On Wednesday, March 20, following a floor debate led by Assemblyman Farrell, the first bill related to the State budget for Fiscal Year 2013-2014 passed by a measure of 104 to 41.
The bill, A.3002-A, was introduced by Governor Cuomo in January and amended in March. The bill is necessary for the State to make legally-required payments on existing debts. It also provides funding for new projects in the coming five years - transportation, education, parks and reconstruction efforts after the 2012 storm.
Under the terms of the bill, debt service will remain under the legal maximum amount, and new protocols will be introduced to make the State's money-handling procedures more efficient and to lower borrowing costs.
Negotiations on other budget bills are ongoing. Among these are legislation that may raise the minimum wage to $9 per hour in the near future, increase funding for education, provide a tax break for middle-income families who own their homes, and reform the stop-and-frisk program.
The Assembly on Monday, March 11 passed its' "one-house" budget resolution, followed by a meeting of legislative leaders in the General Budget ("Mothership") Conference Committee and Joint Budget Conference Committees. Monday's floor debate was led by Assemblyman Farrell, who as chair of the Ways and Means Committee is responsible for helping pass the budget.
The Assembly's budget resolution and the Senate's corresponding budget resolution are being discussed during Joint Budget Conference Committees. These committees divide the budget into components: Public Protection/Criminal Justice/Judiciary; Environment/Agriculture/Housing; Higher Education; Mental Hygiene; Transportation; Human Services/Labor; General Government/Local Assistance; Economic Development; Health; and Education.
Members of these subcommittees, in their discussions, are not allowed to discuss any item that is not included in either the Assembly or Senate resolution. Once the differences in the resolutions are ironed out, a unified budget bill will be passed and sent to Governor Cuomo.
The Assembly's budget bill makes several significant restorations to the $141.6 billion Executive Budget released by Governor Cuomo in January. While the Executive Budget included higher school aid compared to State Fiscal Year 2012-2013, the Assembly's restorations increase school aid by more than $800 million, including restoration of $240 million for New York City Schools.
These funds had been cut because of a disagreement on teacher evaluations between the mayor and the teachers' union, causing a missed deadline which in turned forced City schools to forfeit increased State aid. This cut was blocked by a judge. The Assembly, anticipating an agreement would be reached, included this $240 million in State aid in its' budget resolution.
The following are highlights of the Assembly budget resolution: the Aid and Incentives for Municipalities (AIM) program would allocate an additional $140 million for New York City during each of the next three years, and $120 million would be allocated for the State Office for People with Developmental Disabilities, reversing significant proposed cuts.
Funding for these crucial programs had been cut because of a dispute between Albany and Washington about Medicaid payments to New York that had been made in previous years. Washington cut $500 million in Medicaid funding after the Executive Budget had already been released, forcing a sudden funding cut for non-profits who serve the developmentally disabled.
Seeing the catastrophic effect these cuts would have on communities statewide, the Assembly restored funding for programs that positively affect the quality of life for thousands of New Yorkers while providing badly needed jobs.
The Assembly's budget also increases the amount of financial aid that is available to students attending SUNY-affiliated community colleges, increases SUNY and CUNY child care centers which provide vital assistance and support to parents who attend college, and makes $25 million in financial aid available to undocumented youth who wish to pursue a higher education.
As part of the legally required process of completing the State budget for Fiscal Year 2013-2014, which begins April 1, today Governor Cuomo and leaders of the Assembly and Senate sat down in order to reach consensus revenue figures for the fiscal year, a key component of the budget.
The panel at today's meeting included Robert L. Megna, director of the Governor's Division of Budget, Assemblyman Farrell, chair of the Ways and Means Committee, representatives of the Senate Finance Committee, and private sector economic experts including Hugh Johnson, Chris Varvares of Macroeconomic Advisors, James Diffley of IHS Global Insight, Jason Bram of the Federal Reserve Bank of New York and Ronnie Lowenstein of the NYC Independent Budget Office.
Presentations delivered by Johnson and other leading economists shed light on the State and national economic outlook, with a focus on New York's economy and possible future risks. Their reports also included assessments of the pace of the ongoing national economy, figures that are crucial as the budget for Fiscal Year 2013-2014 takes shape in the coming weeks.
