Zack Hutchins
Director of Communications

For Release — June 30, 2004


ALBANY—The Business Council today urged Governor Pataki to veto a "budget reform" measure passed this year by Legislature, arguing that it would only worsen New York's ongoing problems with high taxes and massive deficits.

"The recent history of the New York State budget process leaves a lot to be desired. The Constitutional structure of that process, however, is not the cause of our problems," Business Council President Daniel B. Walsh said in a June 29 letter to the Governor. "Quite the contrary. The Executive Budget system created by Governor Al Smith, with strong support from Charles Evans Hughes and others, protects New York taxpayers from the potential of even greater fiscal irresponsibility."

The Legislature's "reform" bill (S.7615/A.11702) would weaken those protections, Walsh added.

"We urge you to veto S.7615/A.11702, and to use the bully pulpit of your office to oppose enactment of the associated Constitutional amendment," the letters said.

Walsh said some of the elements of the proposal are attractive. "For instance, the bill moves Health Care Reform Act spending into the budget, as should have been done when HCRA was created several years ago."

But the bill's proposals "fail to solve the fundamental problem with the New York State budget: irresponsible spending," Walsh said. "They could, in fact, make that problem worse."

The letter added: "This 'reform' package would let the Legislature's own inaction on the budget trigger a situation in which it acquired vastly greater power to design the spending plan."

Nearly every year, the Budget Division projects significant budget gaps in the "out years," Walsh wrote. "Those gaps exist because the Legislature, by its very nature, is under constant pressure to spend every available dollar each year."

Any new available funds are funneled into formula-driven programs such as Medicaid and education assistance, which automatically drive inflation-plus spending increases in succeeding years, Walsh added. Such spending produces future budgets that "can only be balanced with unusual growth in tax revenue, new revenue sources, or legislated reductions in the rate of spending increase."

The proposed "budget reform" reflects its sponsors' acknowledgment of this reality, the letter noted.

"The legislation provides that, if no new budget is in place at the start of a new fiscal year, aggregate disbursements in the contingency budget may not exceed those in the prior fiscal year," Walsh wrote. "It then requires 'uniform reductions' in most disbursement categories to bring spending into line with available revenues. Why would spending cuts be needed to make sure that disbursements do not rise from one year to the next? Because New York's budget is designed so that state spending follows our state motto - 'Ever Upward.'"

In addition, with the major new powers the Legislature would assume under the reform proposals, it is more than likely that there will never be a contingency budget or automatic spending reduction that lasts more than a few weeks, the letter said.

"We believe the Legislature, reflecting the varied interests of New Yorkers, has the right and the responsibility to examine and amend any Executive Budget," Walsh wrote. "But this 'reform' package would let the Legislature's own inaction on the budget trigger a situation in which it acquired vastly greater power to design the spending plan."

The state's proven lack of spending restraint is the cause of our high taxes, heavy debt burden and repeated budget crises, the letter concluded.