PRESERVING NEW YORK'S EXECUTIVE BUDET PROCESS
Text
of letter sent to Governor George E. Pataki from Daniel B. Walsh,
President of The Business Council, dated June 29, 2004.
Honorable George E. Pataki
Governor
Executive Chamber
The Capitol
Albany, New York 12224
Dear Governor Pataki:
RE: Preserving New York’s Executive Budget process
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.
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.
Now the Legislature is moving to weaken those protections, under the
guise of budget “reform.” 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.
We share with the Senate and Assembly a desire to seek creative solutions
to budget problems that sometimes appear intractable. After 20 years
of late budgets, there is an argument to be made for the concept of a
contingency budget that would provide automatic spending limitations
in case of gridlock at the negotiating table. There are specific elements
of S. 7615/A.11702 we applaud. 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 we believe the Legislature’s “reform” proposals
fail to solve the fundamental problem with the New York State budget:
irresponsible spending. They could, in fact, make that problem worse.
Virtually every year, the Budget Division projects significant budget
gaps in the “out years. ” These gaps exist because the Legislature,
by its very nature, is under constant pressure to spend every available
dollar each year. Most newly available dollars go toward formula-driven
programs such as Medicaid and education assistance. Funding formulas
for those programs automatically drive inflation-plus spending increases
in succeeding years, so that those future budgets can only be balanced
with unusual growth in tax revenue, new revenue sources, or legislated
reductions in the rate of spending increase.
S.7615/A.11702 reflects its sponsors’ recognition of this reality.
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. 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.”
While the specifics of the proposed contingency budget have been subject
to debate and amendment, those details are unlikely to matter in practice.
With the Legislature assuming major new powers in the budget process,
it is likely there never will be a contingency budget, nor automatic
spending reductions, that last more than a few weeks.
The proposed Constitutional amendment would increase the pressure for
ever-higher spending. By giving the Legislature power to initiate a budget
once a new fiscal year has begun, it would effectively place in the legislative
branch much of the budgetary authority invested in the Governor under
the Executive Budget system created in the 1920s.
As you know, the Legislature has sought to add substantial spending
to each of your proposed budgets. The same was true with most of your
predecessors’ proposals. The genius of the Executive Budget system
developed by reformers such as Governors Smith and Hughes is that it
creates clear accountability in the office of the chief executive. Only
the Governor, Smith reasoned, will ever be held accountable for the overall
financial condition of the state. (Governor Smith’s analysis is
even more valid today, given the rarity of competitive legislative races.)
No insult to the Senate and Assembly was intended. Smith himself served
with distinction as chairman of the Ways and Means Committee, and recognized
the reality of the political demands placed on legislators. Individual
Senators and Assembly members must be responsive to funding requests
from multiple interests in their home districts. We believe the Legislature,
reflecting the varied interests of New Yorkers, has the right and the
responsibility to examine and amend any Executive Budget. It already
has the power to do so by negotiating with the governor or, as happened
just one year ago, by overriding gubernatorial vetoes. 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.
New York State’s lack of spending restraint is the cause of our
high taxes, heavy debt burden and repeated budget crises. We believe
the proposed Constitutional amendment and legislation will lead to even
greater spending increases than we have seen in recent years. For those
reasons, we urge you to veto S.7615/A.11702, and to campaign against
enactment of the proposed Constitutional amendment.
Sincerely,
Daniel B. Walsh
President/CEO
