Governor Cuomo Delivers Budget Message in Rochester
Governor Andrew M. Cuomo today presented his proposed 2011-2012 Executive Budget to hundreds of New Yorkers at Nazareth College in Rochester. The Governor's proposal transforms the state budget process to conform to fiscal realities and eliminates a $10 billion deficit without raising taxes or borrowing.
"New York is at a crossroads, and the decisions we make now will impact Rochester, Monroe County, and the entire state for years to come," Governor Cuomo said. "This budget is about changing the way government operates. Whether it is healthcare, education, or other state services, it is about spending resources wisely to get the greatest return on the taxpayers' investment."
Our state spending has grown at over 5.7 percent per year over the last decade, outstripping tax receipts (3.8 percent), personal income (3.7 percent), or inflation (2.4 percent). Not only do we spend too much, but we get too little in return. Our state is number one in spending on education and number 34 in results. We are number one in spending on healthcare and number 21 in results. The goal is to return fiscal responsibility to the state so that we may strengthen the economy and create jobs.
A key step in beginning to redesign and realign New York's government is taking a look at the process used to create the budget.
First, we are redesigning how the budget is created. We are rejecting a system of automatic and unrealistic budget increases that, for years, has caused spending to skyrocket to unsustainable levels.
Second, the process is not just a budget exercise, but a management exercise. That means that we cannot just keep throwing money at the problem. More funds do not mean better healthcare, better schools, or better programs. The changes must start with a look at the programs: do they work for the patient, the student, or the New Yorker.
Third, we must work together to fix our dismal financial situation. That means bringing stakeholders to the table and making everyone part of the solution. From Medicaid to education to government reform to mandate relief, government cannot do this alone. That is why the Governor appointed key working teams in Medicaid redesign and local mandate reform. He also created the SAGE commission on government efficiency to revamp the state government structure.
Fourth, in order to lead by example, we have made the largest percentage cuts in state operations, reducing general fund spending by 10 percent. Though there is much pain to go around, this decision spares local governments the worst of the budget cuts.
Governor Cuomo's Executive Budget proposal eliminates the projected 2011-12 gap with $8.9 billion in recurring spending actions, or nearly 90 percent of the total plan. The remainder of the gap is eliminated through $340 million of revenue enhancements, such as tax modernization to improve collections and lottery proposals; one new fee; and $805 million in non-recurring actions. This budget proposes gap-closing actions in almost every area of state spending and includes year-to-year reductions in the two largest drivers of State expenditures, Medicaid and School Aid.
State Operating Funds spending increases by 1 percent while all governmental funds spending declines by 2.6 percent. As the Governor has made clear, closing the gap means cutting growth in projected spending. Without actions, spending was projected to grow by 12 percent, due largely to provisions in state law mandating higher spending. This has become an unsustainable process. This budget is designed to reduce or eliminate the impact of many of these provisions and recalibrate spending to sustainable levels to help repair New York's fiscal condition.
With these actions, the Executive Budget proposes:
* All Funds spending of $132.5 billion in the fiscal year that begins April 1, 2011, a decrease of 2.6 percent or $3.6 billion from 2010-11.
* State Operating Funds spending of $88 billion, an increase of $910 million, or 1 percent. State Operating Funds exclude federal funds and long-term capital spending.
* State Operating Funds are adjusted to reflect the loss of significant one-time federal funding received in 2010-11 to cover Medicaid costs normally paid from State funds and other actions, as well as other extraordinary expenses, at an increase of 1 percent.
The actions proposed in the Executive Budget reduce the projected four-year deficit by 86 percent, from $63.3 billion to $9 billion. Following the Executive Budget, the projected budget gaps drop to $2.2 billion for 2012-13, $2.5 billion for 2013-14, and $4.4 billion for 2014-15.
Senator James Alesi said, "I'm proud to welcome the Governor and am committed to joining him in his efforts to reshape New York by controlling spending and taxes, creating new jobs, and returning New York to the great state it once was. Governor Cuomo's commitment and dedication to achieving these goals will provide us with the leadership that has been lacking in Albany for far too long. As the Legislature prepares to begin budget conference committees to deal with the details of his budget proposal, I will fully embrace the concept of Governor Cuomo's budget plan."
Senator George Maziarz said, "The next few weeks will be crucial to ensuring an on-time budget. The Governor's proposal reins in spending, while conserving the quality services New Yorkers rely on. As a symbol of transparency, he has also made an effort to include all residents in the budget process. This will restore the voters' trust in their elected officials. I welcome Governor Cuomo back Rochester and thank him for bringing his message of reform to our community."
