zone program will sunset on June 30, 2010 – one year earlier than in current law.
Film Tax Credit. The Enacted Budget includes $350 million in new authorization for the State’s film tax credit, which will help keep entertainment industry jobs in New York State.