By
SHERRY HALBROOK
Faced with a mid-year budget deficit that has now ballooned to $3 billion, in mid-October, Gov. David Paterson announced spending cuts and other fiscal measures totaling $5 billion over two years.
Although Paterson described the situation as dire and said he personally finds his spending cuts “indescribably painful,” the governor said he was trying to avoid any layoffs of state or local government employees.
State Budget Director Robert Megna reinforced that intention, saying the plan is “designed to minimize any state layoffs.”
The governor also ruled out any new or increased taxes and he refused to tap into the state’s “rainy-day” fund, saying it should be used only to respond to massive catastrophes, such as natural disasters.
Agencies face 11% cuts
State agencies were directed to cut $500 million from what is left of their budget allocations for the current fiscal year. That’s 11 percent of their budgets for non-personal-services spending such as equipment, travel, supplies and materials, and contracts including those for consultant services.
“We’re encouraged the governor is intent on finding other ways to save than by simply cutting state workers,” said PEF President Ken Brynien. “The state can achieve much of the $500 million in current-year agency spending reductions by setting specific agency targets to cut the use of consultants.”
The governor also called for cutting current local assistance aid by $1.3 billion, or approximately 10 percent.
According to information from the state Division of Budget in early October, it has exempted state agency operations budgets from cuts in both the state and federal shares of Medicaid reimbursable funding.
This results in much smaller spending reduction targets for the Office of Mental Health, Office of Mental Retardation and Development Disabilities and the Office of Alcoholism and Substance Abuse Services.
In addition, the spending cut target for the Higher Education Services Corporation contains $11 million in non-personal service cuts and a $25 million cut achieved through a delay in spending associated with the New York Higher Education Loan Program (NYHELPs), because the program is not expected to expend the $50 million appropriated for its operation.
The governor renewed his call for state legislators to pass both a bill creating a new pension Tier 5 for public employees hired in the future, and a bill imposing a cap on annual state budget spending. Paterson’s proposal would limit annual increases in appropriations for state operating funds to the average inflation rate over the previous three years.
Although Paterson steered his cost-saving efforts away from layoffs, PEF members at many state worksites are finding the spending cuts and intra-agency consolidations an increasing challenge. (See related articles, pages 12 and 14.)
More ideas?
The governor had asked state legislators to suggest other ways to close the deficit, but had few replies.
However, state Senate Republicans did make recommendations including one to consolidate 41 various state agencies, departments, divisions, offices and others into 10 mega agencies. They estimated such consolidations could save $266 million.
Paterson has repeatedly called for state agencies to continue offering the $20,000 severance buyout to employees willing to leave state service.
“We welcome the call for flexibility in the governor’s efforts to broaden the severance buyout and voluntary reduction in work schedule (VRWS) programs,” Brynien said.
PEF took the governor up on his invitation to suggest ways the state could save money or improve revenues, and Paterson praised the union for its cooperation.
“I have forwarded to the governor’s staff the names of more than 625 PEF members who have expressed an interest in receiving the state’s $20,000 severance or VRWS information,” Brynien said.
“We also are reviewing the many suggestions members have made to reduce unnecessary state spending and will include those ideas for which we can verify potential state savings in a report we will issue and share with the governor’s office before the end of the year.”
Paterson praised PEF’s responsiveness and cooperation in dealing with the fiscal crisis.
More tax, fraud collections
Some state agencies may find their workload increased by the governor’s plan.
For instance, the state Department of Taxation and Finance (T&F) would be responsible for administering a tax-penalty-forgiveness program the governor hopes will actually boost tax collections by $250 million in the current fiscal year and another $100 million for 2010-11.
T&F would partially forgive accrued penalties and interest on long-outstanding state tax liabilities to encourage individuals to resolve unpaid claims. For assessments between three and six years overdue, penalties would be reduced by 50 percent. For assessments overdue more than six years, penalties would be reduced by 80 percent.
“This initiative would provide much-needed revenue to the state, while helping taxpayers repair their credit histories and avoid costly legal action,” Paterson said.
The governor is asking the Legislature to pass this plan to provide a limited forgiveness period from January 15 to March 15, 2010. Local governments would receive a fiscal benefit of approximately $84 million from their share of these previously uncollected taxes. Recurring savings would accrue due to expanded voluntary compliance efforts in the out-years.
PEF members who help the state investigate and prosecute Medicaid fraud will also see that effort intensified. Paterson’s plan projects recoveries totaling an additional $150 million in the current fiscal year.