Senator Michael F. Nozzolio said, "After experiencing decades of overspending and high taxes, New Yorkers have had enough. Governor Cuomo's budget addresses the immediate fiscal issues facing our state, such as limitless spending and over-taxed citizens. In addition, this budget will make the state more efficient and a better place to live. I look forward to working with the Governor to pass an on-time budget."
Assemblyman Joseph Morelle said, "On February 1, Governor Cuomo offered New Yorkers more than a new budget. He offered new hope and a new direction. As he has often stated, we are at a crossroads - one way leads to ruin through continued overspending and excessive taxation, the other to recovery through fiscal responsibility and tax relief for hard-working citizens. The proposed 2011-2012 budget puts us on the right path. I applaud the governor's courage and leadership and thank him and Lt. Governor Duffy for bringing this critical message to Rochester today."
Assemblyman David Gantt said, "Today, Governor Cuomo laid out a blue print for how we can return New York to fiscal stability and revive our state's business community. For too long upstate has languished and seen our residents leave for better opportunities. Under Governor Cuomo, I am confident that we will reverse that trend and bring about a revitalization of our region's economy and I look forward to helping the Governor make that dream a reality."
Assemblyman Harry Bronson said, "Our state and nation are facing unprecedented economic challenges. I know that we will have to make difficult choices as we prioritize our state budget and we will be asked to make sacrifices to turn our economy around. I am committed to work with the Governor, my legislative colleagues, and the families of the 131st Assembly District to ensure that we make the right choices to build a brighter future for our children."
Assemblyman Stephen Hawley said, "Governor Cuomo addresses the root of New York's fiscal problems in his Executive Budget. We need to continue to find ways of working more efficiently and cooperatively and learning to do more with less---as our citizens and businesses do every single day. I support the Governor's goal of closing the deficit without raising taxes and will continue working with him to pass an on-time budget for our state."
Assemblyman Bill Reilich said, "I am certainly optimistic about the reduction in overall state spending as proposed in Governor Cuomo's budget. He is showing a clear commitment to changing the tax and spend mentality in Albany. I remain optimistic that by continuing to work together we can get our state back on the path to fiscal sanity."
Assemblyman Sean Hanna said, "The governor's budget takes a good first step in the right direction by reducing spending, and by declining to extend temporary tax increases on small businesses and businessmen making more than $250,000. I look forward to passing an on time budget that will also reduce school district funding on a per pupil basis, and will afford meaningful mandate relief to local governments."
Assemblyman Mark Johns said, "New York State stands at a financial tipping point and restructuring state government is a high priority. Governor Cuomo's proposed 2011-2012 Executive Budget could be the most astounding in a generation, and may alter how our government operates for years to come. The fates of government mandates and Medicaid hold a significant impact on the present and future residents of our great state. The new way of thinking proposed by the Governor is required to usher in a new era of efficient and effective spending. We must also reduce the size and cost of government to create jobs and promote economic prosperity. The need for reform is dire and the old system of tax, borrow and spending needs to come to an end. The time for action is now."
Redesigning and Rightsizing State Government
Reducing the Cost of State Government. The Governor's budget proposal reduces General Fund State Operations spending by 10 percent at State agencies. Commissioners and agency heads will be instructed to maximize savings in non-personal services. To achieve the rest of the savings, the Governor intends to seek a partnership with the State employee labor unions to seek savings in personal service spending in a way that causes the least disruption to State employees while ensuring the continued provision of necessary services for the citizens of New York. Management employees would also contribute to these savings. If workforce saving cannot be accomplished jointly, as a last resort up to 9,800 layoffs would be necessary. Contracts covering the vast majority of State employees are up for renewal at the outset of the 2011-12 State fiscal year.
Merging and Consolidating State Agencies. The Executive Budget proposes to merge or consolidate 11 separate State entities into four agencies to streamline and eliminate duplicative bureaucracy, better align State responsibilities with need and improve services through superior coordination. Proposals include merging the Banking and Insurance departments and the Consumer Protection Board into a new Department of Financial Regulation; merging the Department of Correctional Services and the Division of Parole into the new Department of Corrections and Community Supervision; consolidating the Office for the Prevention of Domestic Violence, the Office of Victim Services and the State Commission of Correction into the Division of Criminal Justice Services; and consolidating the New York State Foundation for Science, Technology and Innovation into the Empire State Development Corporation.
Reducing the Size of State Government. To help redesign and transform government, Governor Cuomo has created the Spending and Government Efficiency (SAGE) Commission. As part of this effort, Governor Cuomo has directed the Commission to make recommendations to reduce the number of agencies, authorities, and commissions by 20 percent over the long term. The SAGE Commission is directed to submit to the Governor a rightsizing plan to reduce the number of agencies by May 1, 2011. Under legislation proposed by the Governor, the Governor would then submit the rightsizing plan to the Legislature for action with the plan going into effect pursuant to a resolution of the Legislature.
