Bill S3770-2013

Establishes an annual spending growth cap and increases the maximum capacity of the rainy day fund

Establishes an annual spending growth cap and increases the maximum capacity of the rainy day fund.

Details

Actions

  • Jun 20, 2014: RECOMMITTED TO RULES
  • Jun 9, 2014: ORDERED TO THIRD READING CAL.1207
  • Jun 9, 2014: COMMITTEE DISCHARGED AND COMMITTED TO RULES
  • Jan 8, 2014: REFERRED TO FINANCE
  • Jan 8, 2014: returned to senate
  • Jan 8, 2014: died in assembly
  • Jun 12, 2013: referred to ways and means
  • Jun 12, 2013: DELIVERED TO ASSEMBLY
  • Jun 12, 2013: PASSED SENATE
  • Jun 11, 2013: ORDERED TO THIRD READING CAL.1259
  • Jun 11, 2013: COMMITTEE DISCHARGED AND COMMITTED TO RULES
  • Feb 14, 2013: REFERRED TO FINANCE

Meetings

Calendars

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Memo

BILL NUMBER:S3770

TITLE OF BILL: An act to amend the state finance law, in relation to establishing a spending cap and increasing the maximum capacity of the rainy day fund

PURPOSE: This legislation will cap the growth of state spending and increase the allowable reserve of the rainy day fund.

SUMMARY OF PROVISIONS:

Section one of the bill would amend the State Finance Law ("SFL") to add a new Article 17, establishing a state spending cap.

* New SFL § 244 sets for definitions for article 17.

* New SFL § 245 establishes a spending cap, which limits the growth of state operating funds spending to no more than the average rate of inflation of the three previous calendar. years. In addition, the section requires the governor to certify that the executive budget is consistent with the cap and the comptroller will provide, within five days of action by the Legislature upon the budget, a determination as to whether the state budget as enacted exceeds the annual spending growth cap. Finally, the section provides that if the Comptroller finds that the state budget as enacted exceeds the annual spending growth cap, the Governor must take corrective action, such as a veto, reducing state agency spending within the control of the Executive or working with the Legislature to enact spending reductions, to ensure that funding is limited to the amount of the annual spending cap.

* New SFL § 246 provides that upon a finding of an emergency by the Governor, he or she may declare an emergency b executive order. Based upon such declaration, the Governor may submit and the Legislature may authorize by a two-thirds super majority a budget containing a percentage increase in state operating fund spending over the prior fiscal year that exceeds the annual spending growth cap.

Section 2 of the bill would increase the maximum capacity of the state's rainy day reserve from 3 percent of General Fund spending to 10 percent of General Fund spending.

Section 4 would make the act effective.

EXISTING LAW: SFL § 92-cc (2) establishes a maximum balance in the rainy day reserve fund of three percent of the aggregate amount projected to be disbursed annually from the General Fund.

JUSTIFICATION: State government spending has grown substantially in recent years especially in good economic times. Such growth has forced the State to take drastic actions to stabilize its finances when revenues decline dramatically during periods of economic difficulty. For example, from 2002-03 to 2007-08, State Operating Funds spending grew from $52.8 billion to $77.0 billion -- an average annual rate of7.86 percent. In great part due to this dramatic expansion in spending, the State needed to address a nearly $20.1 billion deficit during last year's budget process. To end this pattern of boom and

bust cycle budgeting, and impose greater fiscal discipline on state government, this legislation would enact a strict can limiting the growth of State Operating Funds spending. It also significantly increases the maximum capacity of the State's rainy day reserve so that surpluses that accrue as a result of this cap can be used to help address revenue declines during times of economic difficulty.

If the cap proposed in this legislation had been in place from 2002-03 to 2007-08, average annual spending growth during that period would have averaged 2.6 percent. Additionally, 2007-08 State Operating Funds spending would have totaled $60.0 billion - $17.0 billion lower than actual results.

