Budget On-Time But Cuts Are Harsh

April 5, 2011
The Governor and the Legislature closed a $10 billion deficit, adopting an on-time budget on March 31. The Legislature made $600 million in restorations to the budget, but there are more than $8 billion in spending reductions and cuts. Governor Cuomo and Senate leaders refused to support an extension of the “millionaire’s tax,” which would have brought in an additional $700 million this year and $2.6 billion next year and paid for more meaningful restorations to education, health care, social services, and transportation.

LOSS OF FEDERAL STIMULUS FUNDS About $6 billion of the State’s $10 billion deficit resulted from the loss of the Federal stimulus funds provided in 2009 to help the State during the recession. The funds were available for two years and run out on June 30.

GOVERNOR’S CONSTITUTIONAL POWERS The Governor threatened to use his constitutional powers to force his budget to be approved or face a government shutdown. This is because the State Constitution forbids the Legislature from passing any budget bills before action on the budget submitted by the Governor is complete. As a result the Governor could put his whole budget into emergency spending bills after the budget deadline and the Constitution prohibits the legislature from amending them.

SENIOR CENTER, SUMMER JOBS FUNDS RESTORED The Governor had proposed eliminating $25 million in social service funds that the City of New York uses to fund senior citizen centers. The Legislature blocked that cut. The Governor also proposed the elimination of money for summer jobs for youth, and the Legislature blocked that cut as well.

EDUCATION Aid to public schools took serious cuts. A substantial amount of the Federal stimulus funds in the State budget, which were expiring, provided aid to the New York City public schools. Without some additional revenue, such as the millionaire’s tax, the Legislature could only make very limited restorations. The Governor also proposed a 33% cut in aid to New York City school construction, which the Legislature blocked. Mayor Bloomberg played an ineffective role, advocating for changes in how to deal with layoffs rather than focus on the main issue, the need for revenue. He refused to support the millionaire’s tax too.

A two-year education budget was adopted. Although total cuts this year were $1.27 billion, an $800 million increase was provided for next year. This is a positive development.

HEALTH CARE The Governor proposed a $2.3 billion State share reduction to the Medicaid program, including an 8% cut to hospitals, nursing homes, clinics, and home care agencies. About half the spending reductions were cuts (including a cap on spending for providers) and the other half were reforms like requiring managed care for long-term care and for the mentally ill. Developmental disability agencies also took big cuts which I viewed as unfair.

THERE WERE BETTER CHOICES An extension of the income tax surcharge on the wealthy could have provided the revenue we needed, both this year and next year, to provide meaningful restorations. The State could also have borrowed a small amount of money to further mitigate the cuts, and the extension of the tax would have provided sufficient revenue for a fully balanced budget next year anyway despite the small borrowing.