Reducing Excess Capacity. The Governor's Executive Budget proposes to reduce excess capacity in prisons, youth detention and mental hygiene facilities. Governor Cuomo will reduce excess capacity using rational processes and will propose to eliminate the statutory 12-month notification prior to closures. Actions for youth and mental hygiene facilities will be taken following careful analysis of vacancy rates, service utilization, and other factors. For prisons, closures will be implemented pursuant to recommendations of a task force created by Executive Order to examine excess capacity. Recognizing the impact of facility closures on host communities, the Executive Budget directs $100 million in economic development aid for affected areas.
Medicaid
With the Executive Budget, Governor Cuomo is advancing a new and inclusive approach that will bring New Yorkers into the process of developing proposals to provide critical health care services at lower costs. Following years of unsustainable growth, the Executive Budget reflects a year-to-year All Funds decrease of nearly $1 billion ($982 million), or two percent, in Medicaid spending in 2011-12.
Gap closing actions totaling $2.85 billion for 2011-12 will be advanced by the Medicaid Redesign Team. Established pursuant to Executive Order No. 5, the Medicaid Redesign Team's 27 members brings vast experience as health care providers, consumers and industry experts to address the challenge of refocusing our health care system to provide quality health care at lower costs. The team, which also includes State legislators, conducted a comprehensive review of New York's Medicaid Program and reported its findings and recommendations for cost reductions to the Governor on February 24, 2011 for consideration in the budget negotiation process.
In addition, these proposals will limit future Medicaid Program State Funds growth to the 10-year rolling average of the medical care component of the Consumer Price Index (currently four percent).
Education
Education in New York is financed primarily through a combination of State and local funding. Under current law, school aid was slated to grow at a rate of 13 percent in 2011-12. The Executive Budget proposes School Aid of $19.4 billion for the 2011-12 school year, a year-to-year reduction of $1.5 billion. This represents a reduction of only 2.9 percent of the total operating expenditures projected to be made by school districts statewide during the 2010-11 school year, and 7.3 percent in State support. After these reductions, which represent $2.85 billion of gap-closing benefit for the State Fiscal Year, School Aid will continue to represent the largest State-supported program, accounting for 29 percent of General Fund spending.
To help achieve the Governor's goal of encouraging efficiency and results, the Executive Budget allocates $250 million to be awarded on a competitive basis to school districts that demonstrate significant improvement in their student performance outcomes and another $250 million to be awarded on a competitive basis to school districts that undertake long-term structural changes which reduce costs and improve efficiency.
The Executive Budget's School Aid proposal includes a $2.8 billion Gap Elimination Adjustment (GEA) for the 2011-12 school year that would help achieve a balanced budget through reductions in school aid on a progressive basis, accounting for each school district's wealth, student need, administrative efficiency and residential property tax burden. The size of the GEA in part reflects the loss of $1.3 billion in one-time Federal funding provided by the American Recovery and Reinvestment Act of 2009 and the Education Jobs Fund of 2010. The GEA is partially offset by $305 million of growth in existing expense-based aids such as Building Aid, Transportation Aid and BOCES Aid.
The budget modifies transportation aid to encourage shared services and other cost-effective practices, and includes $696 million available from the Federal Race to the Top program, which is also designed to reward student performance. To limit school aid growth in future years, the budget proposes a new Gap Elimination Adjustment formula in permanent law that limits growth in the out-years based on the growth in personal income.
Regional Approach to Economic Development
The Executive Budget establishes 10 Regional Economic Development Councils, which will be chaired by Lieutenant Governor Robert Duffy, to create a more regionally-based approach to allocating economic development funding and to act as one-stop shops for all State-supported economic development and business assistance programs in each region. Recognizing that strategies to revitalize different parts of the State depend upon numerous factors unique to each region and that the best ideas come from the people who live in those regions, Governor Cuomo is proposing a process that will include and engage local stakeholders in developing and executing sustainable long-term, regional economic development strategies.
The Executive Budget reprograms more than $340 million in existing economic development capital resources for major regional initiatives. Besides assisting communities affected by state facility closures, these funds will be used to provide more than $130 million for competitively determined economic development projects put forward by the Regional Councils, $100 million for the Metropolitan Transportation Authority's capital program and $10 million towards the State's existing commitment for the New York City Empowerment Zone. The Executive Budget also strengthens the Excelsior Jobs Program, which was created in 2010 to provide job creation and investment tax credit incentives to businesses in targeted industries.