On Wednesday, February 27, Assemblyman Farrell and Speaker Silver announced the Assembly Majority Conference has released their annual Revenue and Economic Reports. These reports can be found at www.assembly.state.ny.us.
In brief, the reports forecast receipts of $141.4 billion, which is an increase of $6.3 billion compared to the previous fiscal year. This includes $3.8 billion in Federal funds for "Superstorm Sandy" relief that is responsible for much of the year-to-year growth in the budgets.
Additional revenues over and above forecasts for SFY 2012-2013 are now anticipated in the amount of $73 million. Also, in forecasts for SFY 2013-2014, the Assembly anticipates an additional $484 million in revenue, for a total of $557 million.
The Senate fell short of Assembly projections but forecasts an additional $262 million in revenue above the original forecasts between these two fiscal years.
The Assembly forecast also anticipates growth in employment during the coming year, with corresponding increases in wages forecast for 2013 and 2014.
Assemblyman Farrell on Friday debated and helped pass a package of budget bills that flesh out a $132.6 billion spending plan for Fiscal Year 2012-13, which began Sunday, April 1. These budget bills, which are a product of an accord the Assembly, Senate and Governor Cuomo reached earlier in the week, completed the budget process early for the first time since 1983.
"After several years of cuts, I am happy to say that we will at last be able to undo some of the damage caused by the Great Recession," Assemblyman Farrell said. "I commend Governor Cuomo for keeping the promise he made last year and releasing $805 million to our schools, including $75 million that has been set aside for New York City schools."
Overall support for education programs in the 2012-13 budget total $20.3 billion. This 3.9 percent increase in funding for public schools is matched by a similar increase in funding for health care programs. These and other State programs were cut as State government dealt with funding shortfalls forced by the Wall Street crash of 2007 and the economic decline that followed.
This budget, which recognizes ongoing weakness in the economy, is structured in such a way as to provide for the most vital needs of the State and its' people while staying below the self-imposed spending cap of 2 percent called for by Governor Cuomo. Because the same amount of money is to be spent in a smarter way, proposed cuts were not actually made in the final budget.
These restorations include $239 million in expense-based school aid, more funding for SUNY and CUNY including campus child care centers, and a restoration of $30.6 million to the Elderly Pharmaceutical Insurance Coverage (EPIC) program. The budget fully funds increases to the public assistance grant, which is scheduled to rise by 5 percent this summer and again in the fall.
An appropriation of $6.5 billion will fund unemployment insurance benefits, and the budget also finalizes plans for the State to shoulder increased Medicaid costs, freeing localities from this cost and saving local governments an estimated $1.2 billion over the next five years. Also included is $34.3 million to maintain the right of spousal refusal, meaning that seniors whose ailing spouses require long-term care will not be at risk of losing vital assets.
Businesses owned by women and minorities who wish to contract with the State will find a helping hand has been extended, as funds have been allocated to support these companies. Capital projects, including road and bridge maintenance, are funded at aggressive levels, as is State support for the Metropolitan Transportation Authority. Under the 2012-13 State budget, $4 billion has been provided to support the MTA, a 5 percent increase from the previous year.
The Neighborhood Preservation Program, which the Governor had proposed eliminating this year, has been restored to the tune of $10 million. Other housing rehabilitation and foreclosure prevention programs were similarly saved, affirming the State's commitment to preserving the stock of affordable housing in Northern Manhattan and other communities.
Budget bills passed by the Assembly on Friday include A.9050D, which makes an appropriation of $34.7 billion to provide for the operations of State government agencies (passed 124-1); A.9054D, which makes an appropriation of $52.1 billion to fund capital projects by State agencies (passed 132-5); A9053E, which provides aid for localities including education funding (passed 134-2); A.9051A, which makes an appropriation of $2.7 billion to fund the State judicial system (passed 121-3); A.9056D, which enacts and implements the health and mental hygiene components of the budget (passed 128-4); A.9057D, which enacts and implements the education, labor and family assistance components of the budget (passed 119-8); and A.9059D, which implements the fiscal plan for Fiscal Year 2012-13 (passed 115-14).
HERMAN D. FARRELL, JR
Assemblymember 71st District
2541-55 Adam Clayton Powell, Jr. Blvd.
