The State Fiscal Year (SFY) 2017-18 Enacted Budget increases funding for education, clean water, affordable housing and other programs, but authorizes more than $10.5 billion in new state debt and allows billions of dollars in lump sum spending with minimal disclosure, according to a report released today by State Comptroller Thomas P. DiNapoli.

“Although the budget came together more than a week into the fiscal year, the Legislature and Executive acted on critical budget issues that will help New York move forward. However, billions of dollars in spending lacks key details that would better inform the public about how their tax dollars are being spent,” DiNapoli said. “It should concern all New Yorkers that budget decisions in Washington may force tough fiscal choices for the state and raise new questions for local governments and nonprofits that rely on state funding. Federal actions that could adversely affect New York, as well as economic uncertainty, are key risks to this budget.”

DiNapoli’s report shows that the state reduced tax revenue projections four times last fiscal year, and All Funds tax collections for last year, $74.4 billion, were $2.8 billion below initial projections. That shortfall was offset by larger-than-expected growth in federal and miscellaneous receipts. The General Fund balance at the end of SFY 2016-17 was $7.7 billion, approximately $1.7 billion more than projected when the fiscal year began but down nearly $1.2 billion from a year earlier. No deposits were made to the state’s statutory reserve funds during the last fiscal year.

Currently, leaders in Washington are considering cuts to federal aid for health care and other services. While the Enacted Budget creates a process that could be used to address potential reductions during the fiscal year, any resulting changes could pose unpredictable challenges for state agencies, local governments, nonprofits and others that rely on state funding.

Initial estimates by the Executive and the Assembly indicate All Funds spending for the year will reach $153.1 billion, excluding certain federally funded spending related to the Affordable Care Act and Superstorm Sandy. Including such spending, the projected total budget is $163.2 billion, according to Assembly estimates.

Among new lump-sum appropriations that allow taxpayer dollars to be spent with minimal disclosure is another $385 million in appropriation and bonding authority for the bond-financed State and Municipal Facilities program. Each of the previous four enacted budgets included similar appropriations. The allowed uses of such moneys include a wide range of economic development, education, environmental and other purposes. This year’s budget expands the listing of authorized entities and eligible purposes, but does not specify how funds will be allocated, how recipients are selected or what public benefits are expected.

Additionally, significant amounts of spending are shifted off-budget, which reduces oversight and obscures the overall level of spending and year-to-year growth.

Examples of such spending include use of tobacco settlement funds to pay for Medicaid costs, estimated by the Executive to total $125 million this year and $400 million annually going forward; an estimated $100 million in State Insurance Fund revenues to pay for a portion of state employee workers’ compensation costs in the current year; and $155 million in State of New York Mortgage Agency Mortgage Insurance Fund resources for various purposes.

DiNapoli’s report notes this year’s budget:

• Provides a $1 billion, or 4 percent, increase in general support for public schools for the coming school year, along with a $50 million increase in competitive grants for schools;
• Requires the state Department of Health to create a new regulatory program for “emerging contaminants,” including certain mandated testing by most public water systems in the state. Related measures include a new capital appropriation of $2.5 billion for clean water infrastructure projects expected to be funded through borrowing;
• Increases total state-supported debt authorizations by more than $10.5 billion – 8 percent over previously authorized amounts – all to be issued by public authorities without voter approval. Authorizations besides those for clean water projects include more than $2 billion for economic development and other purposes and more than $1.8 billion for transportation;
• Creates the Excelsior Scholarship program to cover tuition costs at the State University of New York and the City University of New York for certain full-time students, when combined with other financial aid. The budget also authorizes undergraduate tuition increases of up to $200 annually at SUNY and CUNY institutions through academic year 2020-21, and provides Enhanced Tuition Awards of up to $3,000 for students at certain private, nonprofit institutions;
• Extends the 8.82 percent personal income tax rate for high-income taxpayers for two years with projected revenue by the state Division of the Budget (DOB) to increase by more than $680 million this fiscal year and more than $3.3 billion in each of the two following years;
• Includes $2.8 billion in appropriations for economic development purposes in the state Department of Economic Development (DED) and Urban Development Corp. (UDC). The budget requires certain advertising contracts to include outcomes and specific measures to evaluate performance outcomes, and requires DED to annually post online a report on all economic development assistance granted by DED or UDC. A separate provision eliminates annual reporting requirements for the START-UP NY program; and
• Creates the Affordable New York Housing Program, which replaces the expired 421-a tax abatement program and will provide real estate developers in New York City with property tax abatements for up to 35 years based on several factors.

Important information as to the fiscal impact of the Enacted Budget is not yet available. DiNapoli’s office will provide additional analysis after DOB releases its updates to the State’s Financial Plan and Capital Program and Financing Plan.

Read the report, or go to: https://osc.state.ny.us/sites/default/files/reports/documents/pdf/2019-02/budget-enacted-2017-18.pdf

For access to state and local government spending, public authority financial data and information on 130,000 state contracts, visit Open Book New York. The easy-to-use website was created to promote transparency in government and provide taxpayers with better access to financial data.