NEW YORK STATE ASSEMBLY MEMORANDUM IN SUPPORT OF LEGISLATION submitted in accordance with Assembly Rule III, Sec 1(f)
BILL NUMBER: A4845
SPONSOR: Barclay (MS) TITLE OF BILL:
An act to amend the state finance law, in relation to establishing a
spending cap and increasing the maximum capacity of the rainy day fund
PURPOSE OR GENERAL IDEA OF BILL:
This legislation will cap the growth of state spending and increase the
allowable reserve of the rainy day fund.
SUMMARY OF SPECIFIC PROVISIONS:
Section 1 of the bill would amend the State Finance Law (SFL) to add a
new Article 17, establishing a state spending cap.
*New SFL § 250 sets forth definitions for Article 17.
*New SFL § 251 establishes a spending cap, which limits the growth of
state operating funds spending to no more than the average rate of
inflation of the three previous calendar years. In addition, the section
requires the Governor to certify that the executive budget is consistent
with the cap and the comptroller to provide, within five days of action
by the Legislature upon the budget, a determination as to whether the
state budget as enacted exceeds the annual spending growth cap. Finally,
the section provides that is the Comptroller finds that the state budget
as enacted exceeds the annual spending growth cap; the Governor must
take corrective action, such as a veto, reducing state agency spending
reductions, to ensure that funding is limited to the amount of the annu-
al spending cap.
*New SFL § 252 provides that upon a finding of an emergency by the
Governor, he or she may declare an emergency by executive order. Based
upon such declaration, the Governor may submit, and the Legislature may
authorize, by two-thirds supermajority, a budget containing a percentage
increase in state operating fund spending over the prior fiscal year
that exceeds the annual spending growth cap.
Section 2 of the bill would increase the maximum capacity of the state's
rainy day reserve from 15 percent of General Fund spending to 20 percent
of General Fund spending.
Section 3 would make the act effective immediately.
JUSTIFICATION:
Over the last ten years, State Operating Funds spending has increased by
approximately $32 billion or 36%. This increase includes the period when
Governor Cuomo was in office, and he imposed a 2% State Operating Fund
cap. This Executive action was adopted by the Legislature during budget
negotiations but was never put into law. This legislation would perma-
nently require a cap on spending regardless of who is in office or deals
that are made during the budget process. This bill would attach an indi-
cator of how the actual economy is doing to the increase in New York
spending and not just an arbitrary peicentage. Over the last three years
or since the COVID-19 pandemic first hit New York, State Operating Fund
spending has increased by 23.5%. Such growth is unsustainable unless the
taxpayers want to continue to pay more in taxes to account for this
level of spending. New York relied too heavily on Federal money to
recover from the pandemic and these funds are almost all spent, which
could lead to a fiscal cliff. To end the pattern of boom-and-bust cycle
budgeting, and impose greater fiscal discipline on State government,
this legislation would enact a strict cap limiting the growth of State
Operating Funds spending.
Lastly, this bill also significantly increases the maximum capacity of
the State's rainy day reserve so any surplus that accrues as a result of
this cap can be used to help address revenue declines during times of
economic difficulty.
PRIOR LEGISLATIVE HISTORY:
A.5550 (2021-22), Held in Ways and Means
A.4448 (2019-20), Held in Ways and Means
A.5942 (2017-18), Held in Ways and Means
A.4383 (2015-16), Held in Ways and Means
A.1367 (2013-14), Held in Ways and Means
A.5370 (2011-12), Held in Ways and Means
A.9061 (2009-10), Held in Ways and Means
FISCAL IMPLICATIONS:
For State Fiscal Year 2022-23, it is expected that the cap would have
limited State Operating Funds spending, at time of Enactment, to no
greater than $120.4 billion. This reflects an increase of approximately
$3 billion or 2.58% from the prior year close-out results. The actual
State Operating Funds spending for 2022-23, at the time of Enactment,
was $122.7 billion, which increased spending by 4.5%.
EFFECTIVE DATE:
This act shall take effect immediately.
STATE OF NEW YORK
________________________________________________________________________
4845
2023-2024 Regular Sessions
IN ASSEMBLY
February 23, 2023
___________
Introduced by M. of A. BARCLAY, FITZPATRICK, BLANKENBUSH, NORRIS, RA,
PALMESANO, BRABENEC, SMITH, MIKULIN, SMULLEN, MILLER, MANKTELOW,
WALSH, SIMPSON, LEMONDES, JENSEN, J. M. GIGLIO, TAGUE, SLATER --
Multi-Sponsored by -- M. of A. K. BROWN, DiPIETRO, FRIEND, GALLAHAN,
GOODELL, HAWLEY, THIELE -- read once and referred to the Committee on
Ways and Means
AN ACT to amend the state finance law, in relation to establishing a
spending cap and increasing the maximum capacity of the rainy day fund
The People of the State of New York, represented in Senate and Assem-bly, do enact as follows:
1 Section 1. The state finance law is amended by adding a new article 17
2 to read as follows:
3 ARTICLE XVII
4 SPENDING GROWTH CAP ACT
5 Section 250. Definitions.
6 251. Establishment of annual spending growth cap.
