Limits state spending, excluding the disbursement of proceeds from bonds, bond anticipation notes and federal grants, to the amount expended in the previous year plus an amount equal to inflation.
NEW YORK STATE ASSEMBLY MEMORANDUM IN SUPPORT OF LEGISLATION submitted in accordance with Assembly Rule III, Sec 1(f)
BILL NUMBER: A11187
SPONSOR: Brown TITLE OF BILL: CONCURRENT RESOLUTION OF THE SENATE AND ASSEMBLY
proposing an amendment to article 7 of the constitution, in relation to
limiting the amount of revenue to be retained by New York state
PURPOSE OR GENERAL IDEA OF BILL: To control the growth of state spend-
ing, and ease the tax burden on New York residents.
SUMMARY OF SPECIFIC PROVISIONS: The Taxpayer Relief Act sets a limit
on the increase in state spending in any given fiscal year to be equal
to the previous year's spending plus inflation and growth in entitlement
programs.
Any revenue generated in excess of the spending limit is to be
refunded/utilized in the following manner: 1/3 shall be refunded direct-
ly to all state income tax filers annually in the form of a refund
check, 1/3 shall be deposited into a contingency fund to be used in
years of revenue shortfalls and 1/3 shall be used to reduce the state's
outstanding debt.
If the Legislature sees fit to increase spending in any given year, it
may do so with a 2/3 supermajority vote in both houses.
JUSTIFICATION: High taxes, spending and borrowing in New York are
widely recognized as significant obstacles to stronger economic growth,
especially for Upstate communities whose natural competitors are lower-
cost regions in the Midwest and Southeast. As of 2004, New York ranked
number one in state and local tax burden, at 29 percent above the
national average. Additionally, New York State spends more per capita
than any other state except Alaska, at just over $6,200 for every man,
woman, and child in the state. And New York has the second highest debt
load ($140 billion) of any state in the country.
To address the high cost of state government, 27 other states have
enacted Tax and/or Expenditure Limitations (TEL), 18 of which have been
constitutionally ratified. A TEL serves to cap state spending from year
to year with adjustments for inflation, population growth, and/or
increased revenue. New York State has no such limitation.
The Taxpayer Relief Act aims to constitutionally limit state spending
and slow the overall growth of government. Annual spending would be
restricted to the previous year's expenditures plus inflation and growth
in entitlements. It earmarks revenues in excess of the spending cap for
three distinct purposes:
1. 1/3 is returned to New York State income tax filers annually in the
form of a refund check.
2. 1/3 is deposited into a contingency fund designed to be replenished
during years of economic prosperity and tapped during years of severe
revenue decreases as a mechanism to allow expenditures to keep in line
with the baseline spending cap without going into further debt or
cutting essential services.
3. 1/3 is used to pay off New York State's debt.
The Taxpayer Relief Act builds on and enhances the tax and expenditure
limitations of other states. Colorado enacted the nation's very first
taxpayer bill of rights in 1992. Since that time, Colorado has experi-
enced times of economic recession and lower revenues which lowered the
spending limit and handcuffed state government. The state also experi-
enced periods of great economic prosperity when millions of dollars were
refunded directly to its taxpayers without precautions in place to make
sure the state could effectively manage itself when the economy slowed
down. When revenues were down, the spending cap was too low to allow for
the proper operation of government, and when revenues were up, the task
of reserving funds for future revenue shortfalls was forgone.
The Taxpayer Relief Act is crafted with provisions to safeguard the
state from these pitfalls. It establishes a contingency fund to supple-
ment revenues during down years and allows for expenditures in excess of
the spending limit with a supermajority vote of both houses of the
legislature. It further allows for entitlement spending to be accounted
for in the baseline, ensuring New York's residents will continue to
receive their constitutionally guaranteed services.
Between 1995 and 2005, New York's State tax receipts grew by 42 percent.
If the budget had been subject to these limits, spending growth financed
by these taxes would have been capped at 27 percent.
The cumulative savings over the past 10 years would have been nearly $23
billion. That $23 billion would have substantially reduced New York's
debt, created a fund to safeguard New York from severe economic down-
turns and returned a substantial amount of money to the pockets of hard
working New Yorkers.
When implemented, the Taxpayer Relief Act will have a significant posi-
tive impact on limiting state spending, slowing down overall government
growth and alleviating the tax burden on its citizenry.
FISCAL IMPLICATIONS: This reform will save state taxpayers billions of
dollars once state spending is brought under control.
EFFECTIVE DATE: Upon the approval of two successive Legislatures and
subsequently by the voters, the provisions of this bill can be in effect
as early as SFY 2008.
STATE OF NEW YORK
________________________________________________________________________
11187
IN ASSEMBLY
May 2, 2006
___________
Introduced by M. of A. BROWN -- read once and referred to the Committee
on Ways and Means
CONCURRENT RESOLUTION OF THE SENATE AND ASSEMBLY
proposing an amendment to article 7 of the constitution, in relation to
limiting the amount of revenue to be retained by New York state
1 Section 1. Resolved (if the Senate concur), That article 7 of the
2 constitution be amended by adding a new section 7-a to read as follows:
3 § 7-a. This section shall be known as the "taxpayer relief act". 1.
4 All provisions of this section shall supersede any conflicting state
5 constitutional, state statutory, charter, or other state or local
6 provisions.
7 2. For purposes of this section:
8 a. "Total state spending" shall mean total annual disbursements from
9 all governmental fund types included in the cash-basis financial plan of
10 New York state, excluding the disbursement of the proceeds of general
11 obligation bonds and bond anticipation notes authorized by the voters of
12 the state and issued by the state comptroller pursuant to section 10 or
13 11 of this article and excluding the disbursement of federal grants
14 received by the state of New York.
15 b. "Inflation" shall mean the average of the percentage changes, for
16 all regions of New York state, in the United States bureau of labor
17 statistics consumer price index or its successor index.
18 3. The governor shall not submit any appropriation bill or bills, nor
19 shall the legislature act upon any such appropriation bill or supple-
20 mental appropriation bill or bills for the support of government which
21 authorize total state spending for any fiscal year which is in excess of
22 the total state spending for the immediately preceding fiscal year plus
23 inflation, with the following exceptions:
24 a. in the case of services, programs and entitlements for which a
25 greater number of persons are entitled than in the immediate preceding
26 fiscal year, total state spending may exceed the limitation established
27 in this section by a percentage equal to the percentage of increase in
28 number of persons;
29 b. in which the spending limitations established in this section may
30 be exceeded upon a two-thirds vote of the legislature.
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[] is old law to be omitted.
LBD89128-08-6
A. 11187 2
1 4. Nothing in this section shall prevent the governor from submitting
2 or the legislature from acting upon any appropriation bills or supple-
3 mental appropriation bills for the support of government which authorize
4 total state spending in an amount less than that authorized by the limi-
5 tation established in this section.
6 5. If revenue from all sources not excluded from total state spending
7 exceeds the limitation established in this section, the excess monies
8 shall be distributed as follows:
9 a. One-third as a direct tax refund to all persons filing income tax
10 returns, in equal amounts.
11 b. One-third as repayment to reduce the state indebtedness.
12 c. One-third to a contingency fund, to be held in interest bearing
13 accounts to be tapped into in the event of a revenue shortfall.
14 § 2. Resolved (if the Senate concur), That the foregoing amendment be
15 referred to the first regular legislative session convening after the
16 next succeeding general election of members of the assembly, and, in
17 conformity with section 1 of article 19 of the constitution, be
18 published for 3 months previous to the time of such election.
