Civil Service Enforcement/Research Department
TO: Executive Board Members and Statewide Labor/Management Chairs
FROM: Thomas Cetrino, Martin O’Connor, Susan Mitnick, Stephen Connolly,
Michael Marinello, and Amy Sisson
DATE: May 24, 2002
RE: SFY 2002-03 Enacted Budget – Revised Summary of Major Provisions
Last week we forwarded you a memo detailing the major changes contained in the budget enacted by the Legislature. Since we only had a day and a half to review the budget material, the May 17, 2002 memo only summarized the major changes in the largest state agencies that were contained in the enacted state operations budget. This memo replaces that memo and documents all the major changes made in the enacted state operations budget from the Executive Budget as amended by the Governor in his 30-day amendments. It also corrects minor errors in the May 17, 2002 memo. We have also attached to this memo a guide to help you better understand this analysis as well as the analysis contained in detailed agency spreadsheets which are mailed separately to the Executive Board members and Statewide Labor Management Chairs that represent those agencies. This memo and all agency spreadsheets are also available on PEF’s website by going to the Budgets link and looking under 2002 Budget Information. When the Report of the Fiscal Committees on the Executive Budget, also known as the "Green Book", is jointly issued by the Senate Finance Committee and the Assembly Ways and Means Committee, we will forward additional information concerning legislative intent in regard to the changes the Legislature made to the Executive Budget.
General Overview
The Assembly and Senate passed budget legislation that would enact a budget for SFY 2002-03. The total spending authorized by this budget totals $89.6 billion or $1 billion more than the Governor’s proposed Executive Budget.
In general, the enacted budget legislation does not significantly cut the Executive Budget’s recommended spending for “personal service” and “non-personal service” in any State agency’s budget. This means that most agencies will generally operate on the funds the Governor’s budget proposal provided them in January and have operated on in the continuing appropriation bills.
State’s revenues are at least between $1 and $1.3 billion short of the Executive Budget’s estimates and the State will lose at least an additional $220 to $300 million due to the recently enacted federal “bonus depreciation” tax break which is automatically enacted into New York State’s tax law. This tax break gives corporations a reduction in their federal and State corporate franchise tax for investing in new equipment no matter where those investments are made (including foreign investments). The revenue loss to the State from this tax cut could reach $450 million in SFY 2002-03 and $270 million in SFY 2003-04. New York City would also lose substantial revenue due to this tax cut.
These revenue losses, along with the addition of $1 billion in spending, required the Governor and the Legislature to find new sources of revenue that could generate about $2.6 billion in SFY 2002-03. The budget raises this additional revenue as follows:
Ø Abandoned property sales – $300 million.
Ø Expand cigarette tax to cigars and chewing tobacco – $27 million.
Ø New York City cigarette tax increase – According to press reports this will generate $250 million, $125 million of which will go to the State. This legislation has not yet been enacted by the Legislature.
Ø Tax amnesty – $175 million.
Ø Increased cellular phone surcharges – $38 million.
Ø Sweeps of cash balances in State fund accounts – $300 million.
Ø Use of State reserves in addition to the $1.1 billion in reserves used in the Executive Budget - $300 million (this is an estimate based on press accounts). It is unclear whether the $150 million allocated from State mortgage agency accounts is part of this $300 million, is part of the $300 million in “sweeps” discussed in the previous bullet, or is in addition to these funds.
Ø Borrow from the Environmental Protection Fund – $235 million.
Ø Borrow from the Health Care Reform Act cash balances – $200 million.
Ø Early Retirement Incentive – $55 million.
Overall the budget raises $86 million in fees, but we believe that only the cellular phone surcharge increase is the only fee increase that was not contained in the proposed Executive budget.
It should be noted that the proposed Executive Budget already allocated $885 million of the TANF Reserve fund but the Legislature has redirected $380 million of these funds to fully fund the Tuition Assistance program. The estimates of “one-shot” or non-reoccurring revenues used to balance the SFY 2002-03 budget range from $2 billion to $3.1 billion in revenue. We estimate that the one-shot revenues added by the Legislature to the Executive Budget, which we estimate to be $1.565 billion, will bring the “budget gap” for SFY 2003-04 to at least $4.3 billion ($2.8 billion gap in SFY 2002-03 Executive Budget plus $1.565 billion in new one-shot revenues). The State will only have $710 million left in its reserves at the end of this fiscal year. The budget gap for SFY 2003-04 can grow if the State does not receive the federal funding it anticipates or if State revenues continue to come in below estimates.
