FY 2013 Executive Budget Summary

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In his Executive Budget for FY 2013, Governor Cuomo proposes to build on many of his spending and program reform initiatives adopted last year.

He has proposed a budget with “all funds” spending (state and federal funds) $225 million or 0.2% below last year's levels, and with state tax supported spending increasing by 1.9% or $1.7 billion.

A projected $3.5 billion gap for the new budget year is closed by a net $1.5 billion increase in personal income tax revenues generated by November's tax reform bill and nearly $2 billion in net spending reductions ($1.1 billion from state operations, and $750 million from local assistance). The budget leaves a relatively small structural deficit of $700 million for Fiscal 2014, but a combined gap of nearly $7 billion for the next two budget years.

The proposal contains no new taxes, and extends or creates several new targeted tax credits.

The budget commits $70 million in Excelsior Tax Credits and $130 million in capital grants to a second round of funding through the regional economic development councils. It has a total of $723 million in new economic development related capital spending, plus the accelerated spending of another $600 million in previously committed capital projects.

The budget accommodates last year's commitment for a 4% increase in state school aid (an increase of $805 million, to $20.3 billion) and a 3.1% increase in total state spending on Medicaid (a $650 million increase, to $21.8 billion). It also proposes a 3.5% increase in school aid for Fiscal 2014. Additional program reforms are proposed for both primary education and Medicaid.

Its fiscal reform initiatives include a new Tier VI pension plan for newly hired state employees, plus the ability for new employees to opt into an alternative defined contribution plan. The pension reforms are projected to save state and local governments $110 billion over the next 30 years. The Executive Budget also proposes several additional consolidations of state agencies (e.g, folding the Office of Employee Relations into the Department of Civil Service) and major state functions (e.g., consolidating all information technology contracting within Office of General Services).

In addition to pension reform, the Governor's local mandate relief package includes a phased state takeover of county Medicaid administrative responsibilities, reforms to special education programs, and extended local government efficiency and consolidation grants.

The budget presentation mentions but does not provide significant additional details on several other initiatives mentioned in the Governor's state of the state message, including development of an energy infrastructure master plan, a new tax fairness and reform commission, and a new infrastructure financing fund.

Additional issue-specific highlights of the Executive Budget include the following. Please feel free to contact The Business Council's government affairs staff with specific questions or concerns.

A school aid increase of $805 million is proposed, at the maximum level authorized under the new school aid cap.  

The proposed aid increase is linked to completion of negotiations on the implementation of teacher/principal evaluation systems. School districts would have until the end of this calendar year to implement the new evaluation systems.

Governor will establish by Executive Order an Education Reform Commission. Its charge will be “to focus school district resources on improvement in the classroom, where they belong.”

Will establish a centralized state contract for the purchase of school buses; but does not permit districts to participate in national purchasing cooperatives for school buses, as allowed in 49 other states.

The proposed 2012-13 Executive Budget proposes a 9.9% (152.1 million) reduction in All Fund appropriations for total environmental and parks spending.

• The Department of Environmental Protection (DEC) is proposed to take a 16.1% ($167.7 million) reduction, associated with the completion of spending of Federal American Recovery and Reinvestment Act (ARRA) program dollars.
• The Office of Parks, Recreation, and Historic Preservation (Parks) is proposed an increase of 16.2% ($38.5 million). The Parks increase is associated with the newly proposed New York Works program.

The Budget proposal contains funding to rehabilitate state infrastructure, including:

• As a portion of the New York Works $102 million of state funds and, $102 million of federal funding will of $204 million is include in DEC budget for capital purposes including flood control, dam and coastal erosion projects.
• The budget will include $94 million in new capital funding for OPRHP to address a significant backlog of repair and rehabilitation needs at 48 state parks and at Olympic Regional Development Authority facilities.
• Reduces hazardous waste fees on generators that recycle more than 4,000 tons of hazardous wastes or waste water per year.

The proposed Executive authorizes the DEC and the Olympic Regional Development Authority (ORDA) to enter into an agreement to transfer the operations of the Belleayre Mountain Ski Center to ORDA at the close of the 2011-12 ski season.

Merges the Department of Civil Service and the Governor's Office of Employee Relations.

Merges the Division of Lottery and the State Racing & Wagering Board into a newly named New York State Gaming Commission.

Language in the State Operations bill within each of the state agencies allows for suballocations as needed for the purpose of planning, development and/or implementing the consolidation of administration, business services, procurement, information technology and/or other functions shared among agencies.

