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Zack Hutchins
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January 18, 2005

Governor: Budget reform should make budgets balanced, responsible

Governor Pataki is proposing budget-reform legislation that would require the Legislature to adopt a balanced budget each year, while spelling out the impact of one year's spending increases on future years.

"This is the type of budget reform New York State needs," Business Council President Daniel B. Walsh said. "The state faces budget gaps year after year in part because the existing process does not require long-range planning by the Legislature."

The state Constitution, as interpreted by New York's courts, requires the governor to submit a balanced budget but does not require the plan adopted by the Legislature to be balanced.

Governor Pataki's proposed 2005-06 budget calls for "a requirement that the enacted budget be balanced, with an impartial determination made by an independent party if the Executive and Legislature cannot agree."

Under state law, the budgets governors propose each year must also include multi-year projections showing expected revenue and spending. But the Legislature's changes, which typically add hundreds of millions of dollars, do not require such long-term fiscal planning.

The state has faced multi-billion-dollar budget gaps, on an operating or accrual basis, each of the past five years. One result of such gaps was the Legislature's decision in 2003 to raise the state's personal-income and sales taxes by more than $2 billion.

Governor Pataki said he is proposing "increased 'sunshine' reporting to individual legislators before they vote on the budget, so all members are informed of the multi-year financial impacts of all key legislative changes to the budget."

He proposed several other budget reforms, including a requirement for an independent assessment of the state's revenue expectations, if the governor and Legislature cannot agree on a figure by March 1.

The Legislature has proposed budget "reform" that would shift significant power over each year's fiscal plan from the governor to the Legislature. The Business Council has opposed such proposals as likely to lead to higher spending and taxes.