The enacted budget also adds $900 million in debt including $300 million of capital construction programs that were originally funded with cash appropriations in the Executive Budget. The remaining $600 million in borrowing is for seed money for high-tech industries and other economic development projects. The budget also allows the State to issue variable rate debt which should save the State $225 million in SFY 2002-03; this savings was already anticipated in the Executive Budget.
The enacted budget also authorizes more than $1 billion in new tax cuts for individuals and businesses during the next three years, including the bonus depreciation tax cut discussed above. The other new tax cuts include creation of ten new Empire Zones, a new STAR COLA for seniors, a tax cut for families of 9-11 victims, sales-tax free weekends in Lower Manhattan, an enhancement of a low-income housing tax credit, and renewal of an investment tax credit for the financial services sector.
Early Retirement (S7431/A11420)
The Legislature enacted and the Governor agreed to an Early Retirement law which includes provisions that allow, during an undetermined 90-day window, State employees with at least 25 years of service and who are at least 55 years old to retire without a reduction in their retirement allowance. The Director of State Operations will determine when the 90-day window will occur. The Director of State Operations may deny participation to positions that are deemed to be “critical” to public health or safety. This is expected to be applied narrowly and there is a provision allowing for a challenge in court if an individual is denied for reasons that are arbitrary and capricious. The legislation also includes the Governor’s targeted incentive which has the same provisions as the previous early retirement incentives offered during the Pataki Administration except the law would no longer require that State agencies abolish the positions targeted for the early retirement incentive. The Director of State Operations has recently indicated that the state will reserve the right to abolish positions vacated by employees who receive the targeted incentive. It appears this will be addressed on a case-by-case basis. More detail about the new early retirement law is contained in a separate memo prepared by the Legislative Department and in a question and answer memo that will be soon distributed by PEF Online and posted on PEF’s Website. The Division of the Budget has also prepared its own memo on the legislation which is available on the Web (http:// www.state.ny.us/dob/pubs/supporting/retireIncentive.html).
Action on Other PEF Budget Priorities
The enacted SFY2002-03 budget:
Ø Restored the Youth Opportunity Program in OMRDD at a cost of $1.3 million.
Ø Restored 30 shared staff positions in OMH at a cost of $1.3 million.
Ø Rejected the Governor’s proposal to transfer the State Library, State Archives, and State Museum to a public benefit corporation.
Ø Accepted the Executive’s proposal to consolidate the Office of Higher Education and the Office of Professions but rejected his proposal to eliminate this office’s academic reviews of college and university programs. The enacted budget restores $1.2 million for this purpose.
This section highlights the major changes proposed in the Executive Budget for all State agencies. Executive Board members and Statewide Labor-Management Chairs have been mailed a more detailed analysis for these agencies. Agencies that are not mentioned in this analysis have not had any major changes made to their State Operations budget as proposed in the Executive Budget as amended by the Governor’s 30-day amendments.
HEALTH, MENTAL HYGIENE AND ENVIRONMENTAL CONSERVATION (S6254B/A9754B & S6257-B/A9759B)
The budget enacted by the Legislature makes the following changes to the Executive Budget:
• Increases State Operations funding by a total of $2,072,000.
• Provides $1.3 million to the Adult Services Program to fully restore the Shared Staff program (a minimum of 30 county shared staff positions)
• Adds $250,000 to the Research in Mental Illness Program for the New York State Psychiatric Institute.
• Adds $500,000 to the Research in Mental Illness Program for the Nathan Kline Institute.
• Provides additional Aid to Localities funding for a 3% COLA for community residences, residential care centers and licensed single room occupancy programs for the recruitment and retention of staff ($7.9 million in the Adult Services Program, $1.4 million in the Children and Youth Services Program, and $3 million in the Reinvestment Program).
• Provides additional Aid to Localities funding for a 10% increase for Medicaid payments to Article 31 licensed outpatient programs ($2 million in the Adult Services Program, $700,000 in the Children and Youth Program).
Office of Mental Retardation and Developmental Disabilities
The budget enacted by the Legislature makes the following changes to the Executive Budget:
• Increases State Operations funding by $1.3 million, reflecting full restoration of the Youth Opportunity Program in the Central Coordination and Support Program.
• Adds $3 million in Aid to Localities in the Community Services Program for a 3% COLA for voluntary agencies.
