Report: On the New York State Budget
Version: October 23, 2007
Summary: A NYSHEI primer on the state budget process, including official stages and commentary on actual practices.
Most New Yorkers know two things about the state budget process: the process is dysfunctional and the budget is always late. This is understandable, if not always true.
This report seeks to define and describe the state budget process for the casual observer.
Essential Facts- New York has an “executive budget” model.
- The state fiscal year begins April 1 and ends on March 31.
Background
New York’s current strong executive model was established by State Constitutional amendments in 1925 and 1927, both building on the executive model adopted at the 1915 Constitutional Convention.
During the Cuomo years (1980-1994) the Legislature was increasingly brought into the budget process, creating, in the minds of many, a “three-way” budget process that elevated the Assembly Speaker and Senate Majority Leader to near equal stature with the Governor. The practical effect was a two-decade long series of late budgets.
The strength of the executive model (found in Article VII of the NYS Constitution) was affirmed in two Court of Appeals rulings, the 1993 Bankers v. Wetzler decision and 2004 in Pataki v. Silver. In Bankers, the Court ruled that the Legislature could not add to an appropriation bill. The Court determined that the state Constitution budgeting provisions constitute “a limited grant of authority” of the Legislature that favors the Governor. Pataki went further. In that decision the Court recognized that the “classic ‘separation of powers’ between the executive and legislative branches is modified to some degree by our Constitution.” Though two dissenting and the concurring opinion voiced concern with the potential for abuse by the Governor and the diminution of the Legislature’s law-making powers.
At issue in Pataki v. Silver is the so-called “non-alteration” clause that states the Legislature “may not alter an appropriation bill submitted by the governor except to strike out or reduce items therein.” Therefore, the Legislature has three options, accept the Executive proposal, reject it, or pare it down. It is important to note that an executive has yet to fully exploit his dominant position in the budget process and continues to court policy-making input from the legislative bodies.
Budget Stages
Agency Preparation
The formal budget process begins when the Budget Director issues a “call letter” to the executive agency (departments of health, labor, et. al.) chiefs. Typically issued during the summer months, the call letter contains parameters set by the Governor. In the call letter each agency head is asked to submit a budget request for their areas of responsibility. By early fall, with the approval of the agency head, all agency requests received by the Division of the Budget (DOB) are assembled in a final program package.
Legislative fiscal committees receive copies of the agency requests.
DOB Review
By October the DOB will have analyzed all agency requests to bring them into conformity with economic forecasts and the Governor’s direction.
The Constitution directs the DOB to conduct formal budget hearings at which agency heads discuss their requests. This gives DOB and Governor’s office staff the opportunity to raise questions or concerns. The Legislature is typically invited to participate in the hearings.
Through November DOB examiners transform agency requests into budgetary recommendations, with companion appropriation bills and legislation.
In the first weeks of December the DOB director prepares revenue and expenditure statements for the Governor and his staff.
Executive Budget Proposal
By the first of February in a election year, earlier in a non-election year, the Governor is required to submit a balanced budget to the Legislature. The “budget” actually consists of:
- Five Budget Volumes (Executive Briefing Book, The Five-Year Financial Plan, Economic and Revenue Outlook, Five-Year Capital Program and Financial Plan and, Agency Presentations).
- Appropriation Bills (Legislature and Judiciary, Debt Service, Education, Labor and Family Assistance, Transportation, Economic Development and Environmental Conservation, Public Protection and General Government, and Health and Mental Hygiene)
- “Article VII” Bills (legislation necessary to enact the appropriations)
The Governor has thirty days to submit amendments (including new additions) to his budget proposal.
Legislative Reaction
Under the terms of the 2007 Budget Reform Act, the Legislature is required to hold joint Conference Committees to reach agreement between the two houses. Typically, each legislative conference will also conduct meetings, hold hearings, and otherwise debate the budget plan.
The Executive and Legislature are also compelled to reach a consensus on available revenue by March 1. Failure to do so prompts the Comptroller to issue a binding revenue forecast by March 5.
As per the 2004 Pataki decision, the Legislature may accept, reject or trim the Executive Budget Proposal (with 30 Day Amendments) as altered to accommodate the established revenue forecast.
Upon passage in the legislature, the budget (except the appropriations for the Legislative and Judicial Branches which much be returned to the Governor for signature) become law without further executive action. The Governor retains a line-item veto he may use to disapprove of any items added to the Legislative and Judicial appropriations.
Budget Conclusion
Upon enactment the DOB approves “certificates of allocation” to inform the State Comptroller of the budget decisions. The state budget is then executed by the various state agencies entrusted.
Half-way through the fiscal year the DOB will produce a Financial Plan Update that measures the budget actions against unexpected changes in revenue or expenditures. By that time the following years budget process will be underway.