Governor Andrew Cuomo plans to piggyback on last year’s success in closing a $10 billion budget deficit while holding the line on taxes by reducing estimated spending increases to state agencies and local municipalities, state officials said on Thursday.
New York Secretary of State Cesar Perales presented Mr. Cuomo’s proposed budget Thursday afternoon at the Suffolk County Community College Culinary Arts Center in Riverhead. The proposed $132.5 billion spending plan, called the “New NY Transformation Plan,” includes plans to close a $2 billion state budget deficit.
Mr. Perales said this will be accomplished by eliminating “automatic inflators,” spending increases the state has granted to state agencies and local municipalities over the past few years.
While state agencies have been receiving a 13 percent increase in spending, Mr. Perales said their budget will remain flat this year in order to create a savings of $1.3 billion. In addition, the usual 3.9 percent spending increase given to localities will be reduced to 2.6 percent next year. The two moves will combine to close the $2 billion budget gap, Mr. Perales said.
“We can’t spend any more money,” he said. “We have to learn to live within our budget.”
But, in some cases, the governor is proposing to spend more money in certain areas this year in order to help improve the state’s economy.
One piece to Mr. Cuomo’s spending plan is to invest $723 million on infrastructure projects. The state will be eligible for a $1.7 billion matching grant from the federal government and Mr. Cuomo also anticipates the state could receive $3 billion from private investors. Some of the infrastructure projects include improving over 100 bridges and 2,000 miles of roads.
“When we do this, we are creating jobs,” Mr. Perales said. “Think about when people in the construction business have more money in their pocket and spend it in our economy.”
A new tax revenue generating project the governor is proposing is the construction of a convention center and gambling casino at the Aqueduct Racetrack in Queens. While the state won’t fund the project, Mr. Cuomo is looking to secure $2 billion from private investors to build it. Since casino gambling is currently illegal in the state, Mr. Cuomo is also drafting legislation that would allow the state to control and manage casino gambling.
“Right now, people are gambling everywhere and we don’t get very much money from it,” Mr. Perales said. “This will generate tax revenue for the people of our state.”
Another element in the proposed spending plan includes helping local municipalities deal with rising Medicaid costs.
“We want to limit the growth so local governments won’t have to pay any more money than they do now,” he said. “The governor has proposed taking up all of the increase in Medicaid, so, if local government is paying $10 million, then they know it’s going to stay at $10 million every year and the state will pick up the increase.”
Mr. Cuomo also plans to revamp the state pension system by establishing a new and “less generous” pension package called Tier VI, which would only affect new state employees.
This pension system, which resembles 401k retirement plans, involves workers contributing to their pensions and the government matching them.
In addition to restructuring the state pension system, Mr. Perales said the governor plans to reorganize the way state aid is given to schools.
“We are number one in spending per student in the country,” he said. “We’re 38th in the graduation rate … It’s not just money that determines if we’re going to have an effective school system.”
In order for the state to receive a $700 million federal “Race to the Top” grant it won in 2010, a teacher evaluation program must be implemented. Mr. Perales said if there is no evaluation system fully implement by school districts before Jan. 17, 2013, then the state won’t give those school districts aid.
First District Assemblyman Dan Losquadro, who attended the budget presentation, said he believes the governor has done a good job in crafting a spending plan that’s fair in tough fiscal times. Mr. Losquadro said he appreciated the budget planning process, which he said involved the legislative and executive branches of state government working together.
“Having been in Albany for just over a year now, I know first hand how much we’ve been able to accomplish as a Legislative body in partner with the governor,” he said. “This administration has truly accepted the reality of the economic situation the state faces. That is not an easy thing to do and these aren’t easy choices to make.”