DiNapoli also raised concerns about transparency and
accountability, including proposed statutory changes that could distort the
reporting of revenue and spending in the state’s financial statements and allow
the Executive to spend beyond the amounts approved by the legislature. Other
proposals would weaken oversight.
“New York’s economy is expanding but the state is still
facing a serious budget gap. It’s imperative the Medicaid Redesign Team seek
broad input on the root causes and options for addressing rising Medicaid
costs,” DiNapoli said. “There is limited time for deliberations before the
budget deadline. The state needs to identify long-term solutions for the
millions of New Yorkers that rely on Medicaid and the taxpayers who will be
footing the bill. Failure to effectively solve the Medicaid problem may result
in harmful impacts in other areas of the budget this year and going forward.”
The MRT is charged with identifying savings that can lead to
financial sustainability of the program, including meeting the goal of having
“zero impact on local governments and zero impact on beneficiaries.” The budget
also proposes linking state funding of the local share of certain Medicaid
costs to the property tax cap. It is unclear how the budget proposals or any
recommendations by the MRT will achieve these potentially conflicting goals.
The Executive budget assumes a second consecutive deferral
across fiscal years of $1.7 billion in Medicaid costs. DiNapoli said the
deferrals are troubling reminders of historical practices that resulted in a
large accumulated structural deficit.
DiNapoli’s analysis also raised concerns about the Medicaid
Global Cap. The cap was established in 2011 to promote cost containment
efforts, but actions since then have moved various elements of Medicaid
spending into or out of the cap. The shifting of the $1.7 billion into SFY
2019-2020, an effort to avoid exceeding the cap, contributed to the ongoing
delay in addressing the program’s increasing fiscal challenges.
The financial plan projects SFY 2020-21 total spending at
$178 billion, up 1.2 percent. Spending from State Operating Funds is estimated
to increase by 1.9 percent. DiNapoli said after adjusting for prepayments and
other identifiable budgetary actions, the increase is estimated at 3.1 percent.
The Comptroller urged the Executive to remove language in
the 30-day amendment period that seeks to require the comptroller’s cash-basis
reports to classify receipts and disbursements in accordance with provisions established
by budget legislation. This proposal raises a potential conflict with Article
V, Section 1 of the State Constitution, which grants the Comptroller the power
to determine accounting methods, and is troubling with respect to transparency
and accuracy in financial reporting. Related to this issue, proposed new
language would broadly authorize netting of certain revenue against
disbursements. Among other concerns, this would cloud the picture of true
spending growth and potentially results in significant expenditures beyond the
appropriations approved by the legislature.
DiNapoli called the Division of Budget’s plan to deposit
$428 million into the Rainy Day Reserve Fund at the end of the current fiscal
year a positive step. However, the report noted New York’s rainy day reserves
are less than half their authorized levels and no additional deposits are
planned. The Comptroller has advanced a proposal to provide a disciplined,
consistent approach to building these reserves. This would help ensure that more
robust reserves will be available in the event an economic downturn or
catastrophic event merits their use.
DiNapoli’s report also finds:
-School Aid would increase by $826 million, or 3 percent, to
$28.5 billion in the coming school year. This increase is less than the 4
percent growth allowable under a statutory limit related to personal income in
the state.
-Funding for most local governments aid programs would be
held flat, continuing a trend in recent years of decreases or level funding in
such areas. These include Aid and Incentives for Municipalities, also known as
AIM, the largest unrestricted aid program for local governments, as well as
major funding for streets, highways and bridges.
-Total capital spending over the current and next four years
is projected at $66.7 billion, little changed from the estimate based on the
SFY 2019-20 Enacted Budget. Projected transportation spending is increased $3.3
billion, partly offset by certain unspecified reductions from the previous
plan. The budget would appropriate $3 billion for the Metropolitan
Transportation Authority’s 2020-2024 capital program, although funding sources
are not identified.
-The budget recommends presenting a $3 billion Restore
Mother Nature General Obligation (GO) Bond Act to the voters that, if approved,
would provide funding to restore habitats, reduce flood risks, improve water
quality, protect open space, expand the use of renewable energy and support
other environmental projects. DiNapoli said that having voters weigh in on new state
debt is a sound approach.
-The budget would authorize an additional $10.3 billion in
new state-supported debt, all to be issued by public authorities except the
proposed $3 billion Restore Mother Nature GO Bond Act. Outstanding
state-supported debt is projected to rise 20.3 percent, and annual debt service
48.4 percent, by SFY 2024-25.
-The Executive anticipates elimination of 2,500 state prison
beds in the coming fiscal year, and a $181.5 million reduction in spending for
the Department of Corrections and Community Supervision, partly reflecting
budget language that would authorize additional prison closures.