TI TLE SLI DE N EW Y ORK Title Slide 2008-09 E XECUTIVE B UDGET Title slide G OVERNOR E LIOT S PITZER January 3 1 , 2 0 0 7 J ANUARY 22, 2008
The 2 0 0 8 -0 9 Executive Budget State Operating Funds All Funds ( includes Federal) All Funds ( includes Federal) State Operating Funds $81.8 billion/ 5.0% growth $124.3 billion/ 5.1% growth SCHOOL AI D MEDI CAI D SCHOOL AI D MEDI CAI D $20.3B 25% $23.1B 19% $39.0B 31% $16.2B 20% HI GHER EDUCATI ON $7.3B 9% ALL OTHER $28.0B 21% STAR ALL OTHER $4.8B 6% HI GHER ED $17.8B 20% $8.2B 7% DEBT SERVI CE $4.6B 6% STAR $4.8B 4% HEALTH/ PENSI ON BENEFI TS $4.3B 5% DEBT SERVI CE $4.6B 4% TRANSPORTATI ON $6.8B 5% HEALTH/ PENSI ON BENEFI TS $4.6B 4% TRANSPORTATI ON $3.1B 4% HEALTH $3.5B 4% HEALTH $5.3B 4% 2
The Old Paradigm B UDGET G OALS • Closing the Gap • Protecting Core Priorities • I nvesting for Econom ic Grow th 3
4 C LOSI NG THE G AP The Old Paradigm
Context: National Econom ic Dow nturn • Home prices down 11% since March 2007 • Sub-prime crisis: write-downs reach $100 billion • Labor market struggling: 4.7% unemployment to 5.0% from November to December 2007 • S&P 500 down 15% since October 2007 • California estimates deficit at 14% of General Fund Budget (NYS is 8.2% of General Fund) 5
New York State is No Exception � Roughly 20% of NYS revenues come from the financial services industry Annual Change in Bonuses, Financial Annual Change in Bonuses, Financial Quarterly Profit/ Loss, Securities Firms Quarterly Profit/ Loss, Securities Firms Services Industry Services Industry 12 $12 B $8 B 8 $10 B 10 6 $6 B 8 $8 B $6 B 6 4 $4 B $ Billions 4 $4 B $ B illio n s $2 B 2 $2 B 2 0 0 0 0 2005 2005 2006 2004 2006 2007 2004 2007 2004 2008 2004 2005 2006 2007 - $2 B -2 - $2 B -2 - $ 1 .4 BI LLI ON - $4 B -4 - $4 B -4 - $ 3 .8 BI LLI ON 6
Result: Significant Decrease in Revenue Grow th Annual Growth in Base Tax Receipts Annual Growth in Base Tax Receipts 12% 1 0 .1 % 10% $ 2 .5 B 8% 1 1 .3 % 6% 4 .2 % 4% 4 .2 % 2% 0% 4- yr Annual Avg. ( 03- 04 2008- 09 ( Est.) to 07- 08) 7
New York State’s Budget Gap Current Deficit $4.4 B New Initiatives* $400 M 2008-09 Budget Gap $4.8 B * Includes Child Health Plus expansion; Upstate Revitalization Fund; Veterans’ Tuition Program; Investment in primary and preventive health care; Universal Broadband grants; Low-Income Housing Tax Credits; and others 8
Gap-Closing Principles � No new taxes � Level playing field by closing tax loopholes � Provide critical services � Do more with less – spending efficient, targeted and fair 9
