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February 28, 2005

Comptroller: Executive budget proposal balanced but needs legislative action to stay that way

Governor Pataki’s 2005-06 budget proposal is balanced, but the plan could cause cumulative out-year budget gaps between $5 billion and $11 billion by the end of 2007-08, according to a new report by state Comptroller Alan Hevesi.

The report noted that the Governor’s budget proposal includes many measures rejected by the Legislature in previous years. “If the Legislature again rejects these proposals, the out-year budget gaps could grow to $11 billion by the end of 2007-08,” a release from the Comptroller's office said.

The report also criticized the Governor's budget for not complying with the CFE court order to provide billions in new funding to New York City Schools. Instead, the Governor's budget gives schools $325 million in new aid "on a statewide basis in tenuous video lottery
terminal revenues for operating expenses," the report said.

The Governor’s budget contains “imprudent borrowing” and relies on “previously rejected funding sources” and “one-shot” revenues to balance the budget, the release said. Other items included in the Governor’s proposal, such as the state takeover of local Medicaid costs, would require “multi-year fiscal discipline.”

“It is unclear how this will emerge since recent court decisions have added new uncertainties that could further jeopardize the adoption of a timely budget and consensus on overdue budget reforms,” Hevesi said.

The report also criticized the Governor's budget proposal for: under funding the state's pension system by $367 million; promising local-level Medicaid relief by enacting measures the Legislature has previously rejected; failing to provide for a $1 billion potential HCRA shortfall if the state loses a current court-battle over the privatization of Excellus Blue Cross; imprudent borrowing, including refinancing $3 billion in outstanding bonds that will “result in savings now, but adds a net additional cost of $2.1 billion over 30 years.”

The report is available in PDF format at www.osc.state.ny.us/reports/budget/2005/statebudgetreport22305.pdf.