The $175.5 billion State Fiscal Year (SFY) 2019-20 Enacted Budget includes actions to manage spending and generate nearly $1 billion in additional revenue this year, while providing increased funding for education, health care and mass transit, according to a report released today by State Comptroller Thomas P. DiNapoli. At the end of March, the Division of the Budget (DOB) also made the first deposit into the state’s rainy day reserves since 2015.

“New York is beginning the new fiscal year in a better position than projected,” said DiNapoli. “However, continuing concerns regarding revenue volatility, the forecast for a slowing economy and detrimental federal fiscal policies leave open questions going forward. The recent addition to the Rainy Day Fund is a good first step toward building more robust reserves before the next economic downturn.”

Enacted revenue actions are estimated to increase All Funds revenues by more than $5.4 billion by SFY 2022-23, excluding off-budget actions related to the Metropolitan Transportation Authority (MTA). On-budget revenue actions include extension for five years of the top Personal Income Tax rate on upper-income earners, and broader imposition of the sales tax on online sales.

The state Division of the Budget (DOB) deposited $250 million into the Rainy Day Reserve Fund at the end of SFY 2018-19, the first such deposit since 2015, and anticipates adding another $428 million at the end of the current year, budgetary conditions permitting. Increasing reserves further could reduce the need for undesirable actions, including potential spending cuts during the fiscal year that are authorized in the budget.

The budget provides $5.4 billion in additional state-supported bond authorizations, an increase of 3.7 percent from the previous total. All newly-authorized debt is to be issued by state public authorities without voter approval. The largest increase from previously authorized borrowing limits, $911 million, is for economic development initiatives.

DiNapoli’s report noted that certain elements of the Enacted Budget fall short with respect to high standards of transparency, accountability and oversight. The report also noted that the budget was passed with little time for review by legislators and the public, and minimal information was made available as to its overall fiscal impact. In addition, the budget expands the practice of “off-budget” spending, including a new shift off-budget of certain MTA-related state resources estimated at $547.5 million in the current year. Other enacted measures limit or bypass existing statutory provisions intended to ensure independent oversight of state procurement.

Major public policy changes enacted with the budget include the establishment of a congestion tolling program in Manhattan’s Central Business District, no earlier than December 31, 2020, sufficient to fund $15 billion for the MTA’s 2020-2024 capital program. Many key decisions regarding this initiative including toll levels have yet to be determined.

The budget eliminates cash bail for most misdemeanor and non-violent felony offenses, and makes statutory changes to the discovery process and other revisions intended to promote speedy trials. The budget also authorizes the closure of up to three state prisons, which is expected to generate $35 million in annual savings.

The budget creates a Public Campaign Financing and Election Commission that is charged with establishing publicly funded financing of campaigns for statewide and state legislative offices. Among other requirements, the commission is directed to identify resources up to $100 million annually to support public financing. The Commission’s report is due by December 1, 2019, and will have the full effect of law unless modified before December 22, 2019.

The Enacted Budget restores $550 million in Medicaid reductions, relative to planned growth, that had been proposed as part of Executive Budget amendments released in February. At the same time, the budget provides the Director of the Budget new authority to reduce Medicaid spending by just over $190 million in each of the current and next fiscal years.

Among other elements of the Enacted Budget:

• State aid for public schools for the 2019-20 school year is $27.9 billion, an increase of $1 billion, or 3.8 percent, over the previous year and $44 million over the Executive Budget.
• The budget provides increases of $28.6 million for the State University of New York and $14.5 million for the City University of New York, compared to the Executive Budget. Those changes include additional funding for educational opportunity programs and a 3.5 percent increase in per-student base operating aid for community colleges.
• Single-use plastic carry-out bags will be banned, with certain exceptions, for most retail stores effective March 1, 2020. Cities and counties are authorized to adopt a 5-cent charge for paper bags used by such stores, with any resulting funds going to the state and localities that impose the charge to pay for programs encouraging use of reusable bags.
• The budget eliminates $59 million from the state’s primary general purpose municipal assistance program, Aid and Incentives for Municipalities (AIM), affecting some 1,300 towns and villages. County sales tax revenues where such municipalities are located are to be used to replace these lost payments.
• Funding of $500,000 for the creation of an online database of economic development projects is provided. While this is a positive step toward enhancing much-needed transparency for economic development spending, the budget does not require such a database or specify details as to how it should be structured or what type of information it should include.

The updated Financial Plan and Capital Program and Financing Plan based on the SFY 2019-20 Enacted Budget are expected to be issued in coming weeks. The Office of the State Comptroller will provide additional analysis based on those reports.

To read the full report, go to: https://osc.state.ny.us/reports/budget/2019/enacted-budget-report-2019-20.pdf

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