In the current debate over Governor Andrew Cuomo’s proposed budget for
fiscal year 2011-12, some advocates have characterized the Governor’s plan
as relying too heavily on spending cuts and not enough on new revenues.
In fact an analysis of fiscal developments since the onset of the national
recession three years ago reveals that in the coming fiscal year the State
will have $11.7 billion in revenues attributable to actions taken since the
start of fiscal year 2008-09, a sum larger than the $7.8 billion in recurring
cuts proposed by the Governor.
The $9.5 billion gap addressed in the Governor’s plan is caused by a
combination of decreased revenues and rapidly growing spending.
Due to the national recession that hit in 2008, New York’s tax base
has contracted over the past three years resulting in an $8.5 billion
reduction in base tax collections in the current fiscal year. The economy
is expected to improve in the coming fiscal year, but base tax collections
will still be about $4.5 billion less than when the recession began.
Despite this precipitous drop in base tax revenue, the State has yet to
cut its spending. State-funded spending in the current fiscal year is a
full $8.4 billion higher than in fiscal year 2007-08. Without any new
action the spending growth would accelerate and New York would be
on a course for state spending to be $25.8 billion higher in fiscal year
2013-14 than in fiscal year 2007-08. If Governor Cuomo’s proposals
are enacted, the increase from fiscal year 2007-08 would be reduced
to $13.4 billion.
