New York’s lingering budget problems are a result of poor economic performance influenced by a bad business climate, topped with unsustainable growth in government spending.

In the last decade, New York went on a massive spending spree, with total state spending up by nearly $70 billion. As a result, New York spent far more than other states on major programs like Medicaid and school aid, with no proportional improvements in outcomes.

New York taxpayers are paying the price. Even with the lingering effects of the deep national recession, state tax and fee receipts in New York are up $12 billion over the past five years. Thanks to more than 130 separate tax and fee increases (adopted prior to 2011), we are taking proportionately more money out of a shrunken economy. Yet we face another multibillion-dollar budget gap.

This cycle of ever increasing taxes and spending was broken this spring. With Governor Cuomo’s leadership, the state passed the first budget in decades with an actual reduction in spending and no new taxes.

New York needs jobs and this is the time for Albany to focus on our tax policies to help create them. In 2012, lawmakers must continue to reduce the cost of government, with further reforms in major state spending programs, and mandate relief that reduces the cost of local government.

But most important, the state’s long-term future requires renewed economic growth in high-value sectors.

Between 2000 and 2010, New York suffered a massive loss of middle and upper-middle income jobs – and the tax revenues that go with them. Over this period, the state lost 496,000 jobs in the state’s top paying private sector industries - finance/insurance, management/administration, utilities, information, professional/technical services, wholesale trade, construction and manufacturing. These sectors pay high salaries and produce significant tax revenues and economic spin-offs.

In contrast, virtually all job growth in New York over this ten-year period was in below-average wage sectors, including those like health and social services that rely on significant government funding.

New York has been replacing high paying jobs with lower paying jobs. Jobs that compete in the international economy are being replaced with jobs that are tied to regional markets and state and local government funding.

Going forward, New York needs to make the state more attractive for private sector investment in higher wage occupations. New York needs to lower state-imposed costs on business and capital, and remove regulatory and procedural barriers to new private sector investment and job growth. Renewed economic growth will benefit workers and families, and produce the tax revenues needed to finance necessary public services. An improved business climate – jobs - needs to be Albany’s top priority in 2012.

- Heather Briccetti, Acting-president and CEO, The Business Council of New York State, Inc.

Rick Karlin of the Times Union writes:

“Lawmakers will be back in town next week to discuss the governor’s proposal — the details of which weren’t yet public — for revisions to the state income tax code, possibly including a greater payout from high earners.

Assembly Democrats late Friday were told to come to the Capitol for a 3 p.m. meeting on Tuesday.

“It will be a conference,” said Assemblyman Jack McEneny, D-Albany. “There are a lot of open issues.”

An official session could follow, said Assemblyman and Democratic Majority Leader Ron Canestrari of Cohoes. “The expectation is there will be a session starting on Wednesday,” Canestrari said.”

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The following excerpt is from an article in the Times Union:

“Gov. Andrew Cuomo says changes to the state tax code are among the options he might put before the Legislature when it returns to Albany in January.

So far, Cuomo is not offering any specifics — including whether or not potential adjustments might result in a larger tax bill for high-income New Yorkers.

The administration’s consideration of tax code changes was first reported Tuesday evening by the Wall Street Journal. Cuomo spent considerable time discussing the concept — albeit in the broadest possible fashion — in two radio interviews Wednesday morning.”

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To view the article by Jacob Gershman in the Wall Street Journal (a subscription-based publication) click here.

According to a release from the Speaker’s office:

“The Midyear Update, prepared by the Assembly Ways and Means Committee, is required by the “quick start” budget process in order to assist in creating and reviewing the state budget.

The findings of the Assembly report include the following:

• Key economic indicators point to an ongoing but slow recovery. The Assembly forecasts anemic growth of 1.7 percent for the United States Gross Domestic Product in 2011 and 2012

• While the U.S. Economy began to recover from the “Great Recession” in 2009, there are signs of significant weakness defined by slow employment growth, 13.9 million workers unemployed, weary consumers who are spending cautiously as they face declining incomes and weak housing demand.

• The Assembly revenue estimates for SFY 2011-12 and SFY 2012-13 are a combined $1.7 billion below enacted budget estimates and $187 million below the Executive’s Mid-Year Financial Plan Update.

• The All Funds tax revenue estimate for SFY 2011-12 is $64.5 billion, representing an increase of 6.0 percent or $3.68 billion above the prior year. This is $48 million above the Executive’s Mid-Year Financial Plan Update and $425 million below the First Quarter Financial Plan Update.

• The All Funds tax revenue forecast for SFY 2012-13 is $65.023 billion, an increase of 0.7 percent or $472 million over SFY 2011-12 estimates. This is $235 million below the Executive’s Mid-Year Financial Plan Update and $1.27 billion below the First Quarter Financial Plan Update.

• The Assembly estimates that in 2011 nonfarm payroll employment in New York State will increase 0.9 percent, wages will increase an estimated 4.4 percent and personal income growth is estimated at 4.9 percent.

