DOB Financial Plan Released

April 28, 2020

As you know, Governor Cuomo and the NYS Director of the Division of Budget (DOB) were given extraordinary powers in the newly enacted state budget allowing them to propose amendments  to the state budget based on New York’s fiscal circumstances.  The newly enacted state budget also gives  the NYS Legislature 10 days to make counter proposals to address any formal Financial Plan released by the Executive that proposes amendments to the current year budget. 

The DOB document floated over the weekend frames the problem facing New York and lays out budget and other actions DOB would need to take in the absence of major federal relief.  It calculates that there is a $13B budget gap in the current budget year.  Given what NY has already   received from the federal government, the Plan says New York needs $10B from Washington to close the hole this year.  And that’s only if current fiscal projections remain on track.  Finally, the Plan also projects out over the next 3 years (4 years total including this year), estimating the state will need a total of $60B to dig its’ way out of the financial crisis we are in.  

The DOB document floated over the weekend carves out School Aid and Medicaid from cuts this year. Even if School Aid and Medicaid were included in across the board cuts, we are advised that NY would still  face a 20% Local Assistance cut during this budget year, absent federal assistance. 

The Plan assumes a cut to State Operations @ 10%.  This yields $1.08B in savings, leaving a deficit of $8.2B to close the current budget year hole, leaving $8.2B in potential cuts to Local Assistance.  This could represent a 10-50% cut to Local Assistance, depending on whether School Aid and Medicaid are included in calculation of across the board cuts. 

It will be up to members of the Legislature to identify alternatives to the massive financial pain outlined in the proposed Plan.  Advocates across the state will increase their calls for lawmakers to return to Albany or convene remotely as soon as possible.  As such we need to begin focused conversations with all branches of government in which we depict clearly what these types of cuts would mean to our programs and services, and offering potential alternatives to the cuts where possible. Revenue generators such as the Millionaire’s Tax are again being discussed and pushed by advocates. To this point the Governor has not been supportive of tax raising proposals.  At the end of the day if all of this plays out we will need to push state leaders to include School Aid in proposed across the board cuts.  The alternative would be greater pain for those in the across-the-board calculation. 

Two issues remain unclear:  1) Did the 10 day clock on the Legislature start with the release of the information we received from DOB over the weekend?  Or, was the Plan DOB floated on Saturday more of a general announcement, with a more specific Plan coming after May 1 – a date NYS Budget Director Robert Mujica says is key to understanding state needs to do next.   To date, we’ve seen no indication from legislative leaders that they know they are on a 10 day clock.  This could indicate the document released on Saturday was not a formal Plan from the Executive for amending the state budget.  

2) Will any across the board cuts implemented include Medicaid?  We think this will depend on a variety of factors including but not limited to whether New York receives dispensation from the commitment it made to refrain from changing the state Medicaid program when it accepted the enhanced FMAP funds from Washington earlier this month and in doing so agreed to the Maintenance of Effort (MOE) agreement that prohibits NY from making major changes to the Medicaid Program during the emergency declaration period. 

Regardless of these outstanding questions our work going forward is clear. We must re-double our efforts to compel the Trump Administration to assist New York to the tune of $10B, and we must support the NYS delegation as it continues to advocate for NYS.  

The NYS Council will continue to advocate with state leaders at the highest levels.  Ultimately we may need to push the Executive to include School Aid when calculating any across the board cuts.  To this issue we note that this year’s enacted state budget omitted any previously proposed increases to school aid but also left this area of funding flat (no cuts).   Remember all of this is fluid.  For instance, we just got word that the House has decided not to return to Washington DC next week.  That’s the news today.  Tomorrow things could change again.  

In the meantime, I’m available at any point to talk it over with you so don’t hesitate to reach out to me at your convenience at (518) 461-8200.