New York, NY 10039
TEL (212) 568-2828
FAX (212) 928-4177
Much has been said in the press about the fact that we were more than three months late with the budget. The reason that our work ran so late, after two years in which we passed budgets on time, was because of the Governor's Draconian and damaging budget cuts.
Because of recent court rulings, and the manner in which the Governor presented his budget bills to the Legislature, we could not legally change the Governor's spending plans as we have done in the past. We could vote to pass budget bills or refuse to pass them, but we could not change them. The Governor's intention, like ours, was to cut State spending but we disagreed on what should be cut and by how much. It appears to me that the Governor may not be aware of the consequences of his budget cuts.
Cutting State programs impacts the quality of life in our community and every community in the State. Noise in our neighborhoods goes up when funding for enforcement is cut. Garbage piles up when sanitation programs are cut. Petty crime rises when fewer police are on the streets to keep our community safe. We agreed with the Governor that some programs had to be cut to balance the budget in a time when revenues have fallen, creating a massive deficit. But we believed that there were limits to the cuts we could make this year, and that money had to be found to guarantee that the community's basic quality of life would not suffer.
We did everything we could to fight the Governor's plans to cut funding for schools and classrooms, which we in the Assembly believe are essential for our children's future. The Governor proposed a $1.4 billion cut to education. The Assembly believed that was too much and fought to restore $600 million. We thought cutting $800 million from education programs, instead of cutting $1.4 billion, would help close the deficit but it would not harm classrooms or the basic education that we offer every young person. The Governor had the legal right to veto the money we added, and he chose to do so. We believe this cut may cause major problems for students and schools if teachers are fired and class sizes increase, but we will continue our fight for students during the coming school year.
While we were unable to restore funding for education, we had several important legislative victories that should have a positive impact on our communities. We were able to give students back their subway and bus passes. The MTA claimed they did not have the money, but we were able to restore funding. We found additional State money to get State parks, including Riverbank State Park, open in time for the Memorial Day holiday. We also succeeded in changing the Governor's mind on cutting the public assistance grant. This meant that the full 10 percent increase we had approved last year, which was the first increase in 18 years, went through as scheduled this summer.
The Assembly budget resolution, which is a non-binding proposal that will serve as a touchstone for budget negotiations scheduled to occur in the coming days, aims to erase the State's structural budget deficit by Fiscal Year 2015-16 largely by accepting key elements of the Ravitch plan, including basing future State budgets on Generally Accepted Accounting Practices instead of the current cash flow system, formation of a State Budget Review Board and the imposition of a strict timetable State leaders must follow when addressing future revenue shortfalls.
In the near term, the budget plan would protect programs relied on by hard-hit State residents trying to navigate the ongoing recession. More than $475 million in crucial funding for New York City would be restored under the Assembly plan, which would also reject the Executive Budget proposal to increase the MTA payroll tax and restore NYC STAR property tax relief.
"This budget reflects the many crucial, difficult choices necessary for the fiscal stability of our State," Farrell said. "By following reforms outlined by Lt. Gov. Ravitch, we also now have a plan for our State going forward."
"Our plan addresses New York's $9.2 billion budget deficit through a combination of responsible spending cuts and critical budget reforms, while protecting programs and services New York's working families depend on and rejecting $1 billion in proposed taxes and fees," Speaker Sheldon Silver said.
Many of the Assembly proposals are specific to New York City, and would save metropolitan taxpayers and government millions while preserving programs New Yorkers rely on in their daily lives. Specifically, a proposed $150.8 million State aid cut would be restored, along with $193 million in school aid, $18.5 million for senior centers, $92.5 million for adult homeless shelters, $13.5 million for summer youth employment and $2.1 million for settlement houses.
The Assembly plan also calls for the State to take over local Medicaid administration, which is currently a City responsibility, over a period of five years. This action would save the City $45 million in 2011-12 and over $250 million when the program is fully implemented.
Statewide, $600 million would be restored to education aid which was to be cut by $1.4 billion, and expense-based aid including foundation aid to schools would not be frozen as the Executive Budget proposed. Further, a plan to shift $86 million in summer school costs to local schools was rejected while plans to continue funding for Universal Pre-Kindergarten will be upheld. While funding for SUNY state-operated colleges would be cut by $109.9 million, proposals to cut base aid to community colleges and certain students' TAP awards were rejected.
