The use of one-shots and spending that outpaces revenues demonstrates why New York needs “comprehensive fiscal reform,” state Comptroller Thomas DiNapoli said in a report yesterday.
The $131.9 billion fiscal 2010 budget relies on “practices and patterns that result in poor fiscal outcomes over the long term,” he said.
The state budget office projects budget gaps of $8.8 billion and $13.7 billion in fiscal 2012 and 2013, respectively.
“This was a difficult budget,” DiNapoli said in a press release. “But this budget falls short of what New York desperately needs. This is a buy-time budget; tough decisions on spending have been postponed.”
DiNapoli criticized the budget for creating an unsustainable level of spending and using federal stimulus funds for short-term fixes rather than economic development and budget restructuring.
“The state lost a unique opportunity to use stimulus funds in a focused effort to balance the state’s long-term fiscal plan, to reinvent state government and to invest in New York’s economy,” the report said.
The total budget increased by 8.5% due to the influx of federal stimulus funds while general fund spending increased by only 0.6% to $54.91 billion.
The state is issuing debt at an increasing rate, with annual state-backed debt issuance rising 50% over the next five years compared to the previous five. Average annual debt issuance over the next five years will be $5.4 billion compared to $3.6 billion, according to the report. The enacted budget increased public authority debt caps by more than $3.4 billion.
DiNapoli called on lawmakers to enact a menu of budget reforms, including moving the beginning of the fiscal year to July 1 from April 1, requiring two-year budget proposals rather than one year, limiting the use of non-recurring revenues to finance non-recurring spending, and replacing selling state-backed bonds through public authorities with bonds approved by the voters and sold through the comptroller’s office.
In response to the report, Gov. David Paterson called on DiNapoli to support a spending-cap proposal that would limit the growth in operating spending to the average rate of inflation from the previous three calendar years. Paterson said in a press release that many of DiNapoli’s proposals had been advanced before and would not bring the state’s budget into structural balance.
DiNapoli said that Paterson’s proposal was a “starting point” for discussions on how to control spending.
“The spending growth is a concern,” said Elizabeth Lynam, deputy research director for the Citizens Budget Commission, a business-oriented fiscal watchdog. Spending supported by state revenue in the current year budget “was still maintained at a fairly high level. There were hardly any reductions enacted and that’s problematic, because how is that spending going to be maintained in a couple of years?”
While supporting some of the goals of DiNapoli’s reform proposals, Lynam did not embrace them.
“You can’t legislate good behavior,” Lynam said. “Until there is political accountability for that dysfunction and the electorate starts throwing some people out for poor behavior, it’s hard to imagine there’ll be much change.”