April 22, 2008
GOVERNOR PATERSON CREATES WORKING GROUP TO FIND BUDGET CUTS AND EXPLORE ROOT CAUSES OF HIGH SPENDING
Handpicked Group Tasked With Reviewing Spending, Putting Forth Recommendations by End of Session
Governor Paterson: “It’s Time to Get our Fiscal House in Order”
Governor David A. Paterson today announced that he has tasked the Division of the Budget, working with other key Administration staff, with developing recurring and responsible budget proposals to significantly reduce State spending growth for the 2009-10 budget and beyond. This marks the first in a series of many steps the Governor will take to develop a fiscally-responsible budget that is both proportional to economic times and reflective of a commitment to strategic investments in priorities such as education, health care access and economic development.
An internal working group – including Budget Director Laura Anglin, Deputy Director of State Operations Kristen Proud, Senior Advisor William Cunningham and other senior staff members – will report back to the Governor before the end of the legislative session with a series of recommendations for making tough choices in next year’s budget and jumpstarting public discourse. Also, Michael Weber, who was Finance Secretary to the Senate Democratic Conference from 2005 to 2006, joined the Executive Chamber today and will play a key role in the analysis. Once the study is complete, the working group will seek input from groups that have been pushing for reforms in the state’s budget process.
“As I’ve said all along, the $800 million in spending reductions that I put forth earlier this year are only the beginning,” said Governor Paterson. “The economic forecast is grim, and we need to take the steps necessary to reduce our spending. I’ve directed this group to do exactly that: take the time early on to see where we can reduce our expenditures for next year. This process will not be easy, but we must be realistic about where the economy is going and how New York can plan appropriately. This is only the first step in what will be multi-stage process to get our fiscal house in order.”
Over the last five years, State Operating Funds spending has increased by an average rate of more than 7 percent annually. In the best of times, growth of this magnitude would be generous; in difficult times, it is unsustainable. The recently enacted budget slowed this growth to 4.5 percent, but given the current economic climate, further restraint is critical.
The Governor has made it clear that spending growth must be reduced significantly. As such, this analysis will focus on State Operating Funds, which is the most accurate measure of State spending funded by state taxpayers. The All Funds figure, which is typically cited as the measure of State spending, is in some sense a misleading representation of State operating spending because it includes federal spending as well as long-term capital expenditures. On the other hand, General Fund spending is too narrow a focus because its relevance as a benchmark for spending has diminished over the years since the state now pays for a growing number of activities outside the General Fund.
While all state spending will be reviewed, particular areas of focus will include:
- Activities that do not serve an important statewide purpose;
- Programs that are obsolete or are no longer serving their intended purpose;
- Distinct programs that are funded by dedicated fees and fines that do not provide critical services;
- Discretionary local grants that may be more appropriately financed at the local level or from private sources, or not at all;
- State agency expenditures on equipment, services, staffing and contracting levels, and other discretionary items;
- Public authorities spending;
- Capital projects that are not needed to protect the health and safety of the public.