The budget enacted by the Legislature makes the following changes to the Executive Budget:
• Increases State Operations funding by $57,000, reflecting an increase in non-personal services in the Special Revenue/Other Occupational Health Clinics Account in the Center for Environmental Health Program.
• There were no additional funds in the Health Care Standards and Surveillance program to restore the 11 nursing home surveillance positions eliminated in the proposed budget.
• Provides a $4 million Aid to Localities appropriation in the Office of Continuing Care for an adult care facility quality incentive payment program.
The budget enacted by the Legislature makes the following changes to the Executive Budget:
• An All Funds increase of $30,142,000 in the state operations budget. However, this is not a true increase over the prior fiscal year because it takes into account the $11 million dollar deficiency appropriation for the SRO-Site Investigation and Construction Account necessary to accommodate the General Fund cash transfer provided in the 2001-02 enacted budget to fund the current year staff. In addition, it provides an additional $28 million SRO funding in the same account to bring the appropriation to the same level as the prior fiscal year (this includes the $11 million deficiency appropriation). This appears to repudiate the Executive Budget proposal to shift the 277 positions funded in this account to Capital Projects Funds-Federal.
• The only true increase to the proposed Executive Budget is found in a $2,142,000 million dollar increase to the Environmental Enforcement Program. This increase is a maintenance undistributed appropriation associated with the implementation of the NYC watershed agreement.
• Newspaper reports indicate that the budget includes $11 million to keep paying Superfund staff for another year. This money cannot be accounted for in the appropriation bill unless the reports are referring to the Site Investigation and Construction Funding discussed in the first bulleted paragraph above.
• Approves increases for certification and licensing fees associated with pesticides and for various hunting and fishing licenses which should fully fund the Fish, Wildlife, and Marine Program.
Department of Agricultural and Markets
The budget enacted by the Legislature makes the following changes to the Executive Budget:
• Adds $1.6 million to the Agricultural Business Services Program. $1 million is a Special Revenue Federal appropriation for non-personal services in the Food and Nutrition Services account, $400,000 is a maintenance undistributed appropriation for services and expenses related to the licensing and inspection of pet dealers, and $200,000 is a new Special Revenue Other appropriation for Pet Dealer Licensing. It is unclear whether any of the additional “pet licensing” appropriations will fund additional positions.
Office of Alcohol and Substance Abuse Services
The budget enacted by the Legislature makes the following changes to the Executive Budget:
• There were no changes to the State Operations portion of the OASAS budget.
• Aid to Localities funding was increased by $3.4 million ($2.1 million in the Community Treatment Services Program and $855,000 in the Prevention and Support Program) to reflect a 3% COLA to voluntary providers for recruitment and retention of staff.
Office of Parks, Recreation and Historic Preservation
The budget enacted by the Legislature makes the following changes to the Executive Budget:
• A decrease of $650,000 in the Park Operations Program. The entire decrease is a non-personal services reduction in the Special Revenue Other (SRO) I Love N.Y. Water account.
EDUCATION, LABOR AND FAMILY ASSISTANCE (S6255B/A9755B & S6258B/A9760B)
Office of Children and Family Services
The budget enacted by the Legislature makes the following changes to the Executive Budget:
• Reduces by $500,000 the nonpersonal services appropriation in the Administration program.
• Increases by $500,000 the Maintenance Undistributed appropriation in the Administration program. This money is for the State Commission on Quality of Foster Care. This is a new Commission set up in the Article VII bill (see Part C S6258-B/A9760-B). The Commission will be responsible for investigating complaints about congregate care foster programs. The language is unclear as to the Civil Service status of employees of the Commission.
• The Office is charged with developing a methodology to assess the need for new juvenile detention facility capacity (see Part C S6258-B/A9760-B).
• Creates the Children and Family Services Quality Enhancement Fund as part of the Family and Children Services program’s local assistance budget (it is funded at $2 million, see Part C S6258-B/A9760-B). This fund can be used for staff recruitment, retention and training activities, research projects; and targeted services expansion and/or demonstration projects to test innovative models for service delivery including such areas as health, mental health and substance abuse.
• Eliminates $72.8 million in Capital Projects funding for a new secure Youth Facility.
Office of Temporary & Disability Assistance
The Legislature made no changes to the Executive Budget’s proposed State Operations Budget for the Office of Temporary & Disability Assistance.
The budget enacted by the Legislature makes the following changes to the Executive Budget:
• Adds $1.2 million as a Maintenance Undistributed appropriation in the new Office of Higher Education and the Professions. This was the amount that was expected to be saved by discontinuing academic reviews of college and university programs.