Transfer of Belleayre Mountain ski operations from DEC to ORDA.

Maintains General Fund operating support for SUNY and CUNY at prior year levels; and accommodates authorized 2012-13 tuition increased in the additional spending authority for SUNY and CUNY.

Maintains base operating aid funding for community colleges at 2011-12 levels of $2,122 per full-time equivalent student.

Includes $30 million of capital funding for the Executive Budget share of a new round of NYSUNY 2020 Challenge Grants. SUNY will match this grant to allow the 60 non-university campuses to compete for three $20 million challenge grants.

Extends the Higher Education Capital matching Grant Program for one year. This supports capital projects at the state's independent colleges. Reallocation of remaining funds from this initiative first adopted in the 2006 budget will be consistent with goals set forth by the regional economic development councils.

Redefines “commodity” to include electronic information resources which will permit state purchasing on behalf of academic and library organizations electronic database subscriptions for academic purposes. This language will permit the implementation of an information infrastructure for research, scholarship, and innovation in the STEM (science, technology, engineering, and mathematics) fields. The language is similar to that envisioned in the Academic Research Information Act, which was supported by The Business Council, but was vetoed by Governor Cuomo in 2011 (S. 6255, Part L, Sections 25 and 26).

A new Tier VI Pension is proposes for new public employees including those in New York state which increases employee contributions based on salary, raises the retirement age, and makes a defined contribution option available to all employees.

Requires school districts to share equally in the costs of growth in the preschool special education program with the state and counties. Also prohibits in most cases children being evaluated by the same agency that provides the child's educational services or by an evaluator with a less-than-arms-length relationship to the agency.

Establishes limits on reimbursement for the costs of executive compensation and administration for social service providers funded by the state. Following the task force appointed by the Governor in August, 2010, language requires state agencies to place limits on the state's reimbursement of the providers' costs of administration and executive compensation. While it appears the intent is targeted at human services providers, the bill language is broadly written and ambiguous as to its scope.  

Redefines “commodity” to include electronic information resources which will permit state purchasing on behalf of academic and library organizations electronic database subscriptions for academic purposes. This language will permit the implementation of an information infrastructure for research, scholarship, and innovation in the STEM (science, technology, engineering, and mathematics) fields. The language is similar to that envisioned in the Academic Research Information Act, which was supported by The Business Council but was vetoed by Governor Cuomo in 2011.

Substantial changes to centralize procurement within, and the authority of OGS, consistent with the strategic sourcing initiative and 2011 local government procurement mandate relief.
Changes include:

• Increases the threshold for requiring public notice of agency procurements that must be advertised in the state's procurement opportunities newsletter from $15,000 to $50,000.
• Expands lowest price procurement to include services at OGS commissioner's discretion.
• Expands best value procurement to include commodities at OGS commissioner's discretion.
• Allows extra weight to be given to a small business or M/WBE offerer for commodities and services contracts.
• Excepts from OSC pre-audit review those contracts entered into from the OGS centralized list.
• Expands bids that can be submitted electronically to include commodities and services in addition to technology.
• Establishes printing as a state standardized service, authorizes OGS commissioner to develop centralized contracting for printing work done by state agencies.
• Increases procurement options for municipalities, school districts, not for profits and others, intended to maximize use of OGS centralized contract list.
• Allows local municipalities, school districts, not for profits and others to piggy back on OGS and other state agency contracts for contracts over $500,000.

Eliminate state regulation of Voice over Internet Protocol (VoIP). Clarifies that the PSC and other state agencies do not have the authority to regulate rates or other terms of service related to VoIP. No revenue implications for New York.

Promotes expanded Broadband Access as part of $75 million New York Works Economic Development Fund Program. No specific funding allocation.

New York Works Infrastructure Investment: New appropriations for New York Works in the Executive Budget total $1.64 billion, including $723 million from the state and $917 million from the federal government. Combined with $600 million in funding from existing state programs, it is intended to support nearly $12.8 billion of additional investments.

Provides the annual authorization for the CHIPS and Marchiselli programs.

Consolidates the NYSDOT's Accident Damage Account with the Dedicated Highway and Bridge Trust Fund.

Implements a performance-based bus inspection program.

Conforms the state Vehicle and Traffic Law to federal requirements governing operators of commercial motor vehicles and medical certification requirements for operators.

Consolidates NYSDOT regional offices from eleven to six and eliminate regional directors and supervisory staff.