Message from Liz . . .
This year's budget fiasco has once again highlighted what we have seen time and again for the last 25 years: the budget process is broken. The fact that the Legislature has failed to pass an on-time budget for 24 of the past 25 years goes to show that the current system is not working and it hasn't worked regardless of which party was in control of the Senate or the Governor's office.
That said, one of the good things which has emerged out of this year's process is that we have finally engaged in one of the most serious discussions of how to reform the budget process. Lieutenant Governor Richard Ravitch and Comptroller Tom DiNapoli are among those who are offering serious proposals for changing the State budget process.
As I mentioned in my last bulletin, I have been working on Legislation which will provide for a comprehensive reform of our State budget process. This Legislation, which I announced on April 7, is based on testimony presented before the Select Committee on Budget and Tax Reform, on which I serve as Chairperson.
The budget reform package has three main purposes:
1. Create a more stable budgeting process;
2. Ensure that revenues and expenditures are balanced over both the short- and long-term; and
3. Create a regular structure to evaluate whether expenditures and tax breaks are serving their stated public policy goals.
The specific problems which have plagued the budget process this Legislation serves to fix are:
• Biennial Budgeting (S.7160):
Current Problem: The budget is set annually, which often results in short-sighted planning because the process is weighed-down by the emphasis of current deficits.
Proposed Solution: Biennial budgeting would require the Governor to submit to the Legislature an Executive Budget outlining a financial program for the ensuing two years (i.e. the budget would be set every other year). This would encourage long-term planning because the budget would have to take into account a two year span instead of just one.
• GAAP Budgeting (S.7284):
Current Problem: The State balances the budget on a "Cash Basis," which blurs the State's actual fiscal reality because it only looks at what money the State has "in pocket" at a given time, while ignoring the money it owes (which is often a large sum).
Proposed Solution: GAAP budgeting would require the Executive Budget and Enacted Budget to be balanced in accordance with the Generally Accepted Accounting Principles (GAAP), which are applied to governments by the Governmental Accounting Standards Board(GASB). GAAP budgeting would prevent the fiscal manipulations allowed under the current process by requiring both revenues and expenses to be recognized when the liability is incurred.
• June 1 Fiscal Year (S.5221-B):
Current Problem: The fiscal year currently ends on April 1, which is before the State knows how much revenue it will generate from personal income taxes collected on April 15. Therefore, the State balances the budget based on assumptions, rather than on hard numbers.
Proposed Solution: Shifting the State's fiscal year cycle to one which runs from June 1 to May 30 ensures important personal income tax data due April 15 is incorporated into budget negotiations. Additionally, Executive and Legislative fiscal leaders would be required by May 1 to revise the revenue consensus they are supposed to reach by March 1 under the Budget Reform Act of 2007.
• Legislative Budget Office (S.4526):
Current Problem: There is not a non-partisan body to provide unbiased estimates to the Legislature of the long-term cost impacts of proposed Legislation.
Proposed Solution: The creation of a Legislative Budget Office (modeled after the U.S. Congressional Budget Office) would provide Senate and Assemblymembers with revenue estimates, analyses of the Executive Budget and cost estimates for pending Legislation.
• Performance Management/Budgeting (S.7259):
Current Problem: There is no system which measures the success and performance of agencies receiving State aid. Therefore, there is no way of holding these agencies accountable for poor performances, while they are still receiving money from the State.
Proposed Solution: Create a 15-member Empire State Performance Commission, tasked with designing performance management, and performance budgeting blueprints and the Legislation for their implementation, which will strongly tie program funding to program performance.
• Tax Expenditure Cost/Benefit Analysis (S.7347):
Current Problem: There are currently a plethora of tax breaks which have "been on the books" for decades without being reviewed to see if they should still be in place.
Proposed Solution: Would require the Governor to include in the Annual Tax Expenditure Report a cost/benefit analysis of all of
• Tax Expenditure Sunsets:
Current Problem: As mentioned above there are a large number of tax breaks still on the books, partially because these breaks were never given an expiration date nor are not forced to provide evidence that they are adequately serving a public purpose.
Proposed Solution: A sunset schedule for all tax expenditures, excluding those with pre-existing sunsets. The sunsets would force Legislators to assess the need for and value of
I am extremely pleased that Democratic Conference Majority Leader John Sampson has signed on as a supporter of this legislative package. With the backing of the Democratic Conference Majority Leader there is a substantially better chance that this Legislation will pass this year.
At some point in the near future we will pass a budget, but I know that we have more work to do to make sure that in the future, both the process and the result are better for the State of
See the Budget Reform Press Conference:
http://www.youtube.com/user/NYSenate#p/u/7/YR2JQIHOEpI
Listen to Liz discussing the budget in
"Beyond the Pale" Radio Interview: http://beyondthepale.org/episode/2010/04/04