March 10, 2010
LIEUTENANT GOVERNOR RAVITCH UNVEILS FIVE-YEAR PLAN TO ELIMINATE NEW YORK STATE’S STRUCTURAL BUDGET DEFICIT
Fiscal Reforms Seek to Bring Recurring Expenses in Line With Recurring Revenues
Financial Review Board Would be Created to Ensure Progress toward Structural Balance
Lieutenant Governor Richard Ravitch today unveiled a fiscal reform plan which calls for a five-year plan to eliminate the State's structural imbalance and institutes a process by which annual budget balance is mandated, monitored and maintained.
With the creation of a Financial Review Board, comprised of representatives appointed by the Governor, the Legislature and the Comptroller, adherence to the five-year plan will be monitored and reviewed on a quarterly basis. And in order to maintain balance in a given fiscal year, the Legislature would be required to act within a limited timeframe when the budget is out of balance or the Governor would be authorized to initiate across the board pro rata spending reductions.
The proposal also recommends stronger reserve requirements, a transition to GAAP (Generally Accepted Accounting Principles) budgeting standards, and changing the beginning of the State fiscal year from April 1 to July 1.
This plan is founded on two fundamental propositions: first, fiscal integrity, which means the acknowledgement that for too long we have found ways to cover up a structural imbalance between recurring revenues and recurring expenses. We should adopt new laws that assure we spend only those monies we are willing to raise, and never again pretend our budgets are in balance when they are not. Second, is the avoidance of the inevitable increase in taxes that will result unless our political system finds the will to make the spending reductions necessary to close our growing structural deficit," said the Lieutenant Governor.
Major recommendations in the report include the following:
- Lock the State into paying down its existing structural budget gap within five years;
- Require a quarterly assessment by an independent Financial Review Board of the State's progress towards structural balance and the maintenance of annual balanced budgets;
- Authorize the Governor, if the independent review board finds that the budget is not projected to be in balance at year's end, and the Governor and the Legislature cannot agree on gap-closing actions within a limited time-frame, to implement across the board pro-rata reductions;
- Allow the State to borrow within stringent limits to close existing budget gaps, but only if the independent review board finds that strict new financial controls have been met.
When Governor Paterson appointed Richard Ravitch to serve as Lieutenant Governor he asked him to prepare a long term fiscal plan for the State of New York. Over the past several months, the Lieutenant Governor has met with State officials, stakeholders and fiscal experts to better understand the challenges facing New York and to provide his recommendations for fixing them.
"I want to thank the Governor for giving me the opportunity to work on this plan over the past several months," added Ravitch. "I look forward to assisting the Governor in any possible way on the budget negotiations moving forward and I look forward to a robust discussion with the Governor, Legislative Leaders, budget officials and stakeholders about the ideas I have presented in my plan."
Click here to view the full report.
