Would the “comprehensive reforms” unveiled today by the state Senate’s Majority Democrats “fix the state’s broken budget process and give New Yorkers a fiscally responsible budget,” as they claim?
Of course not.
There are, however, some good ideas in the package that would moderately boost transparency and encourage better long-term planning if properly implemented.These include:
- Biannual (i.e., two-year) budgeting. While this won’t actually “ensure responsible long-term fiscal planning,” as the sponsors say, it will certainly be more conducive to it. At the very least, a two-year budget would mean half as many blown fiscal year deadlines.
- Budgeting on the basis of Generally Accepted Accounting Principles (GAAP). As Josh Barro and I note in our magnum opus, this would disallow much of the timing-related gimmickry that can occur under New York’s cash-based budgetary accounting. The same change has been proposed by Lt. Gov. Richard Ravitch; unfortunately, Ravitch links it to some not-so-hot ideas, including $6 billion in deficit borrowing.
- Establishment of a non-partisan Legislative Budget Office (LBO), modeled on the Congressional Budget Office (CBO), to “score” appropriations bills and forecast revenues for both houses. Would the LBO replace and absorb most of the resources of the Legislature’s existing partisan fiscal staffs? Not necessarily under the Senate bill, unfortunately.
- Creation of a 15-member Commission, including legislative appointees, to designed performance management and budgeting standards. A move to performance-based budgeting would be an excellent idea (and could also form the basis for more use of competitive contracting of state services, by the way), but such an initiative would be more properly guided and controlled by the executive branch.
- Cost benefit analysis of tax breaks and mandatory statutory “sunsets” of all tax credits, exclusions and deductions. Fine–bring it on. For example, an honest analysis would reveal the fallacy behind the state film credit, which Senate Democrats have joined the Governor in seeking to vastly expand; advocates seem to believe industry hype implying that film credits are some sort of economic perpetual motion machine. But this proposal begs the question: why no cost-benefit analysis of spending programs? Let’s get serious here: it’s indefensible to subject tax breaks to a more demanding standard than spending.
In an interesting twist, the package calls for moving the state fiscal year start from April 1 to June 1 — and not July 1, which is the norm for other states and which has been favored by most other reform advocates (including me). The Democrats released a separate report devoted to this issue, which offers some interesting new arguments, along with a valuable review of practices in other states and of New York’s budgetary history in this area.
I testified last December before the Senate committee that recommended today’s changes and thought committee’s initial report, released in February, was a useful and serious contribution to the debate. Here, drawing from my testimony, are some needed changes missing from the Senate Democrats’ plan:
- Impose a “72-hour rule” requiring that key information about the budget be publicly available three days in advance of a final vote. This information would include (a) an updated multi-year financial plan prepared by the Division of the Budget in consultation with the Legislature, and (b) a memo—in a uniform format for both houses—detailing the fiscal impact of changes to the governor’s proposed appropriations and revenue bills.
- Cap spending by limiting of revenues that can be spent in a given fiscal biennium, and limit the use of surpluses to funding tax rebates and building a larger budget stabilization fund. An example of such an approach would be the Tax Expenditure Limitation amendment proposed in 2006 by Senator Raymond Meier and Assembly Robin Schimminger.
- Require that the state budget be balanced on an all-funds basis at the time of its presentation and adoption, and that it be kept in balance on a quarterly basis throughout the biennium.
- Empower the governor under limited circumstances to make uniform, across-the-board reductions in appropriations, with exceptions for services essential to health and safety, in the event the Legislature first refuses to act on a plan for completely closing deficits projected by the Budget Division during a fiscal year.
- Require voter approval of almost all debt, with important exceptions for (a) a small amount of state facility upgrade debt, and (b) borrowing supported by specific project revenue such as tolls, rents and transit fares. In contrast to current law, voters could be asked to approve more than one bond proposition in a single election.
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