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State budget eliminates $10 billion deficit, includes sweeping reforms and efficiencies
Governor Andrew M. Cuomo today announced the passage of the 2011-2012 budget that
eliminates a $10 billion deficit. The budget includes historic reforms that redesign state
government, create efficiencies through consolidation, cap spending increases for education and
Medicaid, and transform the future budgeting process.
The approximately $132.5 billion budget reduces spending overall by more than 2 percent from
the previous year, eliminates 3,700 prison beds, establishes Regional Economic Development
Councils, brings performance funding to education, redesigns Medicaid, and caps next year's
education and Medicaid spending.
This budget reaches its fiscal goals with no new taxes and no borrowing, and will also cut the
2011-12 projected budget deficit from $15 billion to about $2 billion. Combined four-year gaps
are reduced from $63 billion to less than $10 billion.
Based on preliminary estimates, all funds spending will total approximately $132.5 billion, a
decrease of $3.6 billion from the previous year. State operating spending will total $88 billion,
an increase of $1.2 billion or 1.4 percent. The budget closes the current gap with $9.3 billion in
spending reductions or nearly 90 percent of the plan.
"Tonight the Legislature not only passed an on-time budget, but a historic and transformational
budget for the people of the state of New York," Governor Cuomo said. "This bi-partisan and bi-
cameral cooperation will give New Yorkers the good budget they deserve. It was an invaluable
public service for the state government to 'function' so well at this difficult time and I especially
applaud the leadership of Senate Majority Leader Dean Skelos and Assembly Speaker Sheldon
Silver for this demonstration of competence and performance in state government."
Senate Majority Leader Dean G. Skelos said, "This budget is a responsible budget that meets our
goals of cutting spending, reducing taxes, and empowering the private sector to create jobs. By
passing this budget on-time, we have shown that Albany can be functional and accountable once
again. I congratulate Speaker Silver, and all of the members of the Senate and Assembly, and
I thank our Governor for providing the leadership to get a sound bipartisan budget in place for
New York."
Assembly Speaker Sheldon Silver said, "We are confident that this will be the first of many
agreements the Legislature will reach in concert with the Governor; agreements that will restore
New Yorkers' faith in our government, make it more efficient and more productive, and help
to make our great state a better and more prosperous place in which to live, to work, and to do
business. The final product, the 2011/2012 state budget, is a sobering one. Difficult and painful
decisions had to be made to address the fiscal reality facing our state. The Assembly Majority,
working with the Governor, was able to achieve some critical restorations that will soften the
cuts affecting working families, students, senior citizens and or most vulnerable populations."
Senate Democratic Leader John L. Sampson said, "With the passage of this budget, Governor
Cuomo has taken us through the crossroads and closer to a government that works better and
costs less for taxpayers. I believe this budget sets the table for the kind of state government
Middle Class families deserve. I commend Governor Cuomo for his leadership and for his
commitment to restoring New York's standing as the Empire State."
Assembly Minority Leader Brian M. Kolb said, "This is not a perfect budget, but a realistic one.
It involves tough choices that begin a long overdue – and painful – process of reducing spending,
rightsizing state government and reforming Albany's culture of tax-and-spend. The budget
contains important victories including defeat of a 'Success Tax' extension, closure of the state's
$10 billion budget deficit, enactment of Power for Jobs, decreased spending, along with no new
borrowing or tax increases, all of which are priorities our Assembly Minority Conference has
long championed."
The budget reflects significant initiatives proposed by Governor Cuomo to transform the
state budget and control spending growth while redesigning programs in every area of state
government.
The budget closes a $10 billion shortfall and puts in place mechanisms to control future
spending. The budget puts the state on a sustainable path that will lead to an 85 percentreduction
in projected out-year gaps.
The 2011-2012 state budget contains no new taxes, includes 2-year appropriations for education
and Medicaid, caps the growth of both education and Medicaid spending, closes unneeded and
outdated state-run facilities and includes no new funding for member items.
The budget realigns education financing to meet New York's fiscal reality and provide
sustainable and predictable funding while reaffirming the commitment to improve educational
outcomes in the classroom. Prior to this budget, education spending was projected to grow at an
unaffordable rate of 13 percent for the 2011-12 school year.