Balancing the Equation: Tough but Necessary Choices Across- Across - the the- - Board General Fund Savings: $ 4 .8 Billion Board General Fund Savings: $ 4 .8 Billion STAR Health Care Foundation Aid Governm ent Efficiency $ 4 3 4 m illion – 8 .8 % $ 1 .3 5 billion – 2 2 % $354 million $1.04 billion $93 million $1.35 billion - Provides sm aller year-to- - NPS reductions of 5 % - I ncrease anti-fraud efforts - Delays for one yr the planned year increase than increase in Basic Middle - Close underutilized facilities $ 1 .3 5 billion – 2 2 % - Low er Rx costs: strengthen Class STAR Rebate; w ould projected – phase-in preferred drug list and STAR - Low er energy costs have provided average slow ed from 4 2 .5 % to reduce Average W holesale $ 3 5 4 m illion – 7 .2 % hom eow ner w ith $ 6 5 m ore 3 7 .5 % ; m inim um increase - Low er OT costs Price ( m aintains increase for set at 2 % instead of 3 % - Maxim ize federal aid - Make insurers pay fair share seniors) - Health insurance eligibility - Rationalize reim bursem ent - Scheduled increase in NYC audits rates for hospitals, nursing PI T credit w ill also be hom es and hom e care delayed for one year Non-Recurring Fee I ncreases Loophole Closures Reserves Resources $133 million $434 million $337 million $1.13 billion - $ 5 to $ 2 0 auto insurance - Capital base rate reduction/ - Using planned reserves set - Belm ont developm ent surcharge for State Police & aside to pay for the costs of cap elim ination rights critical bridge m aintenance new labor settlem ents this - I nternet sales tax ( nexus - Fund sw eeps year - Real estate closing fees rule) - Phase in AI M restoration - No use of Rainy Day Fund - Fine insurers that fail to - Lim it tax exem ptions for for NYC com ply w ith w orkers' sales by non-profits com pensation law - from - Expand cigarette definition $ 2 ,5 0 0 to $ 1 0 ,0 0 0 to include little cigars 1 0
Getting Spending Under Control Annual Spending Growth, 2006 Annual Spending Growth, 2006- - 07 to 2008 07 to 2008- - 09 09 1 2 % 1 1 .0 % 10% 1 1 .0 % 1 0 % 8% 8 % 8 .1 % 8 .1 % Personal Income 6% Growth: 5.3% 6 % 6 .0 % 5 .0 % 5 .1 % 4 .9 % 6 .0 % 4% 4 % 5 .1 % 5 .0 % 4 .9 % 2% 2 % 0% 0 % 2 0 0 6 - 0 7 2 0 0 7 - 0 8 2 0 0 8 - 0 9 2 0 0 6 - 0 7 2 0 0 7 - 0 8 2 0 0 8 - 0 9 2006-07 2007-08 2008-09 2006-07 2007-08 2008-09 State Operating Funds All Funds 1 1
Spending Target: 5 .3 % � Limit State Operating spending growth to 5.3% Annual Spending Growth, 1997- Annual Spending Growth, 1997 - present present (long-term average personal income growth) 12% � Why? 10% – Best measure of 8% affordability without 6% burdening taxpayers Personal 4% I ncom e – If spending growth had Grow th: 2% 5 .3 % been kept to 5.3% the 0% last 5 years, we would '9 7 '9 8 '9 9 '0 0 '0 1 '0 2 '0 3 '0 4 '0 5 '0 6 '0 7 '0 8 have nearly $4 B in extra reserves today – nearly the size of the current budget gap 1 2
The Old Paradigm P ROTECTI NG C ORE P RI ORI TI ES & I NVESTI NG FOR E CONOMI C G ROW TH 1 3
Protecting Core Priorities for Econom ic Grow th Long- - Term Agenda Term Agenda Long � Fully-funded education system tied to accountability � New funding strategy to pay for transformative higher education investments � Patient-first health care reform that increases quality and lowers costs � Comprehensive property tax relief: Middle Class STAR; mandate relief; tax cap � Revitalizing the Upstate economy and sustaining growth Downstate � Government spending under control: 5.3% growth 1 4
