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FY 2013 Executive Budget Summary


In his Executive Budget for FY 2013, Governor Cuomo proposes to build on many of his spending and program reform initiatives adopted last year.

He has proposed a budget with “all funds” spending (state and federal funds) $225 million or 0.2% below last year's levels, and with state tax supported spending increasing by 1.9% or $1.7 billion.

A projected $3.5 billion gap for the new budget year is closed by a net $1.5 billion increase in personal income tax revenues generated by November's tax reform bill and nearly $2 billion in net spending reductions ($1.1 billion from state operations, and $750 million from local assistance). The budget leaves a relatively small structural deficit of $700 million for Fiscal 2014, but a combined gap of nearly $7 billion for the next two budget years.

The proposal contains no new taxes, and extends or creates several new targeted tax credits.

The budget commits $70 million in Excelsior Tax Credits and $130 million in capital grants to a second round of funding through the regional economic development councils. It has a total of $723 million in new economic development related capital spending, plus the accelerated spending of another $600 million in previously committed capital projects.

The budget accommodates last year's commitment for a 4% increase in state school aid (an increase of $805 million, to $20.3 billion) and a 3.1% increase in total state spending on Medicaid (a $650 million increase, to $21.8 billion). It also proposes a 3.5% increase in school aid for Fiscal 2014. Additional program reforms are proposed for both primary education and Medicaid.

Its fiscal reform initiatives include a new Tier VI pension plan for newly hired state employees, plus the ability for new employees to opt into an alternative defined contribution plan. The pension reforms are projected to save state and local governments $110 billion over the next 30 years. The Executive Budget also proposes several additional consolidations of state agencies (e.g, folding the Office of Employee Relations into the Department of Civil Service) and major state functions (e.g., consolidating all information technology contracting within Office of General Services).

In addition to pension reform, the Governor's local mandate relief package includes a phased state takeover of county Medicaid administrative responsibilities, reforms to special education programs, and extended local government efficiency and consolidation grants.

The budget presentation mentions but does not provide significant additional details on several other initiatives mentioned in the Governor's state of the state message, including development of an energy infrastructure master plan, a new tax fairness and reform commission, and a new infrastructure financing fund.

Additional issue-specific highlights of the Executive Budget include the following. Please feel free to contact The Business Council's government affairs staff with specific questions or concerns.

Economic Development

Under the banner of “NY Works Fund,” the budget proposes $723 million in new state economic development resources, including:

$25 million of Excelsior tax credits are reserved for the Buffalo economic initiative.

$250 million in capital support for the SUNY Nanoscale College in Albany; $110 million for the SUNY 2020 Challenge Grant program; and $32 million to support ongoing technology programs through university-based grants and similar programs (former NYSTAR programs).

The State Linked Deposit Program is allowed to support loans for farm infrastructure investments.

Education (P-12)

A school aid increase of $805 million is proposed, at the maximum level authorized under the new school aid cap.  

The proposed aid increase is linked to completion of negotiations on the implementation of teacher/principal evaluation systems. School districts would have until the end of this calendar year to implement the new evaluation systems.

Governor will establish by Executive Order an Education Reform Commission. Its charge will be “to focus school district resources on improvement in the classroom, where they belong.”

Will establish a centralized state contract for the purchase of school buses; but does not permit districts to participate in national purchasing cooperatives for school buses, as allowed in 49 other states.

Energy

The Executive Budget propose that state agencies and public authorities will work together on a master plan for an “Energy Highway,” but includes no specific appropriation for this purpose.

The Executive Budget proposes to extend fees for the establishment of oil and gas unit of production values by the Department of Taxation and Finance (DT&F) through 2015.

Proposals for energy-related tax credits include:

Environment

The proposed 2012-13 Executive Budget proposes a 9.9% (152.1 million) reduction in All Fund appropriations for total environmental and parks spending.

The Budget proposal contains funding to rehabilitate state infrastructure, including:

The proposed Executive authorizes the DEC and the Olympic Regional Development Authority (ORDA) to enter into an agreement to transfer the operations of the Belleayre Mountain Ski Center to ORDA at the close of the 2011-12 ski season.

