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II. New York State Financial Accounting

Guide to Financial Operations

II.3.A Planning

II. New York State Financial Accounting
Guide to Financial Operations

AGENCY BUDGET PREPARATION

Preparation of budget requests varies among agencies reflecting their size, complexity, and internal practice. Typically, budget development begins at the program or sub-departmental level, with staff preparing individual program requests. The head of the agency or its chief fiscal officer may hold internal hearings at which program managers outline their budgetary needs.

Although agencies begin to analyze their budget needs as early as May or June, the formal budget cycle begins when the State Budget Director issues a policy memorandum – the “call letter” – to agency management. The call letter signals the official start of the budget process. It outlines, in general terms, the Governor’s priorities for the coming year, alerts the agency management to expected fiscal constraints, and informs agencies of the schedule for submitting requests to the Division of the Budget (DOB). By early-mid fall, the final budget program package is assembled, guided by the instructions set forth by DOB in their Budget Request Manual; reviewed for consistency with the call letter; and approved by the agency head.

DIVISION OF THE BUDGET REVIEW

In accordance with the schedule outlined in the call letter, agencies typically submit their budget requests to DOB in early-to-mid fall, with copies provided to the legislative fiscal committees. Examination units within DOB then analyze the agency requests for those which they have responsibility. Examiners may seek additional information from the agencies and hold informal hearings or meetings with agency management to clarify requests and seek a more precise definition of agency priorities. By the end of October, examination units have also usually determined funding requirements to continue agency programs at current levels in the new fiscal year.

In November, the State Budget Director conducts constitutionally-authorized “formal” budget hearings, giving agency management an opportunity to present and discuss their budget requests and giving the staff of DOB and the Governor’s office an opportunity to raise critical questions on program, policy, and priorities. As provided in the State Constitution, representatives of the Legislature also participate in the hearings.

Pursuant to the State Finance Law, and to help expedite the budget process, Legislative and Executive staffs meet in early November to discuss the economic outlook, revenue forecasts, projected spending, the impact of state and federal statutes, and any other relevant issues. Through late November, DOB’s budget examiners transform agency requests into preliminary budget and personnel recommendations which are reviewed in detail with the State Budget Director.

The staff also prepares the appropriation bills and any other legislation required to carry out these recommendations. Concurrently, DOB Fiscal Planning is reassessing economic projections, investigating possible changes in the revenue structure, analyzing trends in federal funding, and preparing the financial plan that describes and forecasts the State’s fiscal condition. The financial plan is prepared both on a cash basis and according to GAAP.

By early December, DOB will normally have completed its preliminary recommendations on both receipts and disbursements and presented them to the Governor and the Governor’s staff. DOB then prepares the tables and the narrative (the “budget story”) that accompany each agency budget and the descriptions and forecasts of individual revenue sources.

GOVERNOR’S REVIEW (DECEMBER/JANUARY)

The Governor and Executive Chamber staff are kept up-to-date on changing economic and revenue forecasts and confirm that executive program priorities are accurately reflected in the budget. Based on the preliminary recommendations and the most current reading of the economic and fiscal environment, the final Executive Budget recommendations are formulated in a series of meetings between Division of the Budget staff and the Governor. These sessions focus on major fiscal and policy issues and may lead to significant revisions in agency budgets.

LEGISLATIVE ACTION

As required by the State Constitution, by mid-January – or following a gubernatorial election year, by February 1 – the Governor submits the Executive Budget to the Legislature along with the related appropriation, revenue, and other budget bills. The State’s Five-Year Financial Plan, Five-Year Capital Program and Financing Plan, and financial information supporting the Executive Budget are also submitted with the Executive Budget. The Executive Budget documents are available on the DOB website at: http://www.budget.ny.gov/.

The Legislature, primarily through its Senate Finance and Assembly Ways and Means fiscal committees, analyzes the executive spending proposals and revenue estimates, holds public hearings on major programs, and seeks further information from DOB and other state agencies. Following this review, the Legislature acts on the appropriation bills submitted with the Executive Budget to reflect its decisions.

Under 2007 budget reform legislation, the Legislature is required to follow a Conference Committee process to organize its deliberations, set priorities, and reach agreement on a budget between the two houses. In addition, the State Finance Law requires that the Executive and Legislature convene a consensus economic and revenue forecasting conference to issue a consensus report on tax, lottery, and miscellaneous receipts on or before March 1. If the parties fail to reach consensus, the State Comptroller is required to issue a revenue forecast by March 5.

Based on their separate and joint deliberations, the two houses reach agreement on spending and revenue recommendations which are reflected in amended versions of the Governor’s proposed appropriation bills, and related legislation, and approved by both houses. These amended bills are available on the Governor’s website (http://www.governor.ny.gov/).

The appropriation bills, except for those items which were added by the Legislature and the appropriations for the Legislature and Judiciary, become law without further action by the Governor. The Governor must approve or disapprove all or parts of the appropriation bills covering the Legislature and Judiciary and may use the line item veto to disapprove items added by the Legislature while approving the remainder of the bill. As provided in the State Constitution, the Legislature may override the Governor’s veto by a vote of two-thirds of the members of each house. The appropriation bills legally authorize the expenditure of funds during the new fiscal year.

Prior to passage of the appropriation bills, the Legislature must issue a summary of the proposed changes to the budget to its members. DOB is also required to prepare a report that summarizes the impact of the Legislature’s actions on the State’s multi-year Financial Plan. Once the Governor completes the review of the Legislature’s actions, DOB then issues a comprehensive Enacted Budget Report that contains the State’s official financial plan projections for the current and successive fiscal years. The Legislature must also issue a report describing appropriation changes and the effect of the enacted budget on state agency employment levels.

Guide to Financial Operations

REV. 10/13/2023