The budget includes school aid of $19.6 billion for the 2011-12 school year. This reflects a
reduction of $1.3 billion or 6.1 percent from 2010-11 including state operating funds and $608
million of federal Jobs Bill funding. This reduction represents an average of 2.5 percent of
school districts' total spending.
Without consideration of the Federal Jobs bill funding given to districts last year, the year-to-
year reduction in state funding is $698 million or 3.5 percent. This represents 1.3 percent of
school districts' total spending.
The budget provides a two-year appropriation and reflects permanent law changes to limit future
school aid increases to growth in the New York state personal income rate. This action will
help reduce the state's large out-year gap between spending and revenues. Even after this year's
reduction, New York's schools will continue to have among the highest spending per pupil in the
nation.
The budget creates new education performance and efficiency grants with $500 million in total
appropriations for districts that demonstrate significant student performance improvements or
that undertake long-term structural changes to reduce costs and improve efficiency.
The budget continues state support for summer school special education programs at current
levels, and maintains the commitment to children who attend schools for the blind and deaf
(4201 schools).
Total Medicaid spending including federal, state and local spending of $52.6 billion represents
a decrease of $337 million, or minus 1 percent. Future growth in Medicaid will be limited to the
10-year rolling average of the Medical CPI, currently 4 percent. As with education, the budget
includes a two-year appropriation.
The budget includes a cap of $15.3 billion on Department of Health Medicaid state expenditures,
which represent the largest and one of the fastest growing component of state spending.
The budget process brought together health care providers, labor, government and other
Medicaid stakeholders to form Governor Cuomo's Medicaid Redesign Team (MRT). Tasked
with identifying ways to provide critical health care services at lower costs and control
unsustainable growth, the MRT recommended a series of proposals to fundamentally restructure
and reform New York extensive Medicaid program.
Overall, the budget implements a majority of the MRT recommendations. The budget reflects
$2.3 billion in spending reductions supplemented by $425 million in lower-than-expected
expenditures to achieve the Governor's original savings target of $2.85 billion.
Savings will be assured by an overall spending cap, enabling the Commissioner of Health to
make additional savings actions during the year, if necessary.
The state will provide $9.4 billion for human services programs in 2011-12. The budget reforms
the state's juvenile justice system to encourage greater use of community-based alternatives,
while downsizing the state juvenile facilities system by more than 30 percent and investing in
enhanced services for juveniles that remain in OCFS custody. While continuing to ensure that
core services are available for needy populations, the budget recalibrates spending in all areas of
social services including housing, youth delinquency prevention and other services.
The budget also extends the low-income housing tax credit by $4 million in aggregate credit
awards to taxpayers that develop qualifying housing projects for low-income New Yorkers. The
total amount of credits to be awarded becomes $40 million.
The budget supports public protection at lower cost though right-sizing initiatives that reduce
excess prison capacity, improve the management of offenders as they move from prison into
civilian life, and reduce bureaucracy.
To realign the prison system's capacity with its significantly reduced offender population and
achieve real and recurring savings for state taxpayers, Governor Cuomo, in consultation with the
Legislature, will reduce the number of beds in medium and minimum security facilities by 3,700.
Economic development capital funding of $50 million will be made available to communities
impacted by prison closures or consolidations, in addition to tax credits to spur new business.
The budget enables SUNY and CUNY to streamline procurement processes to allow them to
generate efficiencies.
Other budget actions include funding for Community College at $2,122 per full-time equivalent,
and funding for SUNY hospitals at $60 million.
The budget supports the adopted two-year DOT transportation capital plan that balances core
infrastructure preservation with fiscal necessity and continues prior year funding levels for the
core transportation programs supported by the Dedicated Highway and Bridge Trust Fund,
including:
● · $501 million of Dedicated Funding for State roads and bridge construction (part of a
$1.8 billion construction program)
● · $363.1 million for the Consolidated Highway Improvement Program (CHIPS)
● · $39.7 million for the Marchiselli program for local governments
· $16.9 million for Amtrak services and additional rail capital investments
Transportation spending from all sources will total $8.5 billion under this budget.
The budget reduces Aid and Incentives to Municipalities (AIM) to all cities, towns and villages
by 2 percent from current year levels, far less than the 10 percent reductions to the state's
operations.