New York State Budget and Jobs Summit: The FY 2010-11 Budget and the Longer Run Presentation by the Citizens Budget Commission

1. New York State Budget
and Jobs Summit:
The FY 2010-11 Budget and the Longer Run
A Presentation by the
Citizens Budget Commission
February 23, 2010

2. Presentation Overview
► Budget Challenges this Year
Pattern of high spending growth combined with large
revenue losses creates large budget gaps
The Executive Budget is a down payment but does not
do enough
► TheBig Picture- Going off the Cliff or Avoiding it
by Restructuring
Meaningful spending reductions
Avoiding taxes and deficit financing
More strategic investment of limited resources
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3. Budget Challenges this Year
► Governor’s plan includes actions to close a $7.5B
gap in FY 2010-11
► Counts on $1B added federal Medicaid aid
► Positives of the plan:
Largely recurring and mostly spending reductions; one-
shots minimized
New taxes limited
Creative proposals around SUNY/CUNY and agency
mergers
► More savings needed in Medicaid and workforce
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4. Summary of the FY 2010-11
Executive Budget
Proposed growth is 0.0% for State Operating Funds and 0.9% for All Funds
Gap Closing Plan Value of the Proposals
No Growth-Low Growth Proposed Fiscal Year 20010-11 $ in millions Percent
for Next Year
Budget Gap ($7,476) 100%
(dollars in billions)
Spending Actions $4,609 62%
$160 School Aid * 1,838
134 135 Medicaid 822
$140
Operating Efficiencies 707
$120
Labor 250
$100 79 79 Other ** 992
$80 Revenue Actions $1,465 20%
$60 Tax on Sugar Syrup 465
$40 Cigarette Tax Increase 210
$20 Medicaid Provider Tax 216
$- Other 574
State Operating All Funds, incl One-shots/Borrowing $827 11%
Funds fed Federal FMAP Extension $1,060 14%
Remaining (Gap)/Surplus $485 6%
FY 2009-10 FY 2010-11
* Includes changes to the STAR program
** Include $302 M in AIM reductions to NYC
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Source: New York State Division of Budget, Financial Plan Projections, 30-Day Amendments,
February 10, 2010.

5. School Aid Reductions Reasonable
► Budget proposes reductions
Total Spending on Schools in NYS
that represent 2% of total (dollars in millions)
spending; $1.1B in total
$60,000
► Over 10 yrs school spending $52.1B
up $25B; State aid up 115% $50,000
In 2009-10 average spending $40,000 $25,967
per pupil reached $20k; U.S.
Avg. $11k in 2006-07 $30,000 $27.3B
► Reductions targeted; Salmon $20,000 $15,205
River (poorest in NYS) will $10,000
$23,599
increase $550 per pupil while $10,963
115%
Scarsdale (top 20 richest) will $-
1997-98 2007-08
decrease $110 per pupil
Federal State Local
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Source: New York State Department of Education

6. Medicaid Slowed this Year but Up
Rapidly in Subsequent Years
► Current proposal = $1.7B; Sources of General
Fund Spending Growth
$800M in reductions and
$900M in new dedicated FY 2010-11 to 2011-12
“sin” taxes All Other
$758m, 11%
► Reduces state operating
Medicaid
funds baseline spending $4,318m, 63%
growth from 8.7% to 3.6% School Aid
$1,751m, 26%
► 412,000 additional enrollees
expected
Medicaid
► More work needed on rate Driving
reform, utilization patterns, Spending
and eligibility loopholes Growth
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Source: New York State Division of Budget

7. Labor Expectations Out of Sync with
Economic Reality
► Financial plan “plug” of ► Health insurance and
$250M insufficient; 3.3% of pensions up 9% and 19%
the gap-closing compared per yr on avg. to 2013-14
to 23% share of budget
Changes from 08-09 to 09-10 ► Average total comp per State
7.0%
5.8%
employee in coming year
6.0%
Employee
$90,224
5.0%
Compensation ► Just 700 positions to be
4.0%
3.0% eliminated this year; 0.5% of
2.0% workforce
0.8%
1.0% ► Wage freezes, greater
PI
0.0%
headcount reductions, and
-1.0%
-0.3% CPI
more fringe benefit savings
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Source: New York State Division of Budget needed

8. The Longer Run: NY Faces a Cliff
► Assumes a slow and steady recovery with tax revenue growth
averaging 3 percent per year
Significant Budget Gaps Loom (After Executive Gap-Closing Actions)
$70,000
General Funds Disbursements
$65,000
General Fund Receipts w/Net Transfers
millions of dollars
$60,000
$12,397
$55,000 $10,656
$5,386
$50,000
$45,000
$40,000
2010-11 2011-12 2012-13 2013-14
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Source: New York State Division of Budget, Financial Plan Projections, 30-Day Amendments,
February 10, 2010.

9. Raising Taxes is Not the Answer
► Taxes
have already been raised significantly – Last year’s
budget included $8B in measures to increase revenues
► The Tax Foundation ranks New York #49 among states
on its business climate index naming the state among the
ten states whose tax systems “are the most inhospitable
to economic growth”
► Censusdata show that our combined state and local tax
burden per $1,000 of personal income is 36 percent above
the U.S. average – NY ranks as having 2nd highest burden
among states
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10. Borrowing or Pushing Down More on
Local Governments Also Ruled Out
New York Deeply in Debt Highest Local Taxes in U.S.
► $50B owed; much ► Burden per $1,000 PI is
more than is 77% above average
affordable
$84
► $11B outstanding for Medicaid, $10
prior deficits School
Spending,
$47
► Budget cuts $1.8B in
$30
capital spending over All Other, $44
5 yrs. to stay under
statutory debt cap U.S. Average New York
from 2000 Source: U.S. Bureau of the Census, State
and Local Government Finances, 2007 10

11. A Longer Run Agenda
► Rejecttax increases or borrowing to fund
operating expenses
► Lower
State spending on Medicaid, Education,
Compensation and Benefits
Give management more leverage in collective
bargaining
Prioritize services for the neediest New Yorkers
► Adopt new, strategic approach to investment
that promotes economic growth and
infrastructure modernization
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