S3770-2013 Actions

• Feb 14, 2013: REFERRED TO FINANCE

S3770-2013 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.

S3770-2013 Text

 S T A T E   O F   N E W   Y O R K
 
 
                                         3770
 2013-2014 Regular Sessions
 I N  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.
 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
 [ ] is old law to be omitted.
 LBD08608-01-3
 
       S. 3770                             2
 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
 
       S. 3770                             3
 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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