Restructuring Aid to Encourage Results and Efficiency
One of the guiding principles of Governor Cuomo's Executive Budget is that government must become more efficient and demand results. The budget proposal redirects formula and reimbursement aid into competitive grants in a number of areas and encourages community solutions rather than State mandates. These include:
* Funding of $79 million for programs designed to encourage and reward local governments that consolidate or achieve efficiencies and performance improvements. That includes $35 million for Citizen Empowerment Tax Credits and Citizens Re-Organization Empowerment Grants and $40 million for the Local Government Performance and Efficiency Program. Of the Citizen Empowerment Tax Credit, at least half of the bonus the program provides to governments that consolidate - 15 percent of the combined entities' tax levy - would have to be used toward local property tax relief.
* Redirecting a portion of mental hygiene funding from State-operated services to community-based programs to improve the quality of care for this vulnerable population.
* Converting a portion of current formula-based funding for agriculture and markets research, economic development, local government and juvenile detention programs into competitive, performance-based funding program.
Juvenile Justice Reform
Governor Cuomo is proposing significant reform of the State's juvenile justice system and greater use of preventive services to generate better outcomes for children and family as well as significant savings. These reforms will redirect savings achieved by right-sizing State facilities and reducing unnecessary juvenile detention into more effective and lower cost community-based alternatives.
The budget invests savings achieved through the right-sizing of State youth facilities and local detention operations into community-based programs that better meet the needs of troubled youth.
Higher Education
To address the state's fiscal challenges, the Executive Budget proposes reductions in the State University and City University systems. The Executive Budget reduces base per-student operating aid for community colleges by 10 percent and SUNY and CUNY operating aid by 10 percent, and eliminates the subsidy for SUNY's three teaching hospitals in Syracuse, New York City and Long Island, which accounts for approximately eight percent of overall hospital revenue. The budget keeps TAP benefits at current year levels.
To help the State University of New York (SUNY) more efficiently manage, the Executive Budget includes legislation that would enable SUNY to streamline its procurement processes and provide SUNY greater flexibility to engage in public-private partnerships - flexibility the City University of New York already has.
The Executive Budget extends the Physician Loan Forgiveness Program, the McGee Nursing Faculty Scholarship Program and the Nursing Faculty Loan Forgiveness Program, which provide benefits to physicians who agree to practice in areas with physician shortages and to nurses who agree to serve as educators in nursing programs, respectively.
Comparable to reductions for SUNY and CUNY, the Executive Budget reduces unrestricted financial assistance to New York's independent colleges and universities (Bundy Aid) by 10 percent, comparable to reductions proposed for SUNY and CUNY.
Assistance to Local Governments
New York has the highest local property tax rates in the country. Recognizing that reducing State mandates is critical to helping local governments lower their property tax rates, Governor Cuomo created the Mandate Relief Redesign Team by Executive Order. This team, made up of representatives of the Legislature, local government, education and private industry, is conducting a rigorous and comprehensive review of mandates imposed on school districts and other local taxing districts to identify mandates that are ineffective, unnecessary, outdated and duplicative in order to develop the best and most cost-effective ways to deliver mandated programs and services. A preliminary report to the Governor was issued March 1, 2011.
The Executive Budget reduces Aid and Incentives for Municipalities (AIM) by two percent for cities, towns and villages outside New York City, which does not receive AIM in recognition of the city's numerous alternative funding sources such as a local income tax. But the budget encourages efficiency and innovation through the competitive award of $79 million for local government consolidation and performance improvements that will help jump-start the Governor's vision of partnering with local governments to deliver smarter and more effective services to New Yorkers at lower cost.
Environment
The Budget maintains the current year funding level of $134 million for programs supported by the Environmental Protection Fund. Appropriations include $10.8 million for solid waste programs, $52.7 million for parks and recreation and $70.5 million for open space programs.
Transportation
Despite the current fiscal crisis, Governor Cuomo's Executive Budget continues prior year funding levels for the core transportation capital programs supported by the Dedicated Highway and Bridge Trust Fund, providing $501 million for highway and bridge construction, $363.1 million for the Consolidated Highway Improvement Program (CHIPS) and $39.7 million for the Marchiselli program for local governments, and $16.9 million for Amtrak service subsidies and additional rail capital investments.
The Executive Budget also provides a modest increase in cash operating support for the Metropolitan Transportation Authority (MTA) of $43 million, bringing total cash operating support to $3.8 billion, and for other transit systems of $2 million, bringing their combined total to $401 million.
