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Politics and Government

Watchdog group says Cuomo counting too heavily on future budget surpluses

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Gov. Andrew Cuomo is taking credit for the state budget’s turnaround from huge gaps to healthy surpluses, but a watchdog group says Cuomo is relying on future funds that have not yet materialized.

Cuomo often lists his achievements as governor when he gives speeches. He likes to recount how he turned the state’s finances around, as he did in his inaugural address earlier this year.

“We turned a $10 billion deficit into a $5 billion surplus,” Cuomo said then.

Elizabeth Lynam, with the budget watchdog group Citizens Budget Commission says the surplus is (at this point) fictional, because the money has not actually materialized yet.

“That part’s not true,” Lynam said. “They have budget gaps.”

The $5 billion surplus does not actually happen until 2019, and it occurs only if state spending growth is limited to 2 percent or less a year for the next three years.  If spending goes on at its current rate, then there would actually be a $2 billion budget gap.

According to the governor’s budget office, if the voluntary spending cap continues, New York will have a $5.7 billion surplus by 2019.

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 Lynam says Cuomo has done a good job at holding the line on spending to 2 percent or less a year during his first term in office, but that does not guarantee it will happen in the future.

“We aren’t there yet,” Lynam said. “And so we really don’t have the money to spend.”

Lynam says Cuomo has been successful at limiting spending on state operations and health care -- two large chunks of the budget. But education spending has been growing at a much faster rate.

Currently the budget projects school aid to increase by 1.7 percent next year. But Cuomo has promised that if the Senate and Assembly agree to a long list of education policy changes, including new teacher evaluations and more charter schools, he’ll agree to more than double the school aid increase.

“It takes a lot of juggling,” Lynam said.

Cuomo is counting on the spending rate to stay at 2 percent or less in order to pay for a multiyear phased in property tax cut known as a “circuit breaker.” The tax cut is based on the percentage of property taxes compared to a homeowner’s income. It would cost $1.7 billion when fully phased in.

A report on the budget by Citizens Budget Commission says it’s “unwise to make large future commitments” until there’s a specific plan in place to fund the tax break program.

State Comptroller Tom DiNapoli agrees with the commission that if nothing is done to reign in the current rate of spending, the gaps will reach around $2 billion in future years.

“We still see gaps that are there,” the comptroller said recently.

But the governor’s budget office, in its financial report, says that viewing the projected gaps as actual future budget holes is misleading. They say those numbers are based on the assumption that current funding levels for the programs will continue at that rate of growth. They say that since they plan to hold the line on spending growth overall to 2 percent , the programs will not grow by that amount.

DiNapoli agrees that the 2 percent self-imposed spending cap is a laudable goal.

“That aspiration is an important one and a valid one,” he said.

But the comptroller, as well as Citizens Budget Commission, essentially says don’t count your chickens until they’re hatched.

A spokesman for the governor's budget office says the state really does have a $5 billion surplus currently, if a one-time, multi-billion dollar windfall from bank settlements is included in the total. And budget spokesman Morris Peters says critics should give Cuomo more credit, based on his track record of holding spending to a less than 2 percent growth rate for the past four years.

“At some point, they’ll stop calling it an anomaly and recognize that two percent growth is the governor’s policy and it’s backed up by his record,” Peters said.