Government Affairs Albany Update
November 9, 2009

Governor Issues Proclamation for November 10th Extraordinary Session

Governor Paterson signed a proclamation calling an extraordinary session of the Legislature on Tuesday, November 10. According to the Governor's press release, the purpose of the extraordinary session is to address the current-year deficit and additional legislation that was not finished at the end of session last June.

Along with Governor Paterson's Deficit Reduction Plan (DRP), the extraordinary session proclamation contains eight legislative items to be addressed by the Legislature; including the Governor's proposed cap on State spending which includes a circuit-breaker property tax relief program, structural reforms to the State pension system and public authorities reform.  In addition to the aforementioned legislation, negotiations are on-going about a host of other issues.

Assembly Analysis of DRP Proposal

Last week, the Assembly Ways & Means Committee issued a detailed overview of the Governor's proposed deficit reduction plan. It is available here: http://assembly.state.ny.us/comm/WAM/20091029/2009defred.pdf

Among its key observations:

INTRODUCTION. Compared to the adopted budget, the DRP would result in $645 million reduction in state operations, $1 billion in non-recurring actions, and $1.3 billion reduction in local assistance. School aid and STAR benefits are subject to lower. The DRP is projected to reduce spending $2.6 billion below current baseline levels in Fiscal 2011 and a combined $9.7 billion over a five year period. (see p. 1)

ECONOMY. Ways and Means says that employment in New York has fared better than the nation as a whole since December 2007, with construction and manufacturing less hard hit. They also found that personal income will fall faster in 2009 (-5.1%) than in 2002 (-2.6%) or 1991(-0.2%). (TBC note: our relative job performance in the last year is in part due to the fact that we had less far to fall. In the 3 year period, change in NYS manufacturing employment was -7.3 percent, worse than all but 4 other states, and much worse than a national decline of 1%; in construction, while NYS employment increased by 8.8% from 2005 to 2007, it also was below the national average of 9.9% growth, and only 23rd best among the states.) (see pp. 3 - 4)

FINANCIAL PLAN UPDATE. The W&M analysis notes that on a year to date basis (see pp. 7 - 8 and 11- 14):

PROPOSED DRP. The $1.3 billion in proposed local assistance cuts for the remainder of this fiscal year would impact the following programs (p. 16):

The remainder of the document includes agency-by-agency and program-specific summary of spending cuts, including cuts in municipal aid by city (p. 78), and identifies specific AIM program that are exempt from any reductions under the DRP; fund "sweeps"; and other components of the proposed DRP. It does not include district-by-district reductions in state school aid.

Senate Deficit Reduction Actions

The Senate last week introduced S. 6275 (Kruger), the purpose of which is to close the current fiscal year budget gap and includes a State Spending Cap tied to inflation. The Senate estimates that these measures, if enacted, would result in a savings of $1.878 billion in the 2009-2010 fiscal year. The provisions do not include any mid-year cuts to education aid. The following are the principle parts of the bill:

We are currently reviewing the provisions of the legislation. While we generally support the principles related to a state spending cap and a commission on restructuring government to make it more cost-effective, we are concerned that it contains no spending cuts or actual program restructuring. Without these types of measures, we are concerned that this package will do little to address the state's structural imbalance between spending levels and revenues. It is expected that the Senate will act on this legislation today.

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