New York Governor Will Take Executive Action To Keep State Solvent
DRP negotiations end with Legislature unwilling to address State’s Long-Term Fiscal Stability while Governor directs Budget Division to reduce payments to prevent New York State from running out of cash.
Following the conclusion of negotiations with the Legislature on a Deficit Reduction Plan, Governor David A. Paterson today announced that he will take executive action to prevent the State from running out of cash.
“Negotiations with legislative leaders on a Deficit Reduction Plan concluded this afternoon,” Governor Paterson said. “Unfortunately, the Legislature’s last best offer does not take sufficient action to restore New York State’s long-term fiscal stability and does nowhere near enough to address next year’s budget deficit. I welcome the Legislature’s $600-$700 million in cuts, but I intend to go much further. In the face of this historic economic crisis, we need to do more to put New York State on the path to economic recovery.”
The $2.8 billion plan presented by the Legislature includes $1.6 billion in executive actions already taken by Governor Paterson; $391 million in a spin-up of federal education aid; and $250 million in a tax amnesty program – meaning only $600-$700 million in real spending reductions have been agreed to by the Legislature.
“I have given the Legislature more than enough time to join with me to address this crisis,” Governor Paterson said. “If the Legislature won’t stand up for the people of New York because they’re worried about the next election, then I will do so on my own. That is why I am directing the Division of Budget to reduce payments to prevent our State from running out of cash this fiscal year. This action will keep New York State solvent and ensure that we have enough money to make it through the year.”
Governor Paterson is directing the Division of the Budget to withhold certification of local assistance payments – reducing payments to ensure the State has enough cash to meet obligations through the end of the current fiscal year. In addition, the Governor will submit an Executive Budget that reduces appropriations in a manner consistent with this action.
Background: Administratively Withholding Certification of Local Assistance Payments
The laws governing 2009-10 fiscal year appropriations for Public Protection/General Government (L 2009, Ch 50); Education, Labor, and Family Assistance (L 2009, Ch 53); Health and Mental Hygiene (L 2009, Ch 54); and Transportation, Economic Development, and Environmental Conservation (L 2009, Ch 55) each included the following blanket certification provision:
“No moneys appropriated by this chapter shall be available for payment until a certificate of approval has been issued by the director of the budget, who shall file such certificate with the department of audit and control, the chairperson of the senate finance committee and the chairperson of the assembly ways and means committee.” [Hereafter: “Certification Provision”]
In order to ensure cash expenditures in the current fiscal year do not exceed available revenues, the State Budget Director may exercise his authority to withhold certification of local assistance payments for appropriations subject to the Certification Provision.
Governor Paterson has instructed Budget Director Robert L. Megna to exercise this prerogative. Further specific information on particular reductions in payments pursuant to the certification provision will be provided at a later date.
Additionally, the Executive Budget Governor Paterson submits in January will include Article VII and appropriations legislation consistent with the limitations imposed under the Certification Provision, which would eliminate any potential future liability for payment of these funds.
Topics: budget, Budget Division, cash, deficit, deficit reduction plan, economic crisis, economic recovery, Economy, elections, fiscal stability, fiscal year, Governance, government, New York, New Yrok Legislature, payments, politics, solvency, solvent, tax amnesty program, U.S., United States
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