Financial Services

The Department of Financial Services will set aside funding for a new Foreclosure Relief Unit. The office will provide counseling, mediation and other services to help homeowners facing foreclosure. This provision is revenue neutral. No funding allocation was included.

Prohibits banks from charging fees on levied bank accounts. Banks would no longer be able to deduct processing fees from the proceeds of levies to collect delinquent taxes or child support. Banks are currently prohibited from deducting these processing fees from I.R.S. levies. State would collect $5 million in 2012; $7 million thereafter.

Government Redesign

Merges the Department of Civil Service and the Governor's Office of Employee Relations.

Merges the Division of Lottery and the State Racing & Wagering Board into a newly named New York State Gaming Commission.

Language in the State Operations bill within each of the state agencies allows for suballocations as needed for the purpose of planning, development and/or implementing the consolidation of administration, business services, procurement, information technology and/or other functions shared among agencies.

Transfer of Belleayre Mountain ski operations from DEC to ORDA.

Health Care/Health Insurance

Requires commercial health insurance to include Early Intervention service providers in their networks. Program design for Early Intervention, which provides a comprehensive array of therapeutic and support services to children under the age of 3 with confirmed disabilities or developmental delays, is not included in this language, likely shifting costs for this program from Medicaid to commercial health insurance premiums.

New York Health Insurance Exchange:  Establishes a single exchange within the public authorities law, with a governance board comprised of 9 members.  Much of the language mirrors the three-way negotiated bill from 2011 which did not pass in the State Senate prior to their adjournment. The bill language includes provisions for a Small Business Health Options Program and will be available to employers with an average of less than 50 employees through January 1, 2016. The language includes severability language in the event any part of the law is deemed unenforceable. 

Establishes limits on reimbursement for the costs of executive compensation and administration for social service providers funded by the state. Following the task force appointed by the Governor in August, 2010, language requires state agencies to place limits on the state's reimbursement of the providers' costs of administration and executive compensation. While it appears the intent is targeted at human services providers, the bill language is broadly written and ambiguous as to its scope.  

Higher Education

Maintains General Fund operating support for SUNY and CUNY at prior year levels; and accommodates authorized 2012-13 tuition increased in the additional spending authority for SUNY and CUNY.

Maintains base operating aid funding for community colleges at 2011-12 levels of $2,122 per full-time equivalent student.

Includes $30 million of capital funding for the Executive Budget share of a new round of NYSUNY 2020 Challenge Grants. SUNY will match this grant to allow the 60 non-university campuses to compete for three $20 million challenge grants.

Extends the Higher Education Capital matching Grant Program for one year. This supports capital projects at the state's independent colleges. Reallocation of remaining funds from this initiative first adopted in the 2006 budget will be consistent with goals set forth by the regional economic development councils.

Redefines “commodity” to include electronic information resources which will permit state purchasing on behalf of academic and library organizations electronic database subscriptions for academic purposes. This language will permit the implementation of an information infrastructure for research, scholarship, and innovation in the STEM (science, technology, engineering, and mathematics) fields. The language is similar to that envisioned in the Academic Research Information Act, which was supported by The Business Council, but was vetoed by Governor Cuomo in 2011 (S. 6255, Part L, Sections 25 and 26).

Labor/Human Resources

Establishes a Tier VI retirement benefit for new employees of the state and local governments. It would raise the full benefit retirement age, prohibit early retirements, increase the vesting period, increase employee contributions, decrease the pension multiplier for each year of credited service and allow a defined contribution option. Overtime and certain other lump sum payments would not be included in the earnings used to calculate pension benefits.

Requires employees and retirees of certain public authorities to contribute toward the cost of Medicare Part B premiums.

Increases by $1.6 million support for Minority and Women-Owned Businesses. Develop a Minority and Women-Owned Business Enterprise (MWBE) Monitoring and Compliance System. Increase the rate of MWBE participation across the state to at least 20 percent.