Although the budget also provides $100 million to the MTA's capital program from redirected economic development funds, it also proposes using $165 million of Metropolitan Mass Transportation Operating Assistance Account funds to pay debt services on State bonds previously issued for the MTA capital program that otherwise would be paid from the General Fund and transferring $35 million in MMTOA funds to the General Fund.
"New York is at a crossroads, and the decisions we make now will impact Rochester, Monroe County, and the entire state for years to come," Governor Cuomo said. "This budget is about changing the way government operates. Whether it is healthcare, education, or other state services, it is about spending resources wisely to get the greatest return on the taxpayers' investment."
Our state spending has grown at over 5.7 percent per year over the last decade, outstripping tax receipts (3.8 percent), personal income (3.7 percent), or inflation (2.4 percent). Not only do we spend too much, but we get too little in return. Our state is number one in spending on education and number 34 in results. We are number one in spending on healthcare and number 21 in results. The goal is to return fiscal responsibility to the state so that we may strengthen the economy and create jobs.
A key step in beginning to redesign and realign New York's government is taking a look at the process used to create the budget.
First, we are redesigning how the budget is created. We are rejecting a system of automatic and unrealistic budget increases that, for years, has caused spending to skyrocket to unsustainable levels.
Second, the process is not just a budget exercise, but a management exercise. That means that we cannot just keep throwing money at the problem. More funds do not mean better healthcare, better schools, or better programs. The changes must start with a look at the programs: do they work for the patient, the student, or the New Yorker.
Third, we must work together to fix our dismal financial situation. That means bringing stakeholders to the table and making everyone part of the solution. From Medicaid to education to government reform to mandate relief, government cannot do this alone. That is why the Governor appointed key working teams in Medicaid redesign and local mandate reform. He also created the SAGE commission on government efficiency to revamp the state government structure.
Fourth, in order to lead by example, we have made the largest percentage cuts in state operations, reducing general fund spending by 10 percent. Though there is much pain to go around, this decision spares local governments the worst of the budget cuts.
Governor Cuomo's Executive Budget proposal eliminates the projected 2011-12 gap with $8.9 billion in recurring spending actions, or nearly 90 percent of the total plan. The remainder of the gap is eliminated through $340 million of revenue enhancements, such as tax modernization to improve collections and lottery proposals; one new fee; and $805 million in non-recurring actions. This budget proposes gap-closing actions in almost every area of state spending and includes year-to-year reductions in the two largest drivers of State expenditures, Medicaid and School Aid.
State Operating Funds spending increases by 1 percent while all governmental funds spending declines by 2.6 percent. As the Governor has made clear, closing the gap means cutting growth in projected spending. Without actions, spending was projected to grow by 12 percent, due largely to provisions in state law mandating higher spending. This has become an unsustainable process. This budget is designed to reduce or eliminate the impact of many of these provisions and recalibrate spending to sustainable levels to help repair New York's fiscal condition.
With these actions, the Executive Budget proposes:
* All Funds spending of $132.5 billion in the fiscal year that begins April 1, 2011, a decrease of 2.6 percent or $3.6 billion from 2010-11.
* State Operating Funds spending of $88 billion, an increase of $910 million, or 1 percent. State Operating Funds exclude federal funds and long-term capital spending.
* State Operating Funds are adjusted to reflect the loss of significant one-time federal funding received in 2010-11 to cover Medicaid costs normally paid from State funds and other actions, as well as other extraordinary expenses, at an increase of 1 percent.
The actions proposed in the Executive Budget reduce the projected four-year deficit by 86 percent, from $63.3 billion to $9 billion. Following the Executive Budget, the projected budget gaps drop to $2.2 billion for 2012-13, $2.5 billion for 2013-14, and $4.4 billion for 2014-15.
Senator James Alesi said, "I'm proud to welcome the Governor and am committed to joining him in his efforts to reshape New York by controlling spending and taxes, creating new jobs, and returning New York to the great state it once was. Governor Cuomo's commitment and dedication to achieving these goals will provide us with the leadership that has been lacking in Albany for far too long. As the Legislature prepares to begin budget conference committees to deal with the details of his budget proposal, I will fully embrace the concept of Governor Cuomo's budget plan."
Senator George Maziarz said, "The next few weeks will be crucial to ensuring an on-time budget. The Governor's proposal reins in spending, while conserving the quality services New Yorkers rely on. As a symbol of transparency, he has also made an effort to include all residents in the budget process. This will restore the voters' trust in their elected officials. I welcome Governor Cuomo back Rochester and thank him for bringing his message of reform to our community."
Senator Michael F. Nozzolio said, "After experiencing decades of overspending and high taxes, New Yorkers have had enough. Governor Cuomo's budget addresses the immediate fiscal issues facing our state, such as limitless spending and over-taxed citizens. In addition, this budget will make the state more efficient and a better place to live. I look forward to working with the Governor to pass an on-time budget."
