New York State's comptroller sees oversight red flags in state budget plan

Provisions in New York Gov. Andrew Cuomo’s $168.2 billion budget proposal would weaken checks and balances on spending in Albany, according State Comptroller Tom DiNapoli.

New York State Comptroller Tom DiNapoli

New York’s fiscal watchdog released a report Wednesday saying that some aspects of Cuomo’s fiscal plan raise transparency concerns. One proposal empowers the governor’s budget director to cut certain spending by up to 3% if tax collections fall more than $500 million short of budget projections. Additional measures would enable the budget director to impose spending cuts if certain federal funding is slashed by at least $850 million along with broadly authorizing shifts of funds among state agencies and public authorities.

“While the wide-ranging array of measures to expand executive flexibility could mitigate financial plan risks, the effects of their implementation on state programs, local governments and individual New Yorkers remain unclear,” said DiNapoli in the report. “Such proposals also raise questions regarding checks and balances over major decisions involving public dollars.”

The press offices for Cuomo and the New York State Division of Budget did not immediately respond for comment on DiNapoli’s analysis.

Cuomo pitched $1 billion in revenue raisers during his Jan. 16 budget address to address an estimated $4 billion deficit including a plan to deliver $750 million from fees earned by nonprofit health insurance companies and a new tax on opioid drug sales that would net $171 million. Another proposal deferring tax credits on a one-year basis for corporations that receive $2 million or more in credits would raise $300 million in new state revenue, according to the governor's office.

Cuomo has also sought changes in response to the new federal tax bill that negatively impacts many New York residents by capping the federal deduction for state and local taxes at $10,000. One proposal would switch the state’s collection of taxes from an income-tax-based system to a payroll tax-based-approach. The Democratic governor has also proposed authorizing local governments to set up charitable funds that would enable taxpayers to receive credit for donations to offset tax payments.

The Citizens Budget Commission, a nonprofit New York State government watchdog, urged Cuomo in a statement Monday to not rush any major changes to the state’s tax system. CBC president Carol Kellerman said new problems could arise from moving too quickly such as challenges with auditing state-only deductions and adding further complexity to tax rules.

“The proposed voluntary Employer Compensation Expense Tax would be a fundamental change to the state tax system,” said Kellerman. “It will be complex to design and to implement, and it will have many implications that are not yet understood.”

New York State Legislature faces a March 31 deadline to adopt a new budget before the 2019 fiscal year begins on April 1. The Empire State has general obligation bond ratings of Aa1 from Moody's Investors Service, and AA-plus from S&P Global Ratings, Fitch Ratings and Kroll Bond Rating Agency.

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