Schimminger Introduces Constitutional Amendment to Check Budget Growth

January 30, 2007

Assemblyman Robin Schimminger announced today that he has reintroduced a concurrent resolution proposing an amendment to the New York State Constitution that would limit the annual growth of New York State revenue. The amendment would encourage fiscal discipline, make New York more business-friendly, and help to hold the line on increases in taxes and fees.

“We are starting a new legislative term and a new governor is in office. There can be no higher priority for this new government than to improve our state’s economic climate. One way to do that and the best way to ensure improvement long into the future is to institute fiscal restraint at the constitutional level,” Assemblyman Schimminger said.

The proposal would limit the total amount of state taxes to be imposed in any fiscal year to no more than the previous year’s revenues increased by a “fiscal growth factor.” The fiscal growth factor would be determined by adding the rates of inflation and population change for the prior calendar year. Further, the legislation would forbid the state to meet its revenue limits by shifting costs to counties and other local governments and would prohibit the state from adding new or expanded programs at local governments’ expense. Should the state receive revenues over and above the allowable amount, half would be returned to state taxpayers, and half would be deposited in a budget stabilization fund.

The bill (A.2360) contains several safeguards designed to stabilize the budget and avoid fiscal crisis, including:

- Creating a fiscal growth formula. For each fiscal year following the fiscal year in which this constitutional amendment takes effect, the revenue limitation shall be equal to the prior fiscal year's allowable revenue increased by the fiscal growth factor. The fiscal growth factor is defined as the sum of inflation and population change for the prior calendar year. So in years of economic decline and revenue shortfall, the state budget will still be indexed to the prior fiscal year's allowable revenue rather than actual revenue. This formula ensures that during lean years the Legislature and Governor would still be able to maintain vital services.

- Requiring that the revenue limitation be adjusted if a court order or legislative enactment transfers the costs of a federal or local government program to (or from) the state. Without this safeguard a court order or legislative enactment could literally devastate the state's ability to pay its bills and provide necessary services.

- Establishing a budget stabilization fund. This fund will function as a revenue stream in years of economic decline and revenue shortfall. This revenue stream will help the government meet its obligations and provide vital services during difficult years.

Currently there exists no state revenue limitation. A change to the state constitution is only made when the same legislation has been approved by two successive legislatures and subsequently by the voters of the state of New York.

Schimminger said, “Unchecked budget growth has cost us population and jobs while burdening New Yorkers with taxes and fees. Simply put, this is a proposal to put New York State on a diet – except that instead of limiting calories, we’ll be limiting the revenue increases that feed ever bigger budgets.”

Schimminger, who chairs the State Assembly’s Committee on Economic Development, Job Creation, Commerce and Industry, expressed his eagerness to work with the new governor “to make substantive improvements that will help our state, and especially upstate, attract and grow businesses and jobs and compete successfully in the global marketplace.”

Senator John DeFrancisco is sponsoring the revenue limitation legislation in the State Senate.