New York Gets Five Year Plan To Eliminate Structural Budget Deficit
Fiscal Reforms Seek to Bring Recurring Expenses in Line With Recurring Revenues. Financial Review Board Would be Created to Ensure Progress toward Structural Balance.
Lieutenant Governor Richard Ravitch today unveiled a fiscal reform plan which calls for a five-year plan to eliminate the State’s structural imbalance and institutes a process by which annual budget balance is mandated, monitored and maintained.
With the creation of a Financial Review Board, comprised of representatives appointed by the Governor, the Legislature and the Comptroller, adherence to the five-year plan will be monitored and reviewed on a quarterly basis. And in order to maintain balance in a given fiscal year, the Legislature would be required to act within a limited time frame when the budget is out of balance or the Governor would be authorized to initiate across the board pro rata spending reductions.
The proposal also recommends stronger reserve requirements, a transition to GAAP (Generally Accepted Accounting Principles) budgeting standards, and changing the beginning of the State fiscal year from April 1 to July 1.
This plan is founded on two fundamental propositions: first, fiscal integrity, which means the acknowledgement that for too long we have found ways to cover up a structural imbalance between recurring revenues and recurring expenses. We should adopt new laws that assure we spend only those monies we are willing to raise, and never again pretend our budgets are in balance when they are not. Second, is the avoidance of the inevitable increase in taxes that will result unless our political system finds the will to make the spending reductions necessary to close our growing structural deficit,” said the Lieutenant Governor.
Major recommendations in the report include the following:
- Lock the State into paying down its existing structural budget gap within five years;
- Require a quarterly assessment by an independent Financial Review Board of the State’s progress towards structural balance and the maintenance of annual balanced budgets;
- Authorize the Governor, if the independent review board finds that the budget is not projected to be in balance at year’s end, and the Governor and the Legislature cannot agree on gap-closing actions within a limited time-frame, to implement across the board pro-rata reductions;
- Allow the State to borrow within stringent limits to close existing budget gaps, but only if the independent review board finds that strict new financial controls have been met.
When Governor Paterson appointed Richard Ravitch to serve as Lieutenant Governor he asked him to prepare a long term fiscal plan for the State of New York. Over the past several months, the Lieutenant Governor has met with State officials, stakeholders and fiscal experts to better understand the challenges facing New York and to provide his recommendations for fixing them.
“I want to thank the Governor for giving me the opportunity to work on this plan over the past several months,” added Ravitch. “I look forward to assisting the Governor in any possible way on the budget negotiations moving forward and I look forward to a robust discussion with the Governor, Legislative Leaders, budget officials and stakeholders about the ideas I have presented in my plan.”
Click here to view the full report.
Statement from Governor David A. Paterson on the Lieutenant Governor’s 5-Year Fiscal Reform Plan
“I thank Lieutenant Governor Ravitch for his diligent work preparing recommendations to help our State government achieve long-term structural budget balance. At its core, his plan reflects our shared view that New York’s finances are on an unsustainable path and that true structural fiscal reform is urgently needed to control spending. Given the Lieutenant Governor’s considerable experience and expertise, his proposals deserve to be heard and discussed as we move forward toward the final Enacted Budget.
“When I delivered my Executive Budget proposal in January, I articulated several clear principles that I believe must be embodied in any final budget agreement. We must enact both significant recurring spending reductions and real structural fiscal reforms in order to restore our State government’s long-term financial integrity. Additional borrowing will not be considered outside of these parameters, and I know that Lieutenant Governor Ravitch strongly agrees with this position. I look forward to working closely with the Lieutenant Governor and the Legislature as we seek to achieve the important goals of long-term spending restraint and lasting fiscal reform.”
Topics: 2010, accountability, budget deficit, Comptroller, economic development, economic growth, economic recovery, Economy, expenses, financial controls, Financial Review Board, fiscal reform, five year plan, GAAP, Generally Accepted Accounting Principles, Governance, government, governor, legislature, Lieutenant Governor Richard Ravitch, monitor, New York, news, open government, politics, revenue, spending reductions, taxes, taxpayers, transparency, U.S., United States
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