• Adds $26 million in a new Special Revenue-Fund Cultural Education Account in the Cultural Education program. This was the amount that was appropriated in the Council on the Arts budget for the proposed New York Institute for Cultural Education (NYICE). The Council on the Arts budget contains no funding for the NYICE. The new cultural education account is supported by a $15 surcharge on the filing fees charged by County Clerks (see Part B of S6258-B/A9760-B).
• Reduces the other Special Revenue-Other appropriations in the Cultural Education program by $5,000,500 distributed as follows:
- Education Archives Account (-$570,000).
- Education Library Account (-$2,320,000).
- Education Museum Account (-$2,110,500).
The impact of these cuts is unclear but we believe the new $26 million cultural education account provides more than adequate funding for the current operations of the State Archives, State Library, and State Museum.
• Requires the Commissioner to complete a review by June 1, 2003 of all applications, plans and reports required of school districts or boards of cooperative educational services. The review will focus on streamlining all programmatic reporting requirements and to determine the need for continued annual submission of such documents (see Part H of S6258-B/A9760-B).
Higher Education Services Corporation
The budget enacted by the Legislature makes the following changes to the Executive Budget:
• Increases the overall state operations appropriation by $2.495 million.
• Increases Fringe benefit costs and Indirect costs by $2.495 million in the Administration program/HESC Insurance premiums Account. These costs were previously paid for out of the General State Charges.
• Eliminates General Fund appropriations to the corporation (a decrease of $11,309,000). Money is appropriated in the first instance from the General Fund to the Administration program. It is then offset by a negative maintenance undistributed appropriation. Finally, the money that supports the program will come from the Miscellaneous Special Revenue Fund – Insurance Premium Payments account in the Administration program which now funds the entire Administration and Grants and Scholarship programs. This fund supported $49,458,000 of HESC expenses in the Executive Budget and now will fund $63,262,000 of HESC expenses, an increase of $13,804,000. It is unclear where this new money for this fund is coming from.
• There is no net change to HESC state operations funding as a result of all of these accounting machinations.
• Creates the Volunteer Recruitment Scholarship program for volunteer organizations in an Aid to Localities appropriation. The HESC is required to set up this program that will be used to provide scholarships to members of volunteer ambulance and fire companies. The program is funded at $2 million, scholarships can be up to up to $3,400 a year, and could be used at any public or independent degree granting college in New York.
The budget enacted by the Legislature makes the following changes to the Executive Budget:
• Adds $25.1 million to SUNY’s overall funding. The largest portion of this is the $16.9 million added to the General Income Offset account, which we believe reflects that SUNY will generate more of is own revenue than projected in the Executive Budget. There are also some smaller increases for faculty in the All State University Colleges program and EOP in the Student Aid program.
• Adds $2.4 million to the Long Island Veterans Home.
• Adds $500,000 to the All State University Colleges/Student services and Financial Assistance program for payment of tuition awards to recipients of the Maritime Appointments program at SUNY Maritime. This program provides funds for the Governor and Legislators to make appointments to the school providing a full scholarship to the appointees.
The budget enacted by the Legislature makes the following changes to the Executive Budget:
• Eliminates the New York Institute for Cultural Education (NYICE) which was funded with a $26 million appropriation. The programs proposed for the Institute remain in the State Education Department. The filing fee increase dedicated to a cultural education account as proposed by the Governor is also approved (see Part B of S6258-B/A9760-B).
PUBLIC PROTECTION AND GENERAL GOVERNMENT (S6252B/A9752B & S6256B/A9758B )
Department of Correctional Services
The budget enacted by the Legislature makes the following changes to the Executive Budget:
• Increases by $1.222 million all State Operations funding.
• Adds a $250,000 special revenue other appropriation to the Administration Program for a Correctional Services Asset Forfeiture Account.
• Increases by $330,000 the personal service appropriation in the Supervision of Inmates Program, reflecting a slower than anticipated reduction in the inmate census.
• Adds a $642,000 non-personal service appropriation to the Support Services Program for correctional officers’ protective gloves.
The budget enacted by the Legislature makes the following changes to the Executive Budget:
• Increases the personal service appropriation in the Local Government and Community Services Program by $800,000.
The budget enacted by the Legislature makes the following changes to the Executive Budget:
• Increases by $291,000 the personal services appropriation in the Administration Program. This increase is greater than both the reduction taken in the Executive Budget ($108,000), reflecting the proposed transfer of administrative functions to the Division of Criminal Justice Services, and the reduction taken in the DCJS enacted budget ($130,000), which presumably reflects the denial of these transfers. There is no explanation for the additional funding.