I nvestm ent + Accountability = Excellence Year 1 : I nvestm ent Year 1 : Accountability Year 1 : I nvestm ent Year 1 : Accountability - Contracts for Excellence - Historic I ncrease in Funding - Year 1: $1.76 B, 10% increase - Signed by the 55 districts with large aid increases and failing - UPK funding schools in need of improvement - Target historic investments to - Foundation Aid Form ula programs proven to work - Example: Buffalo – Funding targeted to 16 most struggling schools; longer school day by 1 hour; longer school year by 20 days; small classes of 10 students for those in most need 1 5
Largest-Ever School Aid I ncrease Proposed by a Governor: $ 1 .4 6 B State School Aid ($Billion) State School Aid ($Billion) $ 2 5 .6 Maintaining Our Com m itm ent $ 2 5 Projected Total School Aid at Time of 2007-08 Enactment: $ 2 3 .1 2007-08 $19.6 B 2008-09 $21.0 B $ 2 1 .0 2009-10 $23.2 B $ 7 .8 BI LLI ON $ 1 9 .6 $ 2 0 2010-11 $25.5 B $ 1 7 .8 $ 1 6 .2 $ 1 5 .2 $ 1 4 .6 $ 1 4 .4 $ 1 4 .4 $ 1 5 $ 1 0 2 0 0 1 - 0 2 2 0 0 2 - 0 3 2 0 0 3 - 0 4 2 0 0 4 - 0 5 2 0 0 5 - 0 6 2 0 0 6 - 0 7 2 0 0 7 - 0 8 2 0 0 8 - 0 9 2 0 0 9 - 1 0 2 0 1 0 - 1 1 1 6
Foundation Aid Form ula Continues to Drive Majority of Operating Support $ Millions % of Operating (-$350 M from Foundation Aid 14,543 78% Projected) Other Operating 3,743 20% NYC Academic Achievement Grant 179 1% High Tax Aid 100 1% Total Operating Support 1 8 ,5 6 5 Building Aid/ EXCEL 2,111 Other Grant Programs 338 Total School Aid 21,014 1 7
Keeps Funding Com m itm ent to NYC Cumulative Increase, 2007 to 2011 ($Million) Cumulative Increase, 2007 to 2011 ($Million) $ 6 $ 5 .4 0 B • 2 0 0 8 -0 9 Total State School Aid I ncrease: 7 .1 % $ 2 .3 0 B $ 4 $ 1 .6 4 B NYC* $ 3 .1 0 B $ 1 .1 2 B $ 2 $ 2 .1 6 B $ 6 6 6 M NYS $ 1 .2 9 B $ 7 5 4 M $ 0 2 0 0 7 - 0 8 2 0 0 8 - 0 9 2 0 0 9 - 1 0 2 0 1 0 - 1 1 * Expected NYC contribution 1 8
Continues Historic I ncrease Statew ide Increased Operating School Support to Big 4 Cities (2007- - 08 to 2008 08 to 2008- - 09) 09) Increased Operating School Support to Big 4 Cities (2007 * 1 0 .5 % 12% $ 2 4 .5 M 10% 8 .1 % 7 .8 % 7 .7 % $ 1 6 .7 M 8% $ 3 9 .1 M $ 3 0 .7 M 6% 4% 2% 0% Buffa lo Roche ste r Yonke rs Syra cuse * Syracuse is higher because of higher reimbursable aid (transportation, special education, etc.) 1 9
Continues Progress on Universal Prekindergarten 4 - - Year Com m itm ent Year Com m itm ent 4 • In 2007-08: $700 $ 6 3 3 M State Funding - 140 school districts offered State Funding UPK Enrollm ent UPK for the first time UPK Enrollm ent $600 1 8 0 k - 21,000 more students $ 4 5 2 M $500 enrolled (30% increase) $ 3 7 3 M $400 1 8 0 • 86% of high-need districts now 1 2 1 k $ 2 9 2 M offer UPK $300 9 3 k • Universal enrollment: 2010-11 $200 7 2 k $100 $0 2006-07 2007-08 2008-09 2010-11 2 0
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