Despite increasingly challenging fiscal times, and despite having to reduce State revenue projections by nearly $650 million since the Executive Budget was first released, New York City will receive a substantial benefit in our Budget.
Even when discounting the benefits of the Medicaid Cap and the Family Health Plus Takeover (which saves the City $520 million in 2009 alone), Governor Spitzer’s Budget has a net positive
impact on New York City of nearly $671 million in 2009.
In addition to this $671 million positive impact, the Executive Budget advances several key initiatives that will protect the City against revenue losses and other fiscal risks. For example, the Budget would permanently extend the fourth “cent” of the City’s local sales tax which would otherwise expire on June 30, 2008 and result in a loss of $1.15 billion in local tax revenue. ; It would also provide the Financial Control Board, which oversees City finances, with new authority to waive burdensome accounting requirements that the City estimates would otherwise result in an additional $500 million cost in their upcoming fiscal year.
Finally, new economic development initiatives advanced in the Executive Budget will support a range of new projects essential to the City’s efforts to grow its economy and create new jobs.
The Budget Continues to Provide Unprecedented State Support for New York City Schools
While closing a budget gap of over $4.6 billion, the Executive Budget still manages to substantially increase State support for New York City schools to $8.18 billion – an increase of nearly $540 million – in funding for City schools as part of the $1.46 billion, largest-ever, school aid increase proposed by a Governor. This brings the cumulative two-year increase in additional School Aid to New York City to nearly $1.3 billion or over 18 percent. New York State remains on track to meet its planned multi-year commitment to increase State funding for New York City schools.
The Mayor contends that the proposed $540 million school aid increase is some $350 million below the City’s budgeted assumptions. However, the Mayor’s own January Preliminary Budget cuts City aid to schools by more than $500 million over two years ($180 million in the current year and $324 million in CFY 2009). It should also be noted that the $540 million increase recommended by the Governor for NYC is well above the $285 million increase that present law school aid formulas (which reflect the City’s increasing wealth) would provide.
The Mayor argues that the Executive Budget will result in a $1.5 billion reduction in the Department of Education’s capital program. The Executive Budget proposal includes almost $700 million in State building Aid for the City to support annual debt service costs and also continues to provide funding for approximately 50 percent of total school construction costs. Although the Executive Budget proposes conform the payment of State building aid to New York City to the same timing used for the State’s 676 other school districts, the City will receive the same amount of Building Aid reimbursement over the life of its projects. In addition, the Executive Budget continues the Excel program, which will provide $1.8 billion – in addition to State Building Aid – for school construction projects by 2008-09.
The City’s Contention that it Will Somehow “Lose” $747 Million in State Resources is in Actuality a Request for Additional Education Aid above the High Level Already Advanced In the Governor’s Budget
More than two thirds of the $747 million the City is claiming as a “loss”, is actually a request for additional school aid above the nearly $540 million increase already recommended by the Governor. While State fiscal difficulties limit the State’s ability to provide further increases in 2008-09, the Governor remains committed to a record $3.1 billion multi-year investment in New York City schools by 2010-11.
The City’s AIM Funding will be Fully Restored in 2009-10 When it is Needed Most
Despite our own serious State fiscal challenges, the Executive Budget increases the City’s funding under the Aid and Incentives for Municipalities (AIM) program from $20 million in 2007-08 to $164 million in 2008-09. While this is below the traditional $328 million AIM funding level for New York City last provided in 2006-07, a full restoration to $328 million is included in the Governor’s budget in 2009-10 – when the City expects to face significant budget gaps.
Continuing Savings Under the Medicaid Cap/FHP Takeover Far Surpass New Savings Proposals
As part of an overall effort to close the State’s budget gap, the Executive Budget would require New York City to pay an additional $64 million for welfare programs and youth detention services. This is a tiny fraction of the City’s over $43 billion in annual local revenue and is dwarfed by ongoing savings of $520 million under the Medicaid Cap/FHP Takeover. While the City has argued that the MA Cap/FHP Takeover savings does not constitute local aid, there is no doubt that the City’s budget would be $520 million higher in 2009 if the State had not acted to assume this cost. These are, in fact, State dollars that could have been diverted towards the provision of expanded health care, education, transportation or other critical services, rather than help alleviate a financial burden that the City has had for decades. The Medicaid Cap/Family Health Plus Takeover ARE increases in local aid.
Approximately two-thirds of the State’s $46 billion Medicaid costs are in NYC. Medicaid reimburses health care providers – who are large employers in NYC – for the care they render to the City’s most vulnerable residents.