Department of Audit and Control
The budget enacted by the Legislature makes the following changes to the Executive Budget:
• Adds an $850,000 maintenance undistributed appropriation to the Payroll and Revenue Services Program for the liquidation of unclaimed securities.
The budget enacted by the Legislature makes the following changes to the Executive Budget:
• Adds $600,000 to the State Police Seized Assets Account (Special Revenue-Other) in the Criminal Investigation Activities Program for the purchase of hand held radios.
• Adds $2.7 million for a new Statewide Gaming program for services and expenses related to the State’s administration of video lottery gaming and Indian gaming.
• Adds a $4.2 million maintenance undistributed appropriation to the Technical Police Services program’s Special Revenue Other - State Police Seized Assets account. This funding is to be used for services and expenses associated with the Federal Communications Assistance Law Enforcement Act (CALEA).
Division of Military & Naval Affairs
The budget enacted by the Legislature makes the following changes to the Executive Budget:
• Increases the Military Readiness Program by $50,000 in personal service and $117,000 in nonpersonal service.
The budget enacted by the Legislature makes the following changes to the Executive Budget:
• Increases the Real Property Management and Development Program by adding a $200,000 maintenance undistributed appropriation for an EMS Memorial.
Division of Criminal Justice Services
The budget enacted by the Legislature makes the following changes to the Executive Budget:
• A reduction of $130,000 in personal services in the Administration program, reflecting the denial of the transfer of routine administrative functions from the Crime Victims Board.
Homeland Security
The Executive Budget reappropriated $200 million for payments related to security measures implemented to prevent, deter or respond to acts of domestic terrorism, including the operations of the Office of Public Security. The enacted budget now appropriates $96.3 million for the same purpose, $70 million for State operations and $26.3 million for capital projects. In addition, the enacted budget appropriates $50 million for statewide airport security measures and other immediate security needs. In addition, $3 million is appropriated for airport security measures implemented at the request of the Port Authority of New York and New Jersey.
TRANSPORTATION AND ECONOMIC DEVELOPMENT (S6253B/A9753B & S6259B/A9761B)
The Legislature made no changes to the Executive Budget’s proposed State Operations Budget for the Department of Transportation.
Department of Economic Development
The Legislature made no changes to the Executive Budget’s proposed State Operations Budget for the Department of Economic Development. The Article VII “language” bill does create:
• A new Empire Opportunity Fund (EOF) for the purpose of developing major infrastructure projects that lead to the creation of new jobs, such as high-tech/biotech research and development facilities and incubators, industrial parks, downtown commercial revitalization, brownfield redevelopment, high-tech communications, public water supply facilities, transportation improvements, convention centers, inner harbor/waterfront improvement, parks and recreational facilities, and tourism destinations. This was proposed in the Executive Budget but is only funded at $50 million for SFY 2002-03.
• A College Applied Research and Technology (CART) program for non-doctoral level colleges. CART is funded with a $1.5 million appropriation.
• Six new Empire Zones. It also allows the State to move forward with four new zones that were previously authorized but have not yet been approved, for a total of ten newly approved zones. This will bring the new total of Empire Zones across the State to 72.
• A new Gen*NY*sis program to maximize the research and development potential of bio-medical and life sciences research being conducted at New York State public, not-for-profit, and private academic research institutions. This program is funded at $225 million, which is probably provided through bonding
• A new "Security Through Advanced Research and Technology" (START) program, which will help colleges and universities secure Federal and other research funding for the emerging homeland security industry and other high-tech fields. It is funded with a $5 million appropriation.
Department of Taxation and Finance
The budget enacted by the Legislature makes the following changes to the Executive Budget:
• Adds a $17,379,000 maintenance undistributed appropriation to the Revenue and Information Management Program for services and expenses related to the tax amnesty program. It is unclear whether this funding will be used for additional positions.
The budget enacted by the Legislature makes the following changes to the Executive Budget:
• Adds a $17.2 million special revenue other appropriation to the Statewide Gaming Program for services and expenses related to State’s administration of video lottery gaming and Indian gaming.
State Racing and Wagering Board
The budget enacted by the Legislature makes the following changes to the Executive Budget:
• Adds a $1.3 million Special Revenue Other appropriation to the Statewide Gaming Program for services and expenses related to State’s administration of video lottery gaming and Indian gaming.