• The Assembly estimates that the New York State Department of Health (DOH) will spend approximately $15.26 billion in state funds for the Medicaid program in SFY 2011-12, which is about $64.2 million less than the Division of the Budget’s midyear forecast. The Assembly projects DOH Medicaid program spending at $15.85 billion in SYF 2012-13, which is $89.2 million below the Division of the Budget’s midyear forecast.”

To view the full release please click here.

Andrew Hawkins of The Capitol writes:

“If Gov. Andrew Cuomo calls the Legislature back to Albany this year to deal with a $350 million budget shortfall, lawmakers say he could also open the door to debating a host of simmering issues – including independent redistricting.

The next legislative session begins in less than two months, but Cuomo told radio host Susan Arbetter yesterday that the budget gap could force his hand: “If this trend continues, we may have to bring back the Legislature.”

Assembly Speaker Sheldon Silver said he had spoken with Cuomo about a special session, though Senate Majority Leader Dean Skelos said only that his Republicans stand ready to work with them to balance the budget.

Still, the prospect of returning to Albany in the off-season opened all sorts of possibilities – subject, of course, to any details worked out ahead of time between legislative leaders and the governor’s office.”

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Casey Seiler of the Times Union writes:

“Citing what he described as “grim” revenue reports, Gov. Andrew Cuomo said the next few weeks will determine whether lawmakers will have to be involved in closing the current-year state budget gap, which has grown to $350 million.

“I’m going to continue to watch (revenue numbers) over the next coming weeks, because it’s been a little bit like watching a bouncing ball,” Cuomo said in a radio interview Monday morning, shortly after the Budget Division put out its midyear report.

Budget officials “are giving me a range of options, and then depending on those options … we may need a special session,” he told WCNY’s Susan Arbetter.

The Budget Division’s assessment was released two weeks after its statutory deadline, a delay officials ascribed to volatility in global markets shaken by the European debt crisis. That anxiety and “persistently disappointing data on employment, consumer confidence and income” were identified as the biggest drags on the economy in general and the financial sector, which generates as much as a quarter of New York’s tax revenue, in particular.”

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To view the report click here.

According to a release from Comptroller DiNapoli:

“A report released today by New York State Comptroller Thomas P. DiNapoli as part of the state’s Quick Start budget process projects a current year shortfall that appears manageable, but finds that out-year deficits are likely to increase. Over the three-year forecast period, revenue and spending could deviate from current estimates by more than $1.5 billion. The report will be revised following the release of the Mid-Year Update to the Financial Plan.

“The current year enacted budget made positive strides in addressing the ongoing structural deficit,” DiNapoli said. “However, we still face challenges and risks and there is much that could undermine some of the good work of the last year. Fiscal pressures – particularly on the revenue side – pose a significant challenge, and achieving balance will require an ongoing commitment by state leaders to live within our means.”

DiNapoli’s report notes there remains risk that some of the actions taken in the SFY 2011-12 Enacted Budget to eliminate a $10 billion gap and reduce future spending may not be as effective as projected. While the structural imbalance has been reduced, variables including global market volatility, lower Wall Street employment and income, high state unemployment and the struggling housing market continue to pose budget risks. Economic uncertainty has the potential to affect the state’s revenue estimates, and makes accurate forecasting more difficult. The report stressed that close monitoring is critical to ensure that actual results comport with projections.”

To read the full release click here.

Tom Precious of the Buffalo News writes:

“Artificial deadlines come and go all the time at the state Capitol. But Gov. Andrew M. Cuomo, in his first year in office, is breaking a longstanding statute that sets clear deadlines for reporting on the condition of the state’s finances.

The deadline for the closely watched, six-month report on the state budget’s condition came and went Oct. 31 without the governor’s office releasing any numbers. The deadline has been met many times over the years by governors facing far more fiscally turbulent waters.

But Cuomo, while raising the red flag warnings higher ever few days about the state government’s finances, says the mid-year financial report — used by everyone from budget crafters in the Legislature to Wall Street ratings agencies — will come when he is confident the numbers are less squishy.”

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This from the Public Employees Federation website.

“By a count of 27,718 to 11,645, members of the New York State Public Employees Federation (PEF) ratified a revised four-year agreement with the state that averts significant layoffs.

The ratification of the new agreement saves the jobs of 3,496 PEF members and preserves the vital services our members provide.

The agreement preserves the pay-scale, the employment and the careers of PEF members. It maintains increments and salary-grade parity, longevity payments and co-pays for doctor visits at their current levels. It calls for no salary increases for years 2011, 2012 and 2013. A salary increase of 2 percent is included for 2014.

The new contract increases the share members will pay of their health insurance premiums, but includes changes to the productivity enhancement program which will allow members greater opportunity to use vacation time to offset health insurance costs. The new contract includes reimbursement for the 9 furlough days payable at the end of the agreement.”

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Jimmy Vielkind writes in the Times Union - “Ideally, the Cuomo administration wants 7 percent of the state workforce working — and getting paid for — less than five days a week.

The Budget Division issued a bulletin to state agencies Tuesday urging them to make fuller use of a program that allows most state workers to voluntarily reduce their hours (and pay). The bulletin says agencies should “aggressively promote” the program, approve requests “expeditiously” and “approve all employee requests if the current program participation is less than 7 percent of the agency’s workforce.”

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