Government Affairs Albany Update
March 4, 2011
- Revenue Forecasts
The Administration, Senate and Assembly released their Consensus Economic and Revenue Forecast on Wednesday, the forecast of state revenues on which budget negotiations will be based. Specifically, the parties agreed that based on a slightly revised economic outlook, the state would see an increase in Fiscal 2012 tax revenues of $155 million when compared to the amount projected in the Executive Budget, an increase of about 0.2%. While the report acknowledges that differences exist between the parties on the speed and strength of the State economic recovery, all parties agreed that New York’s recovery will continue. A link to the report is available here. Earlier in the week, both legislative houses released their own revenue forecasts, with the Senate expecting an increase of $423 million over the Governor’s projections, and the Assembly’s forecast coming in $49 million below the Executive’s. The Senate urged that any additional revenues be dedicated to increasing the state’s reserve fund or reducing taxes, rather than for support of new or restored spending. The Senate’s forecast report is available here. The Assembly’s forecast is available here.
- Mandate Relief Preliminary Report
A very preliminary report of Governor Cuomo’s Mandate Relief Team was issued this week. The Business Council is a member of the “team,” and participated in its formal meetings; however, neither the Council nor the other team members were given copies of the final report prior to its presentation to the Governor. The report generally identifies a roadmap for reform rather than a set of concrete proposals reflecting team consensus. While it acknowledged mandates which are significant cost drivers at the local government level such as the Triborough Amendment and the Wicks Law, the preliminary report sidestepped any significant recommendations on them. Instead, it included recommendations for a constitutional amendment prohibiting new unfunded mandates, a requirement of detailed independent cost analysis of mandates, creation of a new pension tier, and ways to avoid the Wicks Law through more detailed project labor agreements. The preliminary report was not a consensus document; it also includes in Appendix B (starting on page 27) state agency recommended mandate relief measures which Business Council staff are reviewing.
- 30-Day Amendments
Governor Cuomo issued his 30-day budget amendments on March 2, substantially incorporating the recommendations of the Medicaid Redesign Team approved at the end of February. The recommendations were incorporated in a new Part H to the Health Article VII bill (“language”) and, as appropriate, in the State Operations and Aid To Localities appropriation bills. Amendments include recommendations that:
- repeal the mental health medication carve out as well as anti-rejection drugs for transplants and anti-retroviral drugs used in the treatment of HIV and AIDS;
- eliminate the ‘physician prevails’ requirement if it is determined that the use of prescription drugs is unwarranted;
- require management of pharmacy benefits within Medicaid managed care;
- authorize home care worker wage parity in those areas where a municipal governments has established a minimum wage for some or all employees who perform work on municipal government contracts;
- require prior authorization for exempt drug classes;
- delink workers’ compensation and no fault rates from Medicaid hospital in-patient rates;
- extend the HCRA surcharge amnesty through December 31, 2011 (not part of the original MRT recommendations);
- modifies the MRT recommendation which included extension of the HCRA surcharge to out-patient and radiological services. Bill language uses the word “may” not “shall” in authorizing the Commissioner to expand the HCRA surcharge to this set of services.
- enacts an across-the-board reduction of 2% in Medicaid payments;
- limits on the year-to-year spending growth of Medicaid to a 10 year rolling average of the medical component of the CPI; and
- authorizes the Commissioner to enact Medicaid reductions if the savings targets anticipated in this bill do not materialize.
The overall impact of these proposals is $2.3 billion in Medicaid program savings, however, several of these proposals have raised significant concerns for Business Council members. The Council is continuing its review and analysis of these specific proposals and welcomes additional member input.
The 30-day amendments also propose unprecedented two year spending plans for the state’s Medicaid and local school aid programs. These funding proposals are tied to the spending limits outlined earlier by the Governor (with Medicaid tied to increase in medical inflation and school aid increased tied to increases in state personal income.) Contrary to expectations, the 30 day amendments included no further changes to the Governor’s proposals for a new Department of Financial Regulation, and its new regulatory and enforcement powers. Further details on the 30 day amendments are available here.
- Tort Reform
The 30-day amendments also included tort reform recommendations included in the Medicaid redesign team report. These include a $250,000 cap on non-economic damages (see S. 2809-A/A. 4009-A, page 93); settlement conferences and the creation of the New York State Medical Indemnity Fund, which would provide coverage for neurologically impaired infants. The Business Council strongly supports these landmark medical malpractice reforms and is encouraging the Legislature to adopt these provisions in the final budget agreement.
Bank Tax Reform
The Senate Banking Committee is taking up several bills supported by The Business Council that extend key provisions of the state’s Bank Tax. These proposals generally mirror provisions included in the Executive Budget proposal, including:
- S.3752, which is virtually the same as Budget Bill S.2811/A.4011, Part E, and would extend the financial service sector investment tax credit through October 1, 2015.
- S.3750, which is the same as Budget Bill S.2811/A.4011, Part J, and would permanently extend the Bank Tax (Article 32 of the state Tax Law) and extend the state’s “Graham Leach Bliley transition rules” through January 1, 2013.
In addition, the panel is taking up two bills that break out the provisions of S.3750. One (S.3753) adopts a permanent extension of G-L-B transition provisions, and the second (S.3754) implements its permanent Bank Tax extensions. All four proposals were introduced by Banking Committee Chair Senator Joseph Griffo.
- New Computer Contract Guidelines
The state comptroller’s office has issued a new “procurement and disbursement guideline” on state purchase of equipment and software service contracts, arguing that "state agencies are wasting millions of dollars annually on equipment and computer maintenance.” The guidelines include approaches for assessing the need for equipment and software maintenance contracts and for determining reasonable contract prices, and establish new general contract provisions for equipment and software maintenance contracts. A copy of the new guidelines is available here.
- Cut in Personal Service Contracts
As a means to reduce state costs under his proposed budget, Governor Cuomo issued an Executive Order this week directing state agencies to obtain at least a 10 percent reduction in contract price before any expiring personal service contract can be renewed. “Personal services contracts” are defined as contracts under which an agency believes that a majority of the costs are attributable to compensation of the contractor's personnel. The Executive Order excludes contracts whose price is governed by federal or state law; whose renewal must be subject to a competitive bid; or that are with a “preferred source.” Any exceptions would have to be approved by the Governor’s Director of State Operations. Agencies are also encouraged to “seek all other reasonable and lawful means to reduce the costs of their personal services contracts.” The text of the Executive Order is available here.