Gov. Andrew Cuomo will have to make reductions in all categories of spending outside of of school and and Medicaid in order to hold the annual growth to no more than 2 percent and provide $2 billion in tax cuts, according to the New York City-based Citizens Budget Commission. The governor proposed the tax cuts in his State of the State address Jan. 8, saying they would be paid for with surplus funds available in the 2016-17 fiscal year.
School aid and Medicaid, a health-care program for the poor and disabled, are growing at annual rates at or higher than 4 percent under separate statutory caps, the group said in a blog post.
State operating funds spending is projected to grow from $93.8 billion in the 2014-15 fiscal year to $101.5 billion in the following fiscal year, an average of about 4 percent a year, the state’s most recent four-year financial plan, according to the Citizens Budget Commission, a business-backed group. Spending is supposed to outpace receipts, which would lead to budget gaps ranging from $1.6 billion in the upcoming fiscal year to $2.7 billion in the 2015-16 fiscal year.
If, as anticipated, the governor’s budget proposal next Tuesday reduces the annual spending growth assumption from 3.7 percent to 2 percent, the budget gaps could become surpluses, according to the post, which was written by Elizabeth Lynam, vice president and director of state studies, and Jamison Dague, research associate. Budget spending would have to be cut by $5 billion to achieve a $2.4 billion surplus, they wrote.
It will be a challenge to make such large reductions, the blog post said. Medicaid and school aid are the two largest expenditures in the budget, comprising about 40 percent of state operating funds spending. Medicaid is projected to increase 4 percent a year and school aid is expected to go up an average of 4.9 percent a year, Lynam and Dague wrote.
“The legislature is unlikely to set spending levels in these two large programs below what is allowable by statute, meaning all other areas of state spending will bear the brunt of the reduction needed to achieve 2 percent spending growth,” the blog post said.
That means all other spending could increase just 0.2 percent a year over the four years, it said.
“Growth in some categories, including debt service and fringe benefits, is relatively fixed, and direct state agency spending for corrections, facilities for the mentally ill and developmentally disabled, state police, and other services has been held essentially flat since fiscal year 2010-11; it will be harder to produce savings in these areas going forward,” Lynam and Dague wrote. “Spending expectations for all other areas of local government assistance will also need to be managed.”