Assemblyman Joseph Morelle said, "On February 1, Governor Cuomo offered New Yorkers more than a new budget. He offered new hope and a new direction. As he has often stated, we are at a crossroads - one way leads to ruin through continued overspending and excessive taxation, the other to recovery through fiscal responsibility and tax relief for hard-working citizens. The proposed 2011-2012 budget puts us on the right path. I applaud the governor's courage and leadership and thank him and Lt. Governor Duffy for bringing this critical message to Rochester today."
Assemblyman David Gantt said, "Today, Governor Cuomo laid out a blue print for how we can return New York to fiscal stability and revive our state's business community. For too long upstate has languished and seen our residents leave for better opportunities. Under Governor Cuomo, I am confident that we will reverse that trend and bring about a revitalization of our region's economy and I look forward to helping the Governor make that dream a reality."
Assemblyman Harry Bronson said, "Our state and nation are facing unprecedented economic challenges. I know that we will have to make difficult choices as we prioritize our state budget and we will be asked to make sacrifices to turn our economy around. I am committed to work with the Governor, my legislative colleagues, and the families of the 131st Assembly District to ensure that we make the right choices to build a brighter future for our children."
Assemblyman Stephen Hawley said, "Governor Cuomo addresses the root of New York's fiscal problems in his Executive Budget. We need to continue to find ways of working more efficiently and cooperatively and learning to do more with less---as our citizens and businesses do every single day. I support the Governor's goal of closing the deficit without raising taxes and will continue working with him to pass an on-time budget for our state."
Assemblyman Bill Reilich said, "I am certainly optimistic about the reduction in overall state spending as proposed in Governor Cuomo's budget. He is showing a clear commitment to changing the tax and spend mentality in Albany. I remain optimistic that by continuing to work together we can get our state back on the path to fiscal sanity."
Assemblyman Sean Hanna said, "The governor's budget takes a good first step in the right direction by reducing spending, and by declining to extend temporary tax increases on small businesses and businessmen making more than $250,000. I look forward to passing an on time budget that will also reduce school district funding on a per pupil basis, and will afford meaningful mandate relief to local governments."
Assemblyman Mark Johns said, "New York State stands at a financial tipping point and restructuring state government is a high priority. Governor Cuomo's proposed 2011-2012 Executive Budget could be the most astounding in a generation, and may alter how our government operates for years to come. The fates of government mandates and Medicaid hold a significant impact on the present and future residents of our great state. The new way of thinking proposed by the Governor is required to usher in a new era of efficient and effective spending. We must also reduce the size and cost of government to create jobs and promote economic prosperity. The need for reform is dire and the old system of tax, borrow and spending needs to come to an end. The time for action is now."
Redesigning and Rightsizing State Government
Reducing the Cost of State Government. The Governor's budget proposal reduces General Fund State Operations spending by 10 percent at State agencies. Commissioners and agency heads will be instructed to maximize savings in non-personal services. To achieve the rest of the savings, the Governor intends to seek a partnership with the State employee labor unions to seek savings in personal service spending in a way that causes the least disruption to State employees while ensuring the continued provision of necessary services for the citizens of New York. Management employees would also contribute to these savings. If workforce saving cannot be accomplished jointly, as a last resort up to 9,800 layoffs would be necessary. Contracts covering the vast majority of State employees are up for renewal at the outset of the 2011-12 State fiscal year.
Merging and Consolidating State Agencies. The Executive Budget proposes to merge or consolidate 11 separate State entities into four agencies to streamline and eliminate duplicative bureaucracy, better align State responsibilities with need and improve services through superior coordination. Proposals include merging the Banking and Insurance departments and the Consumer Protection Board into a new Department of Financial Regulation; merging the Department of Correctional Services and the Division of Parole into the new Department of Corrections and Community Supervision; consolidating the Office for the Prevention of Domestic Violence, the Office of Victim Services and the State Commission of Correction into the Division of Criminal Justice Services; and consolidating the New York State Foundation for Science, Technology and Innovation into the Empire State Development Corporation.
Reducing the Size of State Government. To help redesign and transform government, Governor Cuomo has created the Spending and Government Efficiency (SAGE) Commission. As part of this effort, Governor Cuomo has directed the Commission to make recommendations to reduce the number of agencies, authorities, and commissions by 20 percent over the long term. The SAGE Commission is directed to submit to the Governor a rightsizing plan to reduce the number of agencies by May 1, 2011. Under legislation proposed by the Governor, the Governor would then submit the rightsizing plan to the Legislature for action with the plan going into effect pursuant to a resolution of the Legislature.