LEGISLATIVE HISTORY: 2010 Referred to Finance

FISCAL IMPLICATIONS: In 2010-11, it is expected that the cap would limit State Operating Funds spending to no greater than $80.4 billion, which reflects an increase of $1.7 billion or 2.1 percent from the prior year. This capped spending level would be $2.2 billion below the most recent current law estimates of State Operating Funds spending for 2010-11 ($82.6 billion, an increase of $3.9 billion of 5.0%) projected in the Division of the Budget's financial plan.

LOCAL FISCAL IMPLICATIONS: The fiscal impact on local governments would depend upon policy choices made during the budget process in order to comply with the cap.

EFFECTIVE DATE: 30 days after it shall have become law.


Text

STATE OF NEW YORK ________________________________________________________________________ 3770 2013-2014 Regular Sessions IN SENATE February 14, 2013 ___________
Introduced by Sen. ROBACH -- read twice and ordered printed, and when printed to be committed to the Committee on Finance AN ACT to amend the state finance law, in relation to establishing a spending cap and increasing the maximum capacity of the rainy day fund THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM- BLY, DO ENACT AS FOLLOWS: Section 1. The state finance law is amended by adding a new article 17 to read as follows: ARTICLE 17 ANNUAL SPENDING GROWTH CAP ACT SECTION 244. DEFINITIONS. 245. ESTABLISHMENT OF ANNUAL SPENDING GROWTH CAP. 246. PROVISIONS REGARDING DECLARATION OF EMERGENCY. S 244. DEFINITIONS. AS USED IN THIS ARTICLE, THE FOLLOWING TERMS SHALL HAVE THE FOLLOWING MEANINGS, UNLESS OTHERWISE SPECIFIED: 1. "ANNUAL SPENDING GROWTH CAP" SHALL MEAN A PERCENTAGE DETERMINED BY ADDING THE INFLATION RATES FROM EACH OF THE THREE CALENDAR YEARS IMME- DIATELY PRIOR TO THE COMMENCEMENT OF A GIVEN FISCAL YEAR AND THEN DIVID- ING THAT SUM BY THREE. 2. "STATE OPERATING FUNDS SPENDING" SHALL MEAN ANNUAL DISBURSEMENTS OF ALL GOVERNMENTAL FUND TYPES INCLUDED IN THE CASH-BASIS FINANCIAL PLAN OF THE STATE, EXCLUDING DISBURSEMENTS FROM FEDERAL FUNDS AND CAPITAL PROJECT FUNDS. 3. "INFLATION RATE" SHALL MEAN THE PERCENTAGE CHANGE IN THE TWELVE-MONTH AVERAGE OF THE CONSUMER PRICE INDEX FOR ALL URBAN CONSUMERS AS PUBLISHED BY THE UNITED STATES DEPARTMENT OF LABOR, BUREAU OF LABOR STATISTICS OR ANY SUCCESSOR AGENCY FOR A GIVEN CALENDAR YEAR COMPARED TO THE PRIOR CALENDAR YEAR. 4. "EXECUTIVE BUDGET" SHALL MEAN THE BUDGET SUBMITTED ANNUALLY BY THE GOVERNOR PURSUANT TO SECTION ONE OF ARTICLE VII OF THE STATE CONSTITU- TION.
5. "STATE BUDGET AS ENACTED" SHALL MEAN THE BUDGET ACTED UPON BY THE LEGISLATURE IN A GIVEN FISCAL YEAR, AS SUBJECT TO SECTION FOUR OF ARTI- CLE VII OF THE STATE CONSTITUTION AND SECTION SEVEN OF ARTICLE IV OF THE STATE CONSTITUTION. 6. "EMERGENCY" SHALL MEAN AN EXTRAORDINARY, UNFORESEEN, OR UNEXPECTED OCCURRENCE, OR COMBINATION OF CIRCUMSTANCES, INCLUDING BUT NOT LIMITED TO A NATURAL DISASTER, INVASION, TERRORIST ATTACK, OR ECONOMIC CALAMITY. S 245. ESTABLISHMENT OF ANNUAL SPENDING GROWTH CAP. 1. THERE IS HERE- BY ESTABLISHED AN ANNUAL SPENDING GROWTH CAP. 2. THE GOVERNOR SHALL NOT SUBMIT, AND THE LEGISLATURE SHALL NOT ACT UPON, A BUDGET THAT CONTAINS A PERCENTAGE INCREASE OVER THE PRIOR FISCAL YEAR IN STATE OPERATING FUNDS SPENDING WHICH EXCEEDS THE ANNUAL SPENDING GROWTH CAP. 