Plans to cut health care spending by $1 billion would be reduced by $126 million, restoring $32 million in cuts to hospitals, $25.9 million in cuts to nursing homes and $36.5 million in cuts to home health care. The Assembly resolution also tightens controls on insurance companies by mandating State approval before companies are allowed to increase premiums on certain plans.
The Assembly plan would restore $11.25 million in State park funding, which members hope will avert closure of 91 parks, and $2.1 million in fee revenue would be restored. The plan calls for $25 million to be restored to the State Environmental Protection Fund. Certain State agencies that share objectives would be combined, saving $32 million, and the Lyon Mountain and Butler Correctional Facilities would close, saving $7 million this year and $52 million in the out years.
The Assembly plan calls for $2 billion in bonds, $300 million of which would be held in reserve, and the creation of a Budget Review Board which will issue quarterly reports on State finances. If this Board finds the State budget will be out of balance by Fiscal Year's end, the Governor would have 30 days to make administrative corrections, and 30 days to make corrections with the Legislature. After 60 days, the Governor would have the power to cut spending across the board.
The Assembly Ways and Means Committee held the second of two scheduled hearings on the Governor's Deficit Reduction Plan in Room 407 of the County Courthouse. To recap, in late October the Governor proposed to close a projected $3 billion deficit during calendar year 2009 and gain a $2 billion head start on an anticipated deficit during calendar year 2010 by cutting $5 billion worth of spending that had been authorized in the 2009-10 state budget. Most of that $5 billion would be cut from the state's education and health care spending.
As during a hearing in Albany earlier in the week, speakers in Syracuse were skeptical that the Governor's proposal was the way to go. Representatives of upstate cities said that slashing aid to localities would blow huge holes in their municipal budgets, which rely heavily on state aid. Speakers representing educators and human service workers said the cuts would do lasting harm.
However, others said the governor's proposal does not go far enough to reverse what they described as unsustainable spending on pensions, schools and other expenses. A representative of The Manufacturers Association of New York said the group supports the Governor's plan to close the deficit by cutting services, not raising taxes as was done in an earlier Deficit Reduction Plan. Unshackle Upstate Executive Director Brian Sampson criticized the plan as too light on cuts and offered a series of recommendations he said would cut even deeper into state spending.
Sampson, who said his organization represents 45,000 employers, cited reports claiming pension fund costs would drive property taxes up by 10 percent next year and said the state's spending on schools doubled in recent years and is 65% above the national average. Upstate workers spend fewer hours on the clock and earn less per hour than they did a few years ago, he said. Sampson said the state should make immediate cuts of $3.74 billion, including a $2.2 billion reduction in state spending, a payroll lag saving $700 million, and a workforce furlough saving $840 million.
Conversely, others said cutting state spending would be catastrophic. Dr. David Smith of Upstate Medical Center said that the cumulative impact of the proposed cuts must be considered. Between cuts to Medicaid and higher education funding, Upstate Medical Center stands to have $35 million cut from its' budget, Smith said. Janet Penska, finance commissioner for the city of Buffalo, said state aid makes up one-third of the city's $450 million annual budget, which has led city officials to see Buffalo as a ward of the state. Bob Sprague, the city of Syracuse's budget director, testified that state aid makes up more than half of his city's budget.
Not all of the speakers were officials or representatives of professional organizations. Several parents of Syracuse public school students, and adult advocates of schoolchildren, spoke against the proposed cuts. Also speaking against cuts were consumers of metal health services and their advocates, parents of children with developmental disabilities, and environmentalists opposed to "sweeping" unused environmental protection funds into the state General Fund. A Syracuse University staffer told the Committee that cuts to the STEP and CSTEP programs would roll back academic performance and graduation rate improvements associated with those programs.
The Ways and Means Committee, led by Assemblyman Farrell, held the first of at least two scheduled Committee hearings on this date to gather feedback from stakeholders and members of the public on the Governor's plan to close an anticipated budget deficit by making deep cuts to previously budgeted state education and health care spending. A second Ways and Means hearing was scheduled for October 23 in Syracuse and other agencies' hearings are ongoing.
While many of those who spoke, particularly those representing educators' and health care workers' unions, were firmly against the plan to cut state spending on these programs, others said that the plan does not go far enough to reduce expenses and urged more changes be made.