Reducing Excess Capacity. The Governor's Executive Budget proposes to reduce excess capacity in prisons, youth detention and mental hygiene facilities. Governor Cuomo will reduce excess capacity using rational processes and will propose to eliminate the statutory 12-month notification prior to closures. Actions for youth and mental hygiene facilities will be taken following careful analysis of vacancy rates, service utilization, and other factors. For prisons, closures will be implemented pursuant to recommendations of a task force created by Executive Order to examine excess capacity. Recognizing the impact of facility closures on host communities, the Executive Budget directs $100 million in economic development aid for affected areas.
Medicaid
With the Executive Budget, Governor Cuomo is advancing a new and inclusive approach that will bring New Yorkers into the process of developing proposals to provide critical health care services at lower costs. Following years of unsustainable growth, the Executive Budget reflects a year-to-year All Funds decrease of nearly $1 billion ($982 million), or two percent, in Medicaid spending in 2011-12.
Gap closing actions totaling $2.85 billion for 2011-12 will be advanced by the Medicaid Redesign Team. Established pursuant to Executive Order No. 5, the Medicaid Redesign Team's 27 members brings vast experience as health care providers, consumers and industry experts to address the challenge of refocusing our health care system to provide quality health care at lower costs. The team, which also includes State legislators, conducted a comprehensive review of New York's Medicaid Program and reported its findings and recommendations for cost reductions to the Governor on February 24, 2011 for consideration in the budget negotiation process.
In addition, these proposals will limit future Medicaid Program State Funds growth to the 10-year rolling average of the medical care component of the Consumer Price Index (currently four percent).
Education
Education in New York is financed primarily through a combination of State and local funding. Under current law, school aid was slated to grow at a rate of 13 percent in 2011-12. The Executive Budget proposes School Aid of $19.4 billion for the 2011-12 school year, a year-to-year reduction of $1.5 billion. This represents a reduction of only 2.9 percent of the total operating expenditures projected to be made by school districts statewide during the 2010-11 school year, and 7.3 percent in State support. After these reductions, which represent $2.85 billion of gap-closing benefit for the State Fiscal Year, School Aid will continue to represent the largest State-supported program, accounting for 29 percent of General Fund spending.
To help achieve the Governor's goal of encouraging efficiency and results, the Executive Budget allocates $250 million to be awarded on a competitive basis to school districts that demonstrate significant improvement in their student performance outcomes and another $250 million to be awarded on a competitive basis to school districts that undertake long-term structural changes which reduce costs and improve efficiency.
The Executive Budget's School Aid proposal includes a $2.8 billion Gap Elimination Adjustment (GEA) for the 2011-12 school year that would help achieve a balanced budget through reductions in school aid on a progressive basis, accounting for each school district's wealth, student need, administrative efficiency and residential property tax burden. The size of the GEA in part reflects the loss of $1.3 billion in one-time Federal funding provided by the American Recovery and Reinvestment Act of 2009 and the Education Jobs Fund of 2010. The GEA is partially offset by $305 million of growth in existing expense-based aids such as Building Aid, Transportation Aid and BOCES Aid.
The budget modifies transportation aid to encourage shared services and other cost-effective practices, and includes $696 million available from the Federal Race to the Top program, which is also designed to reward student performance. To limit school aid growth in future years, the budget proposes a new Gap Elimination Adjustment formula in permanent law that limits growth in the out-years based on the growth in personal income.
Regional Approach to Economic Development
The Executive Budget establishes 10 Regional Economic Development Councils, which will be chaired by Lieutenant Governor Robert Duffy, to create a more regionally-based approach to allocating economic development funding and to act as one-stop shops for all State-supported economic development and business assistance programs in each region. Recognizing that strategies to revitalize different parts of the State depend upon numerous factors unique to each region and that the best ideas come from the people who live in those regions, Governor Cuomo is proposing a process that will include and engage local stakeholders in developing and executing sustainable long-term, regional economic development strategies.
The Executive Budget reprograms more than $340 million in existing economic development capital resources for major regional initiatives. Besides assisting communities affected by state facility closures, these funds will be used to provide more than $130 million for competitively determined economic development projects put forward by the Regional Councils, $100 million for the Metropolitan Transportation Authority's capital program and $10 million towards the State's existing commitment for the New York City Empowerment Zone. The Executive Budget also strengthens the Excelsior Jobs Program, which was created in 2010 to provide job creation and investment tax credit incentives to businesses in targeted industries.