Controls excessive compensation and administrative costs of non-profit and or-profit agencies that provide services on behalf of the State. Reimbursement for executive compensation will be capped at $199,000 and excess compensation will be a basis for rejection of a provider.

Merges the Department of Civil Service and the Governor's Office of Employee Relations.

Mandate Relief

A new Tier VI Pension is proposes for new public employees including those in New York state which increases employee contributions based on salary, raises the retirement age, and makes a defined contribution option available to all employees.

Requires school districts to share equally in the costs of growth in the preschool special education program with the state and counties. Also prohibits in most cases children being evaluated by the same agency that provides the child's educational services or by an evaluator with a less-than-arms-length relationship to the agency.

Medicaid Redesign

Reduces growth in the local share of Medicaid payments by 1% annually beginning in 2013-14, eliminating fully all growth by 2015-16 and beginning a phased-takeover of local government administration of the Medicaid program. (Health Article VII bill).

“Reforms” Early Intervention program to reduce counties' administrative burdens and cut their costs by $99 million over five years. Achieves this by requiring commercial health insurance to include Early Intervention service providers in their network and centralizing fiscal administration of the EI program through a new fiscal intermediary contract. (Health Article VII bill).

Procurement

Establishes limits on reimbursement for the costs of executive compensation and administration for social service providers funded by the state. Following the task force appointed by the Governor in August, 2010, language requires state agencies to place limits on the state's reimbursement of the providers' costs of administration and executive compensation. While it appears the intent is targeted at human services providers, the bill language is broadly written and ambiguous as to its scope.  

Redefines “commodity” to include electronic information resources which will permit state purchasing on behalf of academic and library organizations electronic database subscriptions for academic purposes. This language will permit the implementation of an information infrastructure for research, scholarship, and innovation in the STEM (science, technology, engineering, and mathematics) fields. The language is similar to that envisioned in the Academic Research Information Act, which was supported by The Business Council but was vetoed by Governor Cuomo in 2011.

Substantial changes to centralize procurement within, and the authority of OGS, consistent with the strategic sourcing initiative and 2011 local government procurement mandate relief.
Changes include:

Taxation

No new or increased taxes are proposed.

Makes permanent e-filing mandate for PIT returns done by professional preparers doing more than five returns and individuals using tax software.

Makes permanent DT&F authority to require segregated accounts for certain sales tax vendors.

Creates, expands and/or extends tax credits for acquisition of solar equipment, production of TV commercials, building of low income housing, and producing biofuel. Extends for five years the motor fuels tax, petroleum business tax, fuel use tax and state and local sales tax exemptions for the purchase of E85 and purchasing alternative fuels.

Extends the new MTA mobility tax rates to professional employer organizations.

Modifies application of the tobacco excise tax on cigars and loose tobacco; makes technical amendments to taxes on diesel fuels.

Allows DT&F to refuse to issue sales tax certificates to vendors that are found to owe any taxes to the state, not just sales taxes.

Telecommunications

Eliminate state regulation of Voice over Internet Protocol (VoIP). Clarifies that the PSC and other state agencies do not have the authority to regulate rates or other terms of service related to VoIP. No revenue implications for New York.

Promotes expanded Broadband Access as part of $75 million New York Works Economic Development Fund Program. No specific funding allocation.

Tourism

Tourism Marketing Programs:

Investing in state and state-owned assets:

Racing & Gaming:

Transportation/Construction

New York Works Infrastructure Investment: New appropriations for New York Works in the Executive Budget total $1.64 billion, including $723 million from the state and $917 million from the federal government. Combined with $600 million in funding from existing state programs, it is intended to support nearly $12.8 billion of additional investments.

Provides the annual authorization for the CHIPS and Marchiselli programs.

Consolidates the NYSDOT's Accident Damage Account with the Dedicated Highway and Bridge Trust Fund.

Implements a performance-based bus inspection program.

Conforms the state Vehicle and Traffic Law to federal requirements governing operators of commercial motor vehicles and medical certification requirements for operators.

Consolidates NYSDOT regional offices from eleven to six and eliminate regional directors and supervisory staff.

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