7 252. Provisions regarding declaration of emergency.
8 § 250. Definitions. As used in this article, the following terms shall
9 have the following meanings, unless otherwise specified:
10 1. "Annual spending growth cap" shall mean a percentage determined by
11 adding the inflation rates from each of the three calendar years imme-
12 diately prior to the commencement of a given fiscal year and then divid-
13 ing that sum by three.
14 2. "State operating funds spending" shall mean annual disbursements of
15 all governmental fund types included in the cash-basis financial plan of
16 the state, excluding disbursements from federal funds and capital
17 project funds.
18 3. "Inflation rate" shall mean the percentage change in the twelve-
19 month average of the consumer price index for all urban consumers as
20 published by the United States department of labor, bureau of labor
21 statistics or any successor agency for a given calendar year compared to
22 the prior calendar year.
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[] is old law to be omitted.
LBD06036-01-3
A. 4845 2
1 4. "Executive budget" shall mean the budget submitted annually by the
2 governor pursuant to section one of article VII of the state constitu-
3 tion.
4 5. "State budget as enacted" shall mean the budget acted upon by the
5 legislature in a given fiscal year, as subject to section four of arti-
6 cle VII of the state constitution and section seven of article IV of the
7 state constitution.
8 6. "Emergency" shall mean an extraordinary, unforeseen, or unexpected
9 occurrence, or combination of circumstances, including but not limited
10 to a natural disaster, invasion, terrorist attack, or economic calamity.
11 § 251. Establishment of annual spending growth cap. 1. There is here-
12 by established an annual spending growth cap.
13 2. The governor shall not submit, and the legislature shall not act
14 upon, a budget that contains a percentage increase over the prior fiscal
15 year in state operating funds spending which exceeds the annual spending
16 growth cap.
17 3. The governor shall certify in writing that state operating funds
18 spending in the executive budget does not exceed the annual spending
19 growth cap. If final inflation rate data for the prior calendar year is
20 not yet available at the time the governor submits his or her executive
21 budget, he or she shall furnish a reasonable estimate of such prior
22 calendar year inflation rate.
23 4. The comptroller shall provide, within five days of action by the
24 legislature upon the budget, a determination as to whether the state
25 operating funds spending as set forth in the state budget as enacted
26 exceeds the annual spending growth cap.
27 5. If the comptroller finds that state operating funds spending as set
28 forth in the state budget as enacted exceeds the annual spending growth
29 cap, the governor shall take corrective action to ensure that funding is
30 limited to the amount of the annual spending cap.
31 § 252. Provisions regarding declaration of emergency. 1. Upon a find-
32 ing of an emergency by the governor, he or she may declare an emergency
33 by an executive order which shall set forth the reasons for such decla-
34 ration.
35 2. Based upon such declaration, the governor may submit, and the
36 legislature may authorize, by a two-thirds super majority, a budget
37 containing a percentage increase over the prior fiscal year in state
38 operating funds spending that exceeds the annual spending growth cap.
39 § 2. Subdivision 2 of section 92-cc of the state finance law, as
40 amended by section 26 of part FFF of chapter 56 of the laws of 2022, is
41 amended to read as follows:
42 2. Such fund shall have a maximum balance not to exceed [fifteen]
43 twenty per centum of the aggregate amount projected to be disbursed from
44 the general fund during the fiscal year immediately following the then-
45 current fiscal year. At the request of the director of the budget, the
46 state comptroller shall transfer monies to the rainy day reserve fund up
47 to and including an amount equivalent to three per centum of the aggre-
48 gate amount projected to be disbursed from the general fund during the
49 then-current fiscal year, unless such transfer would increase the rainy
50 day reserve fund to an amount in excess of [fifteen] twenty per centum
51 of the aggregate amount projected to be disbursed from the general fund
52 during the fiscal year immediately following the then-current fiscal
53 year, in which event such transfer shall be limited to such amount as
54 will increase the rainy day reserve fund to such [fifteen] twenty per
55 centum limitation.
56 § 3. This act shall take effect immediately.