Restructuring Aid to Encourage Results and Efficiency
One of the guiding principles of Governor Cuomo's Executive Budget is that government must become more efficient and demand results. The budget proposal redirects formula and reimbursement aid into competitive grants in a number of areas and encourages community solutions rather than State mandates. These include:
* Funding of $79 million for programs designed to encourage and reward local governments that consolidate or achieve efficiencies and performance improvements. That includes $35 million for Citizen Empowerment Tax Credits and Citizens Re-Organization Empowerment Grants and $40 million for the Local Government Performance and Efficiency Program. Of the Citizen Empowerment Tax Credit, at least half of the bonus the program provides to governments that consolidate - 15 percent of the combined entities' tax levy - would have to be used toward local property tax relief.
* Redirecting a portion of mental hygiene funding from State-operated services to community-based programs to improve the quality of care for this vulnerable population.
* Converting a portion of current formula-based funding for agriculture and markets research, economic development, local government and juvenile detention programs into competitive, performance-based funding program.
Juvenile Justice Reform
Governor Cuomo is proposing significant reform of the State's juvenile justice system and greater use of preventive services to generate better outcomes for children and family as well as significant savings. These reforms will redirect savings achieved by right-sizing State facilities and reducing unnecessary juvenile detention into more effective and lower cost community-based alternatives.
The budget invests savings achieved through the right-sizing of State youth facilities and local detention operations into community-based programs that better meet the needs of troubled youth.
Higher Education
To address the state's fiscal challenges, the Executive Budget proposes reductions in the State University and City University systems. The Executive Budget reduces base per-student operating aid for community colleges by 10 percent and SUNY and CUNY operating aid by 10 percent, and eliminates the subsidy for SUNY's three teaching hospitals in Syracuse, New York City and Long Island, which accounts for approximately eight percent of overall hospital revenue. The budget keeps TAP benefits at current year levels.
To help the State University of New York (SUNY) more efficiently manage, the Executive Budget includes legislation that would enable SUNY to streamline its procurement processes and provide SUNY greater flexibility to engage in public-private partnerships - flexibility the City University of New York already has.
The Executive Budget extends the Physician Loan Forgiveness Program, the McGee Nursing Faculty Scholarship Program and the Nursing Faculty Loan Forgiveness Program, which provide benefits to physicians who agree to practice in areas with physician shortages and to nurses who agree to serve as educators in nursing programs, respectively.
Comparable to reductions for SUNY and CUNY, the Executive Budget reduces unrestricted financial assistance to New York's independent colleges and universities (Bundy Aid) by 10 percent, comparable to reductions proposed for SUNY and CUNY.
Assistance to Local Governments
New York has the highest local property tax rates in the country. Recognizing that reducing State mandates is critical to helping local governments lower their property tax rates, Governor Cuomo created the Mandate Relief Redesign Team by Executive Order. This team, made up of representatives of the Legislature, local government, education and private industry, is conducting a rigorous and comprehensive review of mandates imposed on school districts and other local taxing districts to identify mandates that are ineffective, unnecessary, outdated and duplicative in order to develop the best and most cost-effective ways to deliver mandated programs and services. A preliminary report to the Governor was issued March 1, 2011.
The Executive Budget reduces Aid and Incentives for Municipalities (AIM) by two percent for cities, towns and villages outside New York City, which does not receive AIM in recognition of the city's numerous alternative funding sources such as a local income tax. But the budget encourages efficiency and innovation through the competitive award of $79 million for local government consolidation and performance improvements that will help jump-start the Governor's vision of partnering with local governments to deliver smarter and more effective services to New Yorkers at lower cost.
Environment
The Budget maintains the current year funding level of $134 million for programs supported by the Environmental Protection Fund. Appropriations include $10.8 million for solid waste programs, $52.7 million for parks and recreation and $70.5 million for open space programs.
Transportation
Despite the current fiscal crisis, Governor Cuomo's Executive Budget continues prior year funding levels for the core transportation capital programs supported by the Dedicated Highway and Bridge Trust Fund, providing $501 million for highway and bridge construction, $363.1 million for the Consolidated Highway Improvement Program (CHIPS) and $39.7 million for the Marchiselli program for local governments, and $16.9 million for Amtrak service subsidies and additional rail capital investments.
The Executive Budget also provides a modest increase in cash operating support for the Metropolitan Transportation Authority (MTA) of $43 million, bringing total cash operating support to $3.8 billion, and for other transit systems of $2 million, bringing their combined total to $401 million.
Although the budget also provides $100 million to the MTA's capital program from redirected economic development funds, it also proposes using $165 million of Metropolitan Mass Transportation Operating Assistance Account funds to pay debt services on State bonds previously issued for the MTA capital program that otherwise would be paid from the General Fund and transferring $35 million in MMTOA funds to the General Fund.
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