Legislature Passes Bill Reducing Deficit by $2.7 Billion

December 3, 2009
On December 2, 2009, the Assembly passed a deficit reduction measure that will shrink New York State’s budget deficit by $2.7 billion; the State Senate approved the bill later the same day and Governor David Paterson is expected to sign it, enabling the State to manage cash flow for the remainder of the fiscal year, which ends March 31, 2010.

The deficit reduction measure includes the following savings:

  • $431 million in agency reductions, an 11 percent reduction in each State agency’s non-personnel costs;
  • $482 million in other across-the-board local assistance cuts, including a 12.5 percent cut to legislative member initiatives and an 11 percent cut in the legislative budget;
  • $391 million in Federal stimulus to education that was supposed to be used in the 2010-11 fiscal year, but will be used now to prevent cuts to school districts in the middle of the school year;
  • $250 million collected under a new tax amnesty program;
  • $200 million from the Battery Park City Authority;
  • $200 million from an anticipated Video Lottery Terminal franchise payment;
  • $150 million in more aggressive Medicaid fraud recovery targets;
  • $145 million in administrative actions;
  • $121 million in health care;
  • $90 million from the Regional Greenhouse Gas Initiative fund;
  • $49 million in workers’ compensation surplus recaptures;
  • $26 million from the Dormitory Authority of the State of New York;
  • $10 million from the Environmental Protection Fund; and
  • $155 million in other actions.

It was important to ensure that cuts did not affect programs that receive matching Federal dollars, as the bill successfully preserves $500 million in Federal health care reimbursements State taxpayers were entitled to, compared with the deficit reduction bill originally proposed by the Governor. The Assembly also rejected a number of other cuts proposed by the Governor, such as an $11.4 million cut to Supplemental Security Income (SSI), a $26.2 million cut to the Tuition Assistance Program, a $1.6 million cut in the Regents Professional Opportunity Scholarship, and a $1.6 million cut to the school lunch and breakfast program.

Although it is never easy to make cuts to the State budget, the current budget deficit makes it necessary to make some difficult decisions regarding State programs. This measure was essential in ensuring that the State could pay its bills for the remainder of the fiscal year, and to keep New York on sound financial footing.