State agencies cutting another 11%, but no layoffs
plannedBy
SHERRY HALBROOKFaced with a mid-year budget deficit that has now ballooned to $3 billion, in mid-October, Gov. David Paterson announced spending cuts and other fiscal measures totaling $5 billion over two years.
Although Paterson described the situation as dire and said he personally finds his spending cuts “indescribably painful,” the governor said he was trying to avoid any layoffs of state or local government employees.
State Budget Director Robert Megna reinforced that intention, saying the plan is “designed to minimize any state layoffs.”
The governor also ruled out any new or increased taxes and he refused to tap into the state’s “rainy-day” fund, saying it should be used only to respond to massive catastrophes, such as natural disasters.
Agencies face 11% cuts
State agencies were directed to cut $500 million from what is left of their budget allocations for the current fiscal year. That’s 11 percent of their budgets for non-personal-services spending such as equipment, travel, supplies and materials, and contracts including those for consultant services.
“We’re encouraged the governor is intent on finding other ways to save than by simply cutting state workers,” said PEF President Ken Brynien. “The state can achieve much of the $500 million in current-year agency spending reductions by setting specific agency targets to cut the use of consultants.”
The governor also called for cutting current local assistance aid by $1.3 billion, or approximately 10 percent.
According to information from the state Division of Budget in early October, it has exempted state agency operations budgets from cuts in both the state and federal shares of Medicaid reimbursable funding.
This results in much smaller spending reduction targets for the Office of Mental Health, Office of Mental Retardation and Development Disabilities and the Office of Alcoholism and Substance Abuse Services.
In addition, the spending cut target for the Higher Education Services Corporation contains $11 million in non-personal service cuts and a $25 million cut achieved through a delay in spending associated with the New York Higher Education Loan Program (NYHELPs), because the program is not expected to expend the $50 million appropriated for its operation.
The governor renewed his call for state legislators to pass both a bill creating a new pension Tier 5 for public employees hired in the future, and a bill imposing a cap on annual state budget spending. Paterson’s proposal would limit annual increases in appropriations for state operating funds to the average inflation rate over the previous three years.
Although Paterson steered his cost-saving efforts away from layoffs, PEF members at many state worksites are finding the spending cuts and intra-agency consolidations an increasing challenge. (See related articles, pages 12 and 14.)
More ideas?
The governor had asked state legislators to suggest other ways to close the deficit, but had few replies.
However, state Senate Republicans did make recommendations including one to consolidate 41 various state agencies, departments, divisions, offices and others into 10 mega agencies. They estimated such consolidations could save $266 million.
Paterson has repeatedly called for state agencies to continue offering the $20,000 severance buyout to employees willing to leave state service.
“We welcome the call for flexibility in the governor’s efforts to broaden the severance buyout and voluntary reduction in work schedule (VRWS) programs,” Brynien said.
PEF took the governor up on his invitation to suggest ways the state could save money or improve revenues, and Paterson praised the union for its cooperation.
“I have forwarded to the governor’s staff the names of more than 625 PEF members who have expressed an interest in receiving the state’s $20,000 severance or VRWS information,” Brynien said.
“We also are reviewing the many suggestions members have made to reduce unnecessary state spending and will include those ideas for which we can verify potential state savings in a report we will issue and share with the governor’s office before the end of the year.”
Paterson praised PEF’s responsiveness and cooperation in dealing with the fiscal crisis.
More tax, fraud collections
Some state agencies may find their workload increased by the governor’s plan.
For instance, the state Department of Taxation and Finance (T&F) would be responsible for administering a tax-penalty-forgiveness program the governor hopes will actually boost tax collections by $250 million in the current fiscal year and another $100 million for 2010-11.
T&F would partially forgive accrued penalties and interest on long-outstanding state tax liabilities to encourage individuals to resolve unpaid claims. For assessments between three and six years overdue, penalties would be reduced by 50 percent. For assessments overdue more than six years, penalties would be reduced by 80 percent.
“This initiative would provide much-needed revenue to the state, while helping taxpayers repair their credit histories and avoid costly legal action,” Paterson said.
The governor is asking the Legislature to pass this plan to provide a limited forgiveness period from January 15 to March 15, 2010. Local governments would receive a fiscal benefit of approximately $84 million from their share of these previously uncollected taxes. Recurring savings would accrue due to expanded voluntary compliance efforts in the out-years.
PEF members who help the state investigate and prosecute Medicaid fraud will also see that effort intensified. Paterson’s plan projects recoveries totaling an additional $150 million in the current fiscal year.