Gov. Eliot Spitzer proposed a $124.3 billion budget to the Legislature today that would hold spending growth to about 5 percent, the lowest increase since the mid-1990s.
The proposal would close a $4.4 billion deficit and address declining growth in revenues caused by a slowing economy. Spitzer’s address came on a day Wall Street and world markets were taking hard hits, reflecting persistent economic problems and an uncertain future.
“These challenging economic times require us to make tough, but necessary choices and set clear priorities for state spending,” Spitzer said in a prepared statement before his afternoon budget address.
State budgetFor answers to frequently asked questions about Gov. Eliot Spitzer's state budget proposal, click here. To view a detailed briefing book on the plan, click here (Adobe Reader required to view file). To view other budget documents, click here.
When so-called “off-budget” capital spending and borrowing is included, the total budget is $126.5 billion.
Spitzer, who campaigned as a fiscal conservative, would exact a 2.5 percent cut in the growth of funding for state agencies, the State University of New York and the City University of New York. The reduction isn’t a true cut, but a lower rate of increase. Spitzer would also cut costs by closing facilities — such as underused prisons — and lowering energy costs and other expenses while redefining “little cigars” and malt liquor to generate more tax revenue. He won’t cut the state work force or propose a hiring freeze.
In his 2008-09 budget proposal, the Democrat also proposed $980 million in health care savings by encouraging more preventive care and primary care through the state reimbursement system, and reducing reimbursement for avoidable treatment now done in hospital emergency rooms.
In addition to $2.3 billion in proposed savings, the budget proposes a $1.46 billion increase in school aid to more than $20 billion; providing health insurance to 400,000 children; and a $1 billion economic development fund to revive the upstate economy.
School districts statewide will receive an average increase of 7.5 percent, but New York City schools and other districts will get less than they expected. Long Island schools, most represented by members of the Senate’s Republican majority, will see an annual increase in aid of about 8 percent, less than the 12 percent they expected.
The school aid and reduced spending proposals are expected to set up fights with the Senate and the Democrat-controlled Assembly.
Spitzer’s budget would include $81.8 billion in state spending alone, before federal aid is included. That’s 5 percent more than the current budget and about twice the rate of inflation. But the proposed growth is about half the rate approved by the Legislature in recent years’ budgets.
Among the cuts would be the state’s subsidy to lower local property taxes. Spitzer and the Legislature had promised to provide $1.8 billion in subsidies to schools, local governments and in rebate checks to taxpayers. But on Tuesday, Spitzer proposed $1.25 billion, with 40 percent more directed to senior citizens. The state now subsidizes local school and government taxes with about $5 billion a year, but Spitzer is calling for a cap on local taxes because he’s dissatisfied with local efforts to curb spending.
The budget is also expected to raise $304.5 million by increasing 46 fees, including those on insurance policies and license plates. And Spitzer proposed $434 million in “loophole closers” that end what the administration considers unintended ways for businesses to avoid some taxes. Business groups and Senate Republican leader Joseph Bruno calls that a tax increase, despite pledges by Spitzer not to increase taxes.
Spitzer would also use $1.1 billion in “one-shot” revenues that won’t repeat in 2009-2010 and is counting on $1.1 billion in recurring revenues resulting from proposed efficiencies and other actions to reduce costs and increase non-tax revenues.
In most years, the Legislature adds about $1 billion to the governor’s proposal. A final budget is due by the start of the next fiscal year, on April 1.
Spitzer had promised his proposal would increase spending by no more than 5.3 percent, which the budget crafters say matches the long-term growth in personal income and a sustainable rate of spending growth. Many in and outside government doubted he would deliver on that promise. The current budget adopted April 1, 2007, increased spending by about 8 percent, but spending cuts during the year will lower that final figure, according to Spitzer administration officials.
The state budget has gotten less attention in recent years as the Legislature and governor have been able to make, or nearly make, the April 1 deadline after years of late budgets. But the budget, for all its arcane language and daunting detail, affects most New Yorkers in the quality and cost of their children’s schools and colleges, the health of private sector business, the quality of heath care, the safety of neighborhoods, and the quality of roads and subways.