GOVERNOR CUOMO DETAILS UPDATES TO THE FY 2020 EXECUTIVE BUDGET FINANCIAL PLAN

In February 15, 2019

GOVERNOR CUOMO DETAILS UPDATES TO THE FY 2020 EXECUTIVE BUDGET FINANCIAL PLAN

Budget Remains Balanced Despite Additional Reductions in Revenue Estimates

Governor Andrew M. Cuomo today announced changes to the FY 2020 Executive Budget Financial Plan, including re-estimates and amendments. Estimated tax receipts have been revised downward due to weaker personal income tax collections in December 2018 and January 2019. The downward revisions to receipts are offset by reductions in estimated General Fund disbursements and use of available resources.

“The federal government’s politically motivated changes to state and local tax deductibility have already cost New York $2.6 billion,” Governor Cuomo said. “As Washington continues their economic civil war by restructuring the economy to benefit red states, we are taking action to maintain a strong Financial Plan and safeguard New York’s fiscal integrity.”

Revisions in the Financial Plan include a $3.8 billion downward re-estimate to personal income tax collections over two years, including a reduction of $2.6 billion in FY 2019 and $1.2 billion in FY 2020. Specifically, the estimated payments component of personal income taxes has been lowered by $2.3 billion in the current year and $900 million in FY 2020, and the withholding component by $261 million and $344 million in the current and next fiscal year, respectively. The impact of the reductions is carried through the out-years of the Financial Plan, consistent with a lower base for both components. The decline in estimated tax receipts reflects changes in taxpayers’ behavior including shifting patterns of payments responding to the Tax Cuts and Jobs Act of 2017.

The Updated Plan is balanced in both FY 2019 and FY 2020. The reduction in personal income tax receipts and costs from a new labor contract is fully offset by a combination of new proposals and administrative actions.

State Operating Funds disbursements are estimated at $100.1 billion in FY 2019, and $102 billion for FY 2020, consistent with the 2 percent annual spending growth benchmark in both years.

“The federal tax changes have been a major disruption to the Financial Plan,” said State Budget Director Robert F. Mujica, Jr. “With these amendments to the Executive Budget and revisions to the Financial Plan we are taking this threat as seriously as it deserves.”

The legislation and narratives for all FY 2019 Executive Budget amendments, along with the updated Financial Plan, are available on the New York State Division of the Budget’s website.

Key changes to the Financial Plan include the following:

  • Three actions are advanced in the Medicaid program to generate an additional $550 million in General Fund relief. First, Health Care Transformation Funding which had yet to be distributed will be redeployed for housing services. Second, reflecting the strong balance sheets of Major Voluntary Hospital Systems, Indigent Care Payments will be reduced. Third, an across-the-board reduction in Medicaid provider reimbursement is proposed, which can include alternative approaches that achieve comparable savings. This reduction will approximate 0.8 percent and will not impact payments required by Federal law (i.e., Federally qualified health centers, hospice) or direct payments authorized under mental hygiene law.
  • The Governor will also call upon the Department of Health to reconvene the Medicaid Redesign Team to conduct a comprehensive evaluation of the Medicaid program and offer recommendations to further improve access to high quality and cost-effective medical services and stabilize the long-term fiscal condition of the Medicaid Global Cap. The MRT will be comprised of health care industry leaders and stakeholders from across the State and will convene this year to conduct its evaluation and report recommendations to the Governor. Topics for review will include but not be limited to: addressing the needs of vulnerable populations, responding to the current Federal landscape, evaluating options to enhance affordable health insurance coverage and access, sustaining the future of our long-term care system and stabilizing fiscally distressed health care providers.
  • The Financial Plan includes savings from the closure of up to three prisons to reduce excess capacity due to declining prison population.
  • Executive Budget amendments include legislation to protect the State’s fiscal integrity by requiring bills with a fiscal impact passed after the budget has been enacted to be accompanied by a plan to pay for the costs of such bills.
  • Amendments to the Executive Budget will ensure towns and villages are not adversely impacted by changes to the Aid and Incentives to Municipalities (AIM) program. The proposal would direct counties to use additional sales tax revenue from the elimination of the internet tax advantage to keep towns and villages whole following the AIM reduction to less-reliant municipalities. To ensure locals receive these additional resources faster, the State will also implement the Internet sales tax requirements earlier, starting June 1 of this year as opposed to September 1, the date originally used in the Executive Budget.
  • Consistent with the Executive Budget and reflecting the uncertainty to State revenues attributable to federal tax reform, the Financial Plan continues the planned $250 million deposit to Rainy Day Reserves, the first of two planned deposits.

 

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