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For Release — June 8, 2010

Business Council says “prior approval” savings for state budget is business as usual in Albany

ALBANY— “The Governor and state legislature claiming budget savings from the enactment of the “prior approval” bill will only lead to future revenue shortfalls,” said Kenneth Adams, president and CEO of The Business Council of New York State, Inc.

Earlier this year The Business Council sponsored an actuarial study by Milliman – the same firm often used by the state for actuarial and other projections — that proved the claimed savings from restoring “prior approval” don't exist.

"The Milliman report on “prior approval” clearly concludes that the savings to the state are nominal and, at best, speculative,” said Adams. “Relying on these savings in balancing the state budget is typical of the Albany budget practices that have placed the state in a financial crisis.”

“Albany is claiming these phantom savings to avoid real spending cuts that need to be made. And in the process they have reinstituted artificial price controls on health insurers that will damage the market and ignore the real cost drivers in health care,” said Adams.

“Prior approval is simply government price-fixing that will politicize health insurance rate-setting and likely lead to rate suppression,” added Adams. “It is ridiculous for Albany politicians to claim that this is the way to lower health care premiums when their own actions, such as $4.2 billion in health insurance taxes, including $700 million in new and increased taxes passed as part of last year's budget, along with the increasing number of costly health insurance mandates continue to drive up premiums.”

“So far in this piecemeal budget process we have seen a new tax on businesses, especially upstate manufacturers, as part of the deal to keep parks open and now this damaging “prior approval” bill. This is a recipe for economic disaster as the budget process continues to limp forward,” said Adams.

“The Governor and legislature need to sit down and finalize a budget that lowers spending and does not raise taxes. Enacting bad public policy like “prior approval” and claiming savings in budget extenders will only leave the next Governor, state legislature and taxpayers with a bigger fiscal crisis next year,” concluded Adams.

The full Milliman study is available here.

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