New York To Implement Long Term Economic Reforms To Eliminate Budget Deficit

the Gov Monitor blog offered the following news from Governor David A. Paterson, who proposed a 2010-11 Executive Budget that makes significant spending reductions in order to eliminate a $7.4 billion deficit and institutes key reforms to put New York on the road to economic and fiscal recovery.

The Executive Budget proposal includes spending reductions across every area of the budget; limits State spending to far below both the Governor’s proposed spending cap and the rate of inflation; implements the most significant public higher education reforms in a generation; and provides fiscal relief to local governments through an aggressive mandate reform agenda.

“Since the day I became governor, I have warned that New York is facing an inevitable fiscal reckoning,” Governor Paterson said. “There are no more easy answers. We cannot keep spending money that we do not have. Significant spending reductions are necessary if we want to emerge from this crisis and build a strong fiscal and economic recovery. Together, through shared sacrifice, we will move forward toward a more hopeful and optimistic future for New York.”

Eliminating the Deficit
Governor Paterson’s 2010-11 Executive Budget closes a $7.4 billion deficit through $5.5 billion in recurring spending reductions (74 percent of the overall plan), $1.0 billion in actions that increase taxes or fees (less than 14 percent of the overall plan), $430 million in revenue actions that do not increase taxes or fees, and $565 million in non-recurring actions. Overall, 92 percent of Governor Paterson’s gap-closing plan represents recurring actions that will help the State continue to address its future projected budget deficits.

Major spending reduction recommendations include:

• School Aid. A $1.1 billion or five percent year-to-year reduction in School Aid, targeted progressively based on local school district wealth and student need. Even after this reduction, overall recommended 2010-11 School Aid spending of $20.5 billion would still represent a $6.1 billion or 42 percent increase compared to 2003-04 – twice the rate of inflation (19 percent). Additionally, this $1.1 billion reduction represents only 2.1 percent of overall school district budgets, which total more than $52 billion, including State and local contributions. School districts also have reported undesignated reserves of more than $1.5 billion statewide.
• Health Care. $1.0 billion in Medicaid and health care savings, including reductions to providers and various programs, enhanced Medicaid fraud recovery efforts, and other measures.
• Agency Spending. More than $1.0 billion in reductions to State agency operations spending, including $500 million in additional across-the-board agency cuts, $250 million in negotiated workforce savings (including $28 million from administratively rescinding, for the second consecutive year, the scheduled general salary increase – four percent – for non-union management/confidential employees), prison closures, youth facility right-sizing, agency mergers, shared service initiatives through Governor Paterson’s Office of Taxpayer Accountability, and other actions.
• Hundreds of other individual reductions detailed below and on the Division of the Budget’s website (www.budget.state.ny.us)

Read more here about other plans and details from the Governor.