IN the face of a severe recession, New Yorkers under stood that this year’s state-budget process would be difficult. The meltdown on Wall Street led to huge revenue declines, and the economy hasn’t yet recovered. The state was facing an historic $17.9 billion budget gap. New York families had been tightening their belts and making tough spending choices in their home budgets; they expected the same from state government.
Last week, I issued a report on the 2009-10 state budget that was enacted by the Legislature on April 3. The conclusion was clear: The budget was a missed opportunity to set our state on a long-term course to fiscal health.
While the spending plan sought to deal with the coming year’s daunting budget deficit, it fails to contain the kind of tough measures that New York urgently needs. Essentially, the budget buys time, relying on temporary revenue infusions and postponing hard spending decisions. It showed that the state still hasn’t addressed the challenge of aligning its ongoing spending with recurring revenues over the long term.
The Legislature closed the budget gap by relying on $11 billion in temporary federal stimulus funds and temporary new taxes and fees. While this may have been the easiest way out of the crisis, it masks the state’s serious structural revenue/spending imbalance. That imbalance didn’t start with this downturn but is a legacy of previous years’ budget decisions that made unsustainable future spending commitments.
Over the next three years, the state’s projected budget gap will amount to nearly $25 billion — and that number could grow if the economic downturn lingers. We must carefully monitor revenues and spending to insure that the 2009-10 budget holds together. Even more so, New York will have to figure out how to control spending as the first step toward achieving a balanced budget in the long term.
My report includes a number of recommendations that will significantly improve the budget process and move our state toward fiscal reform. Here are a few:
* Change the start of the fiscal year to July 1 to give the Legislature and governor a more accurate picture of available revenues and the public more opportunity for review.
* Require a binding revenue forecast to set real parameters for spending. The revenue forecast is the consensus prediction of how much money the state will bring in over the budget year. Right now, the Legislature can pick a number and then change it during the course of budget negotiations if it wants to spend more.
* Establish a two-year budget cycle to help address the need to eliminate out-year gaps. Out-year gaps are essentially the level of future-year overspending built into current-year budget. New York has a long tradition of fixing current-year problems by pushing costs into the future.
* Require the Legislature’s budget-conference committees to open their meetings to the press and public and to provide the public with more information.
* Reduce back-door borrowing through the state’s many public authorities with voter-approved debt to give New York citizens greater control of the state’s borrowing.
The 2009-10 state budget perpetuates New York’s long but not proud tradition of fiscal irresponsibility. We need to change our budget process and make better, smarter choices so that we don’t miss the next opportunity to right our course.
Thomas P. DiNapoli is New York state comptroller.