First to testify Oct. 21 were Kenneth E. Raske, president and CEO of the Greater New York Hospital Association, and Kevin Finnegan, political director of 1199 SEIU. Raske's comments, titled "Here We Go Again…" stated that cutting state Medicaid spending by $287 million would lead to the loss of $720 million in matching federal funds, following six health care cuts in two years. Further cuts will degrade patient care or cause hospitals to fail entirely, Raske testified.
Steve Allinger, director of legislation for New York State United Teachers, said that the proposed cuts could jeopardize the state's economic recovery and would run counter to a federal plan to save or create teaching jobs. In the preceding year, 6,500 teaching jobs were lost, he said. Forcing midyear budget cuts would lead to chaotic, unplanned short-term decisions in schools, while public colleges would see their funding cut at a time of higher demand, Allinger testified.
Richard Farkas, of the United Federation of Teachers, said New York City schools are "already reeling" from the loss of $400 million in funding at the beginning of this school year, and coping with a midyear state aid cut of $223 million would further complicate the situation. Already, 62 percent of elementary and middle schools and 73 percent of high schools report larger class sizes now compared to one year ago, and many teachers report students with special needs are not receiving appropriate services, Farkas testified.
United University Professions President Phil Smith testified that cuts made to state colleges, whose professors he represents, have borne larger proportional cuts than any state entity since the financial crisis began, losing over 17 percent of SUNY's operating budget in 18 months. A CUNY representative testified that it will be impossible to make cuts without firing teachers.
Marina Marcou-O'Malley of the Alliance for Quality Education, cited a Siena College poll released the day prior to the hearing that stated that education is the top policy priority for 97 percent of New Yorkers, and that gains being made now would be halted if school funding is cut. Robert Lowry, deputy director of the Council of School Superintendents, said a poll of his membership found that some districts may elect to use reserve funds to make up for state aid cuts but use of reserves now may lead to layoffs in the spring or higher school tax bills next summer.
Joseph Twardy, a representative of the Home Care Association of New York State, said that if the Governor's proposal is accepted, $500 million in federal and state home care funding would disappear and the industry would be decimated while patients could be shifted out of home care situations into more expensive hospital or nursing home care situations.
Center for Independence of the Disabled staff testified that persons with disabilities are already living on the razor's edge of risk and if funding for SSI and similar programs is cut would force these persons into their own financial catastrophes, and in many cases into managed care. Phyllis Wang, president of the Association of Health Care Providers, said in many cases home care is half the cost of institutionalized care, so the Governor's proposal to cut funding for home care services does not make financial sense. Dan Heim, of the New York Association of Homes and Services for the Aging, said the group polled its member organizations following the release of the Governor's plan, and 98 percent of respondents said funding cuts of $475 million over two years would force these agencies to cut staff, which would have an adverse effect on services.
Representatives of the Fiscal Policy Institute questioned the wisdom of removing $2.26 billion of demand from the state's economy in five months, claiming a significant negative impact would result. Frank Mauro, the group's director of fiscal policy, said the Governor was approaching the problem from an accounting perspective and not an economist's perspective, and asked if it would be worse to delay state aid payments compared to denying payments outright. Ron Deutsch, the group's executive director, urged alternatives including drawing down state reserve funds and taking back Empire Zone benefits from firms with questionable job creation records.
Kenneth Adams, president of The Business Council, said the Governor's plan does not go far enough, and the state should instead work to decrease the size of its work force and pension obligation. Adams, in contrast to other speakers, said this not the 'rainy day' the state's reserve fund is intended to be saved for, instead anticipating worse financial droughts next year and later. After the next fiscal year, when federal stimulus funds provided to the state are exhausted, the state may face deficits that are far larger than those being considered today, Adams testified. Under questioning from Committee members, he agreed that public funds keep workers in jobs but returned to his point that the state continues to spend beyond its' means on employees.
James LaPerche, finance commissioner for the City of Yonkers, said the Governor's plan would cut $6.5 million from the city's education budget and $9.5 million from the municipal budget and these cuts would, in turn, cause other short- and long-term problems by passing the buck from the State Capitol to the local level, and urged lawmakers to seek another answer.
Further testimony was offered by organizations including Environmental Advocates of New York, the NYS Association of Small City School Districts, the NYS School Board Association and Habitat for Humanity.