3. THE GOVERNOR SHALL CERTIFY IN WRITING THAT STATE OPERATING FUNDS SPENDING IN THE EXECUTIVE BUDGET DOES NOT EXCEED THE ANNUAL SPENDING GROWTH CAP. IF FINAL INFLATION RATE DATA FOR THE PRIOR CALENDAR YEAR IS NOT YET AVAILABLE AT THE TIME THE GOVERNOR SUBMITS HIS OR HER EXECUTIVE BUDGET, HE OR SHE SHALL FURNISH A REASONABLE ESTIMATE OF SUCH PRIOR CALENDAR YEAR INFLATION RATE. 4. THE COMPTROLLER SHALL PROVIDE, WITHIN FIVE DAYS OF ACTION BY THE LEGISLATURE UPON THE BUDGET, A DETERMINATION AS TO WHETHER THE STATE OPERATING FUNDS SPENDING AS SET FORTH IN THE STATE BUDGET AS ENACTED EXCEEDS THE ANNUAL SPENDING GROWTH CAP. 5. IF THE COMPTROLLER FINDS THAT STATE OPERATING FUNDS SPENDING AS SET FORTH IN THE STATE BUDGET AS ENACTED EXCEEDS THE ANNUAL SPENDING GROWTH CAP, THE GOVERNOR SHALL TAKE CORRECTIVE ACTION TO ENSURE THAT FUNDING IS LIMITED TO THE AMOUNT OF THE ANNUAL SPENDING CAP. S 246. PROVISIONS REGARDING DECLARATION OF EMERGENCY. 1. UPON A FIND- ING OF AN EMERGENCY BY THE GOVERNOR, HE OR SHE MAY DECLARE AN EMERGENCY BY AN EXECUTIVE ORDER WHICH SHALL SET FORTH THE REASONS FOR SUCH DECLA- RATION. 2. BASED UPON SUCH DECLARATION, THE GOVERNOR MAY SUBMIT, AND THE LEGISLATURE MAY AUTHORIZE, BY A TWO-THIRDS SUPERMAJORITY, A BUDGET CONTAINING A PERCENTAGE INCREASE OVER THE PRIOR FISCAL YEAR IN STATE OPERATING FUNDS SPENDING THAT EXCEEDS THE ANNUAL SPENDING GROWTH CAP. S 2. Subdivision 2 of section 92-cc of the state finance law, as amended by section 17 of part U of chapter 59 of the laws of 2012, is amended to read as follows: 2. Such fund shall have a maximum balance not to exceed [three] TEN per centum of the aggregate amount projected to be disbursed from the general fund during the fiscal year immediately following the then-cur- rent fiscal year. At the request of the director of the budget, the state comptroller shall transfer monies to the rainy day reserve fund up to and including an amount equivalent to three-tenths of one per centum of the aggregate amount projected to be disbursed from the general fund during the then-current fiscal year, unless such transfer would increase the rainy day reserve fund to an amount in excess of three per centum of the aggregate amount projected to be disbursed from the general fund during the fiscal year immediately following the then-current fiscal year, in which event such transfer shall be limited to such amount as will increase the rainy day reserve fund to such three per centum limi- tation. S 3. Subdivision 2 of section 92-cc of the state finance law, as added by chapter 1 of the laws of 2007, is amended to read as follows: 2. Such fund shall have a maximum balance not to exceed [three] TEN per centum of the aggregate amount projected to be disbursed from the
general fund during the fiscal year immediately following the then-cur- rent fiscal year. S 4. This act shall take effect on the thirtieth day after it shall have become a law; provided, however that the amendments to subdivision 2 of section 92-cc of the state finance law made by section two of this act shall be subject to the expiration and reversion of such subdivision pursuant to section 53 of part U of chapter 59 of the laws of 2012, as amended, when upon such date the provisions of section three of this act shall take effect.

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