screen-shot-2014-05-09-at-31942-pm-8663269The multi-year tables in New York State’s just-released Enacted Budget Financial Plan for fiscal 2015 make continued use of Governor Andrew Cuomo’s new fiscal conjuring device: a lump-sum, below-the-line reduction in future projected spending, based on the assumption that the governor will “propose, and negotiate with the Legislature to enact budgets that hold State Operating Funds spending growth to 2 percent.”

The footnote (calling to mind the “magic asterisk” in Ronald Reagan’s first federal budget, which promised “future savings to be identified”) first appeared under the financial plan tables in Cuomo’s Executive Budget in January. It was the basis for the governor’s repeated claim to have turned a huge budget gap into a $2 billion surplus, which never actually entered the realm of fiscal reality. (The general fund surplus for 2013-14 was $625 million, the underlying elements of which are an another story.)

Disregarding the footnote and doing a few simple calculations, the state operating funds gaps under the enacted plan, as traditionally measured prior to this year, are about the same as they appeared in the proposed budget, as shown below.

screen-shot-2014-05-09-at-32404-pm-7553181

These gaps represent a structural budget imbalance, albeit one that Cuomo has reduced since 2011. If the financial plan went out one more year, to fiscal 2019, the gap would balloon to roughly $6 billion, due to the scheduled expiration in fiscal 2018 of the temporary “millionaire tax” increase in the PIT.

In other words, the state is still on track to spend more than it takes in on a recurring basis, under current law. However, as the governor’s footnote indicates, the gaps could be turned into surpluses if spending growth continues to average 2 percent a year, as opposed to the nearly 4 percent average increase that would occur if the budget was on autopilot. (This year’s state operating funds spending hike is officially 1.8 percent; however, the spending increase is 2.5 percent after adjusting for $344 million in fiscal 2014 “prepayments” of 2015 expenses. In addition, as noted in the preliminary budget analysis from Comptroller Thomas DiNapoli’s office, the budget authorizes more than $500 million in new spending from off-budget accounts.)

A couple more quick takes from the Enacted Budget Financial Plan:

  • The net personal income tax (PIT) forecast for fiscal 2015 has been reduced $396 million from the projection in the last update to the Executive Budget plan, released three months ago. The state now expects quarterly estimated payments in the new year to be $1.3 billion lower than projected a few months ago, but this decrease will be offset by lower refunds next spring.  Hmm.
  • The budget deal between Cuomo and the Legislature added a total of $2.65 billion in projected state operating funds spending to the financial plan for the next four years. Spending for fiscal 2015 alone was boosted by only $194 million in the enacted budget, but the annual additions will mount to $1.2 billion by fiscal 2018. School aid, up $202 million over the governor’s original proposal for next year, and $2.2 billion across the four-year plan, accounts for most of the difference.
Tags:

About the Author

E.J. McMahon

Edmund J. McMahon is Empire Center's founder and a senior fellow.

Read more by E.J. McMahon

You may also like

Hochul’s ‘Straight Talk’ on Medicaid Isn’t Straight Enough

Arguably the biggest Medicaid news in Governor Hochul's budget presentation was about the current fiscal year, not the next one: The state-run health plan is running substantially over budget. Read More

New York’s Medicaid Spending Is Running Billions Over Budget

New York's Medicaid program ran billions of dollars over budget during the first half of the fiscal year, adding to signs of a brewing fiscal crisis in Albany. According to the fro Read More

Hospital Lobby’s TV Campaign Spreads Misinformation About Medicaid

As New York's health-care industry agitates for more money from the state budget, two of its most influential lobbying groups are airing TV ads that make alarmist and inaccurate claims about Medicaid. Read More

Hochul’s ‘Pay and Resolve’ Push for Hospitals Triggers Déjà Vu

Two years ago last week, I wrote in the Daily News about how then-Governor Andrew Cuomo was pushing a costly change to insurance law on behalf of a hospital group that had supported his campaign through a fund-rai Read More

The Looming Collapse of a Long-Term Care Insurer Raises Questions for DFS

As the Hochul administration presses for the creation of a "guaranty fund" to bail out failed health insurers, the state is quietly moving to seize a small company that could be the fund's first target. Read More

Hochul puts Medicaid spending on a steeper slope

Governor Hochul is releasing the brakes on Medicaid, allowing state spending on the safety-net health plan to increase more than twice as fast as it typically did during the Cuomo administration. Read More

Hochul’s agenda mostly sidesteps health care

Governor Hochul gave health care surprisingly little attention in her State of the State speech on Tuesday – a sign that taking on dysfunction in one-sixth of the state's economy ranks low on her list of priorities. Read More

Federal omnibus deal has big implications for New York Medicaid

The big spending bill heading for a vote in Washington this week would scramble the outlook for Medicaid in next year's state budget, mostly for the better. The $1.7 trillion federa Read More