State budget update: Cuomo’s temporary extