NEW YORK STATE

[Pages:419]NEW YORK STATE

K. Rogers

2009-10 FINANCIAL PLAN FIRST QUARTERLY UPDATE

DAVID A. PATERSON, GOVERNOR

ROBERT L. MEGNA, DIRECTOR OF THE BUDGET

JULY 30, 2009

TABLE OF CONTENTS

INTRODUCTION .....................................................................................................1

OVERVIEW....................................................................................................................... 3 Highlights ..................................................................................................................... 3 Financial Plan At-A-Glance .......................................................................................... 4 Summary ...................................................................................................................... 5 Revisions to the General Fund Enacted Budget Financial Plan................................... 7 Discussion of General Fund Receipts Revisions ......................................................... 8 Discussion of General Fund Disbursement Revisions ................................................. 9 Legislative Session Changes ..................................................................................... 11 Update on Other Financial Plan Issues...................................................................... 12 State Workforce ......................................................................................................... 13 Debt Reform Cap ....................................................................................................... 14 Annual Spending Growth ........................................................................................... 14 2009-10 Projected Closing Balances ......................................................................... 15 Financial Plan Risks ................................................................................................... 17

GENERAL FUND OUTYEAR PROJECTIONS .............................................................. 19 Outyear Receipts Projections..................................................................................... 21 Outyear Disbursement Projections............................................................................. 21

YEAR-TO-DATE OPERATING RESULTS..................................................................... 27 General Fund ............................................................................................................. 27 State Operating Funds ............................................................................................... 29 Capital Projects Funds ............................................................................................... 30 Federal Operating Funds ........................................................................................... 31 Annual Change .......................................................................................................... 31

ECONOMIC OUTLOOK ................................................................................................. 33 National Economy ...................................................................................................... 33 New York State Economy .......................................................................................... 36

ALL FUNDS RECEIPTS PROJECTIONS ...................................................................... 39 Updated All Funds Receipts Projections .................................................................... 39

ALL FUNDS DISBURSEMENTS PROJECTIONS......................................................... 59 Updated All Funds Disbursements Projections .......................................................... 59

UPDATED HCRA FINANCIAL PLAN ............................................................................ 63

GAAP-BASIS FINANCIAL PLANS/GASB 45 ............................................................... 67

DEBT/CAPITAL UPDATE .............................................................................................. 69 Capital and Debt Summary ........................................................................................ 69 Debt Service Budget - Capital Spending Impacts ...................................................... 70 Debt Reform Act......................................................................................................... 72

GLOSSARY OF ACRONYMS ........................................................................................ 75

INTRODUCTION

This First Quarterly Update to the Financial Plan (the "First Quarterly Update" or "Updated Financial Plan") revises the State's fiscal projections for the 2009-10 through 2012-13 fiscal years that were set forth in the Enacted Budget Financial Plan issued on April 28, 2009. The Updated Financial Plan reflects (a) updated receipt and disbursement estimates based on DOB's1 revised economic forecasts for the nation and State, operating results through the first three months of the 2009-10 fiscal year, a review of factors affecting the long-term current services forecast, and other information and (b) an estimate of the fiscal impact of bills passed by the Legislature in the 2009 regular session and approved by the Governor.

The Updated Financial Plan is intended to assist the Legislature and public in understanding the current operating forecast and the impact on State finances over a multi-year period. It is available on-line at budget.state.ny.us or by contacting the Division of the Budget, State Capitol, Albany, NY 12224, (518) 474-8282.

1 Please see Glossary of Acronyms for the definitions of commonly used acronyms and abbreviations that appear in the text.

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HIGHLIGHTS

OVERVIEW

? DOB now estimates a General Fund budget gap of $2.1 billion in the current year, and projects budget shortfalls growing to $18.2 billion by fiscal year 2012-13. The table below summarizes the revisions to the General Fund projections.

SUMMARY OF CHANGES TO GENERAL FUND/HCRA FORECAST : BUDGETARY BASIS SURPLUS/(GAP) PROJECTIONS (millions of dollars)

2009-10

2010-11

2011-12

2012-13

Enacted Budget Estimate

Receipts Revisions Disbursement Revisions Legislative Session Changes HCRA Revisions

First Quarterly Update Estimate

0

(1,975) (87) (61) 0

(2,123)

(2,166)

(1,520) (807) (115) (15)

(4,623)

(8,757)

(2,467) (1,890)

(157) (5)

(13,276)

(13,706)

(1,966) (2,299)

(160) (32)

(18,163)

Required Legislative/Admin Actions

2,123

TBD

Budget Surplus/(Gap) After PEG*

0

(4,623)

* Assumes successful implementation of legislative/administrative actions.

TBD (13,276)

TBD (18,163)

? The economic downturn continues to have a powerful negative effect on tax receipts in many states, including New York. The increase in the State's current-year gap is almost entirely due to a reduction in the forecast for State tax receipts, based on updated economic information and operating results. The outyear adjustments reflect negative revisions to both receipts and disbursements as the pervasiveness of the economic downturn leads to increased pension contributions (absent actions to control costs), reduced investment income, and other costs largely influenced by economic conditions.

? General Fund operating results through the first quarter of 2009-10 were better than expected in the Enacted Budget Financial Plan, but this was due in large part to (a) management actions to maintain adequate operating margins and (b) routine variances in the timing of disbursements that are not expected to affect annual spending levels. Excluding the impact of cash management actions, General Fund receipts were approximately $800 million below planned levels through the first quarter, the prime motivating factor leading to the receipts revisions.

? The Governor will propose a Program to Eliminate the Gap (the "PEG") in the current year without the use of existing reserves. It is expected that the PEG will propose substantial reductions in local assistance and State Operations spending, as well as other measures to achieve a balanced budget in the current year. The Executive expects to have the PEG ready for legislative consideration in the early fall of 2009. At the same time, DOB is working with the Governor's Office of Taxpayer Accountability to identify opportunities to reduce waste, fraud, and abuse in State government, and has begun to implement some of these measures.

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OVERVIEW

FINANCIAL PLAN AT-A-GLANCE

FINANCIAL PLAN AT-A-GLANCE: KEY MEASURES (millions of dollars)

2009-10

State Operating Funds Budget Size of Budget Annual Growth

Other Budget Measures (Annual Growth) General Fund (with transfers)

2008-09 Actual

$78,168 1.5%

$54,607 2.3%

Enacted Budget

Revised 1, 2

Revised (incl. MTA) 2

$78,742 0.7%

$54,908 0.6%

$78,848 0.9%

$55,059 0.8%

$80,471 2.9%

$55,059 0.8%

2010-11 Current Services

$85,453 6.2%

$59,941 8.9%

State Funds (Including Capital)

$83,146 2.2%

$84,657 1.8%

$84,386 1.5%

$86,009 3.4%

$91,913 6.9%

Capital Budget (Federal and State)

$6,830 11.4%

$8,832 29.3%

$8,455 23.8%

$8,455 23.8%

$9,482 12.1%

Federal Operating

$36,573 11.1%

$44,361 21.3%

$44,543 21.8%

$44,543 21.8%

$45,108 1.3%

All Governmental Funds

$121,571 4.8%

$131,935 8.5%

$131,846 8.5%

$133,469 9.8%

$140,043 4.9%

All Govt'l Funds (Including "Off-Budget" Capital)

Inflation (CPI) Growth All Funds Receipts (Annual Growth)

Taxes

$123,833 5.2% 2.7%

$60,337 -0.9%

$133,737 8.0% -0.2%

$60,647 0.5%

$133,690 8.0% -0.2%

$58,897 -2.4%

$135,313 9.3% -0.2%

$60,556 0.4%

$141,988 4.9% 2.0%

$64,889 7.2%

Miscellaneous Receipts

$20,064 2.1%

$22,185 10.6%

$21,435 6.8%

$21,435 6.8%

$21,452 0.1%

Federal Grants

$38,834 11.2%

$47,718 22.9%

$47,799 23.1%

$47,799 23.1%

$48,576 1.6%

Total Receipts

$119,235 3.3%

$130,550 9.5%

$128,131 7.5%

$129,790 8.9%

$134,917 4.0%

Base Tax Growth/(Decline) 3

Combined General Fund/HCRA Gap Forecast 2009-10 (before PEG savings) 2010-11 2011-12 2012-13

-3.0%

N/AP N/AP N/AP N/AP

-6.5%

$0 ($2,166) ($8,757) ($13,706)

-9.6%

($2,123) ($4,623) ($13,276) ($18,163)

-9.6%

($2,123) ($4,623) ($13,276) ($18,163)

6.1%

N/A N/A N/A N/A

Cumulative Gaps

N/AP

($24,629)

($38,185)

($38,185)

N/A

Total General Fund Reserves (year-end)

$1,948

$1,378

$1,378

$1,378

$1,378

State Workforce (Subject to Executive Control)

136,490

128,803

128,803

128,803

128,803

Debt Debt Service as % All Funds State Related Debt Outstanding

4.3% $51,768

4.5% $54,532

4.4% $54,327

4.4% $54,327

4.8% $57,260

1 Excludes the approximately $1.6 billion in special revenue fund receipts and disbursements related to the new the Metropolitan Commuter Transportation Mobility Tax, a tax which is collected by the State on behalf of, and transferred in its entirety to, the MTA.

2 The estimates do not include $2.1 billion in potential PEG savings, as options are currently under development.

3 Reflects estimated change in tax receipts excluding the impact of Tax Law changes since SFY 1986-87.

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