Civil
Service Enforcement/
Civil
Service Enforcement/
Research Department
TO: Executive Board Members, Statewide Labor-Management Chairs, and Council Leaders
FROM: Thomas Cetrino, Susan Mitnick, Stephen Connolly, Jeff Waggoner, and Michael Marinello
DATE: January 30, 2004
RE: Executive Budget SFY 2004-05 –PEF’s Preliminary Concerns in Article VII Budget Language Bills, Updates on Proposed Appropriations
Last week we provided you with a preliminary analysis of the proposed Executive Budget which focused on the agencies that were facing major workforce reductions and major agency consolidations, transfers and privatizations. Since then the Senate and Assembly have published their analysis of the Executive Budget which is based on documentation not available to the public or PEF. In addition, the Legislature’s Fiscal Committees have begun hearings on the proposed Executive Budget and the Fiscal Policy Institute completed their analysis of the budget. We and the Legislative department have also analyzed in greater detail the Article VII bills that implement the Executive Budget appropriations and have in consultation with the PEF President have developed PEF’s positions on these bills. This new information requires additions, changes, and clarifications to last week’s analysis.
Article VII Legislation
The following Article VII language bills, grouped by budget bill, are the preliminary concerns we have identified, (major concerns are italicized):
Public Protection & General Government Bill (A9556/S6066)
Transfers Crime Victims Board to DCJS. Savings $501,000.
PEF POSITION: OPPOSE
Pension funding reforms
PEF POSITION: OPPOSE MOST OF THE EXECUTIVE’S PROPOSALS, SUPPORT THOSE REFORMS AGREED TO BY COMPTROLLER IN HIS LETTER OF JAN.23, 2004
Comptroller Hevesi has offered alternatives to the reforms proposed by the Governor in the Executive Budget (set forth in PEF’s 1/23/04 Preliminary Analysis of the Executive Budget). According to the Comptroller, these modifications to the Pension System would provide up to $1.15 billion in budget relief to local governments in 2004 and $106 million to the State in SFY 2004-05. This compares to the Executive’s proposals which would save the State $500 million in SFY 2004-05.
The Comptroller’s proposals include:
· Moving the payment date for pension contributions from December 15 to February 1. This will provide a one-time cash flow benefit of about $980 million to about 1,100 local governments on a calendar year budget.
· Adjust last year’s reform law to allow the State and local governments to start paying back deferred 2004 pension contributions over five years, starting in 2005. Last year’s law allowed governments to finance any contributions in excess of seven percent, over five years. However, the law requires the first payment on the deferred amount immediately, meaning the State and local governments that chose to amortize really only have four years to complete payment. This new reform proposal would save local governments up to $172 million and the State $106 million.
· Allow local governments that have adopted special police and fire plans to bond certain outstanding liabilities associated with the adoption of these plans. This would save approximately $10 million for 16 local governments.
The Comptroller also proposes the following measures, which would not provide any immediate savings:
· Allow local governments to create a pension reserve fund.
·
Provide multi-year projections of
employer contribution rates. Calculate
contributions based on actual
rather than projected salaries.
Merge State Liquor Authority into Alcoholic Beverage Commission. Saves $173,000.
This proposal includes closing the Syracuse office. PEF has 1 member in the Syracuse office and 2 vacancies; the biggest problem is that staff would no longer be required to be in the competitive class which may result in the loss of civil service rights for some members.
PEF POSITION: OPPOSE UNLESS LANGUAGE IS MODIFIED TO PROTECT CIVIL SERVICE RIGHTS.
Raise PERB filing fees.
PEF POSITION: OPPOSE because it would discourage workers and their representatives from filing legitimate complaints about their rights as public employees.
Parole. PEF also is opposed to ending parole (which is not in an Article VII Bill, but which we expect to be proposed in non-budget legislation) and proposed reductions in parole staff.
Health & Mental Health Bill (A9559/S6068)
Close Middletown Psychiatric Center on 4/1/05. Estimated annual savings of $6.8 million of which $3.4 million to be spent on state-operated community-based services. Also saves $27 million in capital expenses.
