The Citizens Budget Commission’s (CBC’s) first take on the Fiscal Year 2018 Executive Budget:

Rave Reviews

Retiree Health Insurance– The Executive Budget includes a number of reforms that will provide needed long-term savings, including tiered premium shares based on years of service and limited reimbursement of Medicare premiums.

Spousal Refusal– Medicaid should not pick up the bill for New Yorkers who refuse to pay for their spouses’ medical care. It’s time to end this unfair practice.

Mixed Reviews

Spending “Cap”– The Governor deserves praise for recognizing the importance of financial restraint; however, the budget includes some gimmicks to keep state operating funds spending below a 2 percent growth rate. For example, School Tax Relief (STAR) benefits will be converted to personal income tax credits ($277 million) and salaries for 3,000 state employees will be paid from the capital budget instead of the state operating budget ($227 million). These types of shifts impair transparency.

Extending the Personal Income Tax Surcharge— The “Millionaires Tax,” a temporary surcharge initially enacted to help weather the Great Recession, is being morphed into a more permanent resource to sustain recurring spending. Instead, consideration should be given to restructuring the standing tax brackets and reserving for future economic downturns the option of a temporary surcharge.

Reserves— Statutory reserves increase $150 million for a total of $2 billion. In addition, $3 billion in settlement funds has been allocated, but not yet disbursed, and $500 million is available in debt management funds. However, the combined total represents less than 6 percent of state operating spending and would be quickly depleted in the event of a recession.

Education Aid– Positive reforms to the Foundation Aid formula include changes to poverty data and metrics to direct more funding to high-need districts; however, other changes continue to drive significant dollars to affluent districts. In addition, Foundation Aid will be frozen in the 2019 school year, raising serious questions about how the formulas will work in the future and what districts can expect in aid.

Design-Build—The budget proposes expanding design-build authority to all State agencies, the City and State Universities of New York (CUNY and SUNY), and counties outside New York City; however, it unfairly omits New York City, which has requested repeatedly to avail itself of a tool that has provided savings to the State.

Health Care Reform Act (HCRA)– The original purpose of HCRA was to reform the State’s hospital industry. It no longer serves that purpose and needs more than a simple extension; it needs wholesale reform.

Public Higher Education– Free college tuition for students of middle-income families has several benefits, but questions abound about the proposed Excelsior College Scholarships.  The $163 million state cost seems low, and there are other implications to consider: Will increased applications make it harder for low-income students to get into senior colleges at CUNY and SUNY? Will the schools be able to accommodate increased enrollment without significant staffing and facilities expansion? What will be the impact on the state’s technical and educational opportunity centers?  If the Dream Act is adopted, will Dream Act students be eligible for Excelsior College Scholarships? Will there be enough incentives and supports to be sure that the new students actually graduate? Will the proposed tuition plan also apply to the scholarship students? (It should.)

Affordable New York Housing Program– A replacement for the expired “421-a” program is needed to spur construction of mixed-income rental housing in New York City, but the proposed version increases the full exemption on new development from 25 to 35 years for a subset of projects. While no fiscal impact estimate accompanies the proposed statute, it is generally unwise to offer a tax exemption for such a long period of time, sacrificing decades of future city revenue.

Poor Reviews

Economic Development Spending– Too much capital funding is allocated to dubious projects, including a $300 million Life Science initiative, another $400 million for projects in Buffalo, $108 million for an ice-skating rink in the Bronx, and another $150 million spread throughout the state through the Regional Economic Development Councils. In addition, the operating budget includes a 15 percent increase in appropriations for economic development projects and re-appropriates even more from past years.

Film Tax Credit— Extending this credit for three years so that companies can start filing now for payments they will not receive until after 2019 is a mistake; the movie industry is profitable and should not be subsidized.

START-UP NY—Senseless changes reduce the minimum required number of new jobs to only one in five years, weaken eligibility and reporting requirements, and eliminate clawback provisions, which will make it difficult to evaluate the success of the program and recoup the State’s investment in cases in which businesses do not deliver on their promises.

Updated: 2:56 pm