More than two months into the fiscal year, New York State yesterday adopted a budget for fiscal 1995 featuring a series of business tax cuts, an increase in spending, and a plan to reform the way the state sells its longterm debt.
Gov. Mario M. Cuomo is expected to sign the various bills that make up the budget sometime this month, a spokeswoman for the budget division said yesterday. The budget bills that replicate the governor's original budget submitted in January will go into effect immediately, the spokeswoman said. Other bills, such as the tax cut bill, will go into effect when the governor signs them, the spokeswoman said.
The accord, brokered around 4 a.m., Eastern Daylight Time, Wednesday morning, was heralded as fair and balanced by the three major players in the budget negotiations: Cuomo, state Senate Leader Ralph J. Marino, R-Muttontown, and Assembly Speaker Sheldon Silver, D-Manhattan. The $63 billion budget includes a $34 billion general fund budget.
All three leaders issued statements underscoring their support for the spending plan, providing insight into why the state went 69 days into its fiscal year without a budget. The state's fiscal year began April 1.
During the past two months, the Assembly and Senate bickered over the use of a fiscal 1994 surplus of more than $1 billion, with the Senate's proposing to finance additional business tax cuts, and the Assembly's calling for increases in school aid.
All along, Cuomo, a Democrat who is running for re-election, spoke as a fiscal conservative, vowing to fight largess and to keep the budget from running in the red if the state's rebounding economy should turn south.
In another attempt to show fiscal restraint, political observers said, Cuomo in recent weeks called on legislative leaders to reform the state's borrowing practices through the creation of a constitutional amendment as part of the budget process. By Tuesday night, Cuomo, Marino, and Silver came up with a plan all three could live with, and one that is acceptable to state Comptroller H. Carl McCall.
The debt reform plan revises a proposal made by Cuomo in January when he presented his version of the budget to the legislature. In January, Cuomo adopted a plan by the Citizen's Budget Commission, a non-profit fiscal watchdog group, that would create a new form of state debt but limit its issuance to 4.75% of the state's total personal income. All outstanding debt would fall under the cap.
The new agreement calls for a phasing-in of the cap, allowing the state to issue the new bond equal to 1% of total personal income the first year the amendment takes effect. The plan would allow additional bond sales of 1/3% of total personal income each year for the next nine years, and 0.4% of total personal income the last year.
Outstanding debt will not count toward the cap under the new plan.
Claudia Hutton, a spokeswoman for the state budget division, said the amendment is an improvement over Cuomo's original debt reform plan, announced as part of the state's fiscal 1994 budget. That plan would have allowed the state to issue debt up to 5% of total personal income, but not include outstanding debt under the limit.
But Hutton would not say how the current proposal matches up to the one Cuomo announced in January. "We have four-way agreement on the proposal," she said. "It does us no good if we can't get legislative agreement."
Cynthia Green, deputy research for the budget commission, said the new amendment is a "vast improvement" over the plan Cuomo originally put forth last year. She said the plan "is worthy of support" because it largely bans the use of appropriated debt and forces the state to develop a capital planning policy.
The proposal must now pass the legislature one more time before it goes before the voters in 1996. Several analysts, and a popular taxpayer activist, suggested that winning over a debt-weary public will not be easy.
"This looks like a pretty decent program," said Michael Shamosh, a municipal market analyst for Cowen & Co. "But there's a large element of distrust in New York" on these issues.
Taxpayer activist Robert L. Schulz, who is suing the state over the constitutionality of its borrowing practices, said that the latest proposal runs counter to the state constitutional restrictions on debt, which call for a voter referendum for state bonds.