PEF POSITION: OPPOSE UNLESS AN ACCEPTABLE PLAN IS DEVELOPED THAT PROVIDES FOR CONTINUED COMMUNITY SERVICES AND EMPLOYMENT SECURITY FOR WORKERS.
Commission on Closures of State Psychiatric Centers.
Reports by 4/1/05. 8 members- 4 appointed by Governor, 4 by Legislature- but OMH Commissioner chairs it and can break tie votes. If plan calls for closure, it automatically goes ahead unless blocked by vote of both houses of Legislature.
PEF POSITION: OPPOSE- Instead create a commission with a broader mandate to study the needs for mental health services. The Legislature should make final decisions and the makeup the committee should be more representative of the variety of groups that are impacted by the mental health system (workers, consumers, professionals, local communities). The Governor should not control the commission. The commission needs to look more broadly at mental health services in general.
Education, Labor, Family Assistance Bill (9557/S6067)
Give SUNY Board of Trustees the power to transfer SUNY hospitals to private not for profit corporations (same as last year)
PEF POSITION: OPPOSE
Transfer State museum, archives, library from SED to NYICE (a new public benefit corporation). Same proposal as last year; employees have civil service, representation, and pension rights.
PEF POSITION: OPPOSE. This proposal would make these institutions more unaccountable to the public and the Legislature.
Transportation, Economic Development, Environmental Conservation Bill (A9559/S6069).
Establish a program of risk- based inspections of retail food stores, pet dealers and breeders replacing the current annual inspection program, may reduce inspections by Dept. of Agriculture & Markets (A&M). In SFY2004-05 A&M will lose 19 positions in consumer food services program and save $300,000.
PEF POSITION: OPPOSE
Makes Urban
Development Corporation loan powers permanent.
PEF POSITION: OPPOSE. (Should not do this because should be relying less on
unaccountable public authorities such as UDC and need to use the professional
staff at DED to handle economic development issues)
Executive Budget Analysis Updates
Department of Correctional Services
· After the release of the 2004-05 budget, PEF was notified of position eliminations associated with bed reductions in the current year at Cape Vincent, Riverview, Marcy, and Orleans Correctional Facilities, and the closure of Fulton Correctional Facility by March 31, 2004. PEF was also notified of the closure of Camp Pharsalia and Camp McGregor in the fall of 2004 (DOCS indicated these facilities would close in the fall, the Assembly analysis says they will close by the end of SFY 2004-05). The medium security facility at McGregor will not be impacted. Savings from bed reductions are estimated at $6.5 million in 2004-05 and $11 million annualized.
· DOCS has informed PEF that PEF position reductions at the affected facilities are as follows: SFY 2003-04: Cape Vincent (3); Marcy (3); Orleans (1); Riverview (6); Watertown (2); Fulton (16). SFY 2004-05: Camp Pharsalia (17); Camp Mt. McGregor (4)
· The $15 million appropriation for a “Capacity Contracting Account” reflects an anticipated contract with the Federal Bureau of Immigration and Customs Enforcement (ICE) for the housing of approximately 500 prisoners awaiting deportation. Under a contracting process, the Federal government would pay the State $30,000 per bed, per year.
· The closure of the Special Housing Unit (SHU) at the Watertown Correctional Facility, creating a net savings of $300,000. Seven (7) FTE positions would be eliminated by attrition as a result of this action;
· Forensic Services Program initiatives (see OMH bullets, below)
Office of Mental Health
· According to Assembly Ways and Means Committee analysis, the closure of Middletown PC will include the transfer of 186 positions to Rockland PC, 60 positions will be moved into outpatient programs for a total of 121, and 59 positions will be eliminated.
· The $7,000,000 increase for the Forensic Services Program will add 66 nurses and psychiatrists to the number of clinical personnel stationed in Department of Correctional Services (DOCS) facilities. A total of 264 beds would be added to provide forensic services: 102 Behavioral Care Unit beds, 75 Special Treatment Program beds and 87 Intermediate Care Program beds. The Behavioral Care Unit (BCU) is a new, highly intensive treatment model, would serve as an alternative to DOCS Special Housing Units (SHU). The Executive proposes adding 38 BCU beds at Great Meadow and 64 BCU beds at Sullivan correctional facilities. Three new 25 bed Special Treatment Program (STP) beds at undesignated facilities will supplement the 43 Special Treatment Program (STP) beds, located at the Attica and Five Points correctional facilities. The STP provides specialized therapeutic services and support, including on-site 24-hour crisis services to inmates in SHUs. The Intermediate Care Program (ICP) will be increased by 87 beds, bringing the total number to 652. ICP is the “step-down” program that prepares mentally ill inmates for return to the general population. The ICPs are dedicated, residential units that provide enhanced rehabilitation, treatment and supports for inmates with serious mental illness. The costs for capital development and increased security would be borne by DOCS.
Department of Transportation
· Proposes cutting the Capital Projects Highway and Bridge letting level by 6% or $100 million. According to newspaper reports, the $100 million in extra highway spending that was authorized by the Legislature was not spent because division of Budget analysts found no money was designated to fund the projects.
Department of Environmental Conservation
· It is our understanding that the increase in the current FTE level does not represent filled positions. However, according to the Assembly’s analysis, 35 new positions are necessary to assist in the implementation of the Superfund/Brownfields legislation enacted in SFY2003-04. Thus, a combination of the 19 new and 25 currently unfilled FTEs detailed below will be necessary to implement the Superfund/Brownfields legislation.
· Shifts $1.19 million to from the General Fund to the Environmental Enforcement Account (Special Revenue – Other) to support personal service costs.
· Proposes a $1 million increase in anticipated funding for Flood Plain Mapping grants. Historically, these funds appear to be used to fund RACNE/IAGT positions rather than DEC positions
· The proposed decrease of $4.8 million in the maintenance undistributed appropriation in the Forest and Land Program which supported FTEs as follows: 40 in DEC, 37 in Ag & Mkts, and 1 in Parks and Recreation. There is a personal services add of $2.4 million in the Forest and Land Resources Program that has no impact on the FTE level. This add may be helping to offset the loss of the maintenance undistributed referred to above. These issues should be clarified with DEC management.
Department of Taxation and Finance
· We remain concerned about the proposed 122 FTE reduction in staff at Tax and Finance particularly in the Audit and Tax Compliance programs. In SFY1994-95 the Audit program had 2087 FTEs which dropped to 1,913 FTEs in SFY1999-00 and is slated to drop to 1,670 FTEs in SFY2004-05, a 20% decrease since 1994-95 and a 13% decrease since 1999-00. In SFY1994-95 the Tax Compliance program had 1072 FTEs which dropped to 835 FTEs in SFY1999-00 and is slated to drop to 704 FTEs in SFY2004-05, a 33% decrease since 1994-95 and a 15% decrease since 1999-00. We will be discussing with Tax and Finance leaders what action PEF should take in this regard.
Department of Economic Development
· The Executive Budget Overview refers to a New Manufacturing Assistance Program (MAP) to be administered by the Empire State Development Corporation (ESDC) to coordinate Federal, State and local assistance programs and link manufacturing companies to appropriate research and development grant funding. ESDC’s proposed budget lacks the specificity necessary to determine whether any additional funding is associated with this proposal. PEF’s position is that such a program should be administered and staffed by the professional employees who work in the Department of Economic Development
Office of Temporary and Disability Assistance (OTDA)
· A net increase of $3.379 million in the Systems Support and Informational Services Program, including a reduction of $2.1 million (-25 %) in personal services offset by an increase of $5.3 million (+8.8 %) in maintenance undistributed (ongoing cost of redesigning the Welfare Management System (WMS), continued development of the Welfare to Work Caseload Management System, and other initiatives including the Human Services Enterprise Network). The personal service decrease reflects the 23 FTE decrease proposed for this program and occurs simultaneously with an increase in an appropriation that can be used for contracting out. OTDA management should explain whether the FTE reduction in this program will result in greater contracting out under the increased maintenance undistributed appropriation.
State Financial Plan and Economic Outlook for SFY2004-05
The 2004-05 Executive Budget projects that a strengthening economic recovery will produce a return to above-average rates of growth in tax revenues. The Financial Plan reflects overall tax receipt growth of 7.8 %. Underlying receipts growth in 2004-05, adjusted to exclude the impact of tax law changes, is projected to increase by roughly $2.8 billion (7 %) over 2003-04.
According to the Division of Budget state nonagricultural employment is projected to rise 0.8 % in 2004, the first increase in four years. This is consistent with other forecasters’ projections. Moreover, with the first sustained rise in equity prices in three years and interest rates remaining low, their outlook for the finance industry has brightened, improving prospects for bonuses and wages and in taxable income gains for the owners of corporate equities. Bonuses in the finance and insurance sector are projected by DOB to rise 11.7 % in 2004-05, following growth of 23.2 % for 2003-04. Total New York wages are projected by DOB to grow 5.1 % in 2004, which are much more optimistic than Economy.com’s (2.9%) and Global Insight’s (4.3%) projections. Consistent with national trends and other forecasters, DOB projects inflation in New York is projected to fall from 2.8 % in 2003 to 2.1 % in 2004.
Personal Income Tax
According to DOB, PIT net receipts for 2003-04 are estimated to reach $24.08 billion, an increase of $385 million (1.6 %) from 2002-03 due largely to a modestly improved economic environment and the first-year impact of the temporary three-year PIT increase enacted in 2003. Net of the Refund Reserve transaction, in SFY2004-05 All Funds income tax receipts are projected by DOB to increase by 8.6 % over 2003-04.
All Governmental Funds business tax receipts are expected to reach $5.0 billion, which is roughly flat due to the offsetting impacts of weak profit performance in the corporate and banking sector in 2002 and 2003. The estimate is $38 million below DOB’s October Update forecast. General Fund business tax receipts in 2004-05 are projected to be $3.74 billion or $344 million (10.1 %) over 2003-04. According to DOB, this is due primarily to tax law changes enacted in 2003-04 relating to intangible income and the de-coupling from certain Federal tax provisions, and the expectation of strengthening corporate and bank profits.
Conclusion
At this point, the Civil Service Enforcement/Research Department has completed spreadsheets and text bullets for all agencies in which PEF members are employed; these have been mailed to the agencies’ respective Executive Board members and Statewide Labor/Management Chairs. The spreadsheets and text bullets are also available on PEF’s website. Any new changes in agency information for the agencies we covered last week are reflected in the revised spreadsheets which have been mailed to you and are available on the PEF website.
On Wednesday, January 28, 2003, President Benson testified before the Senate Finance and Assembly Ways and Means Committees about the impact of the Executive Budget on the State workforce and PEF members. His testimony has been mailed to Executive Board members, Statewide Labor Management Chairs, and Council Leaders under separate cover. The testimony focused on the problems that will result from the Executive Budget’s proposals to close Middletown psychiatric center and privatize SUNY Hospitals and the State Museum, Archives, and Library. Any information you have about how services to the public have been or will be reduced or contracted out in your agency should be forwarded to the PEF Civil Service Enforcement/Research Department immediately. This information will also be useful for the fact sheets we use to lobby the Legislature on PEF’s budget priorities.
We will keep you informed as we follow the Legislature’s deliberations and review other organizations’ analyses of the Executive Budget. It is important that all Labor/Management Chairs schedule meetings with their agency management as soon as possible to get more budget details. The agency specific spreadsheets contain many unanswered questions that need to be answered by agency management. The Civil Service Enforcement/Research Department will work with Statewide Labor/Management Chairs to formulate these questions and, if requested, will participate in agency meetings on their budget. Please call the Civil Service Enforcement/Research Department if you have any questions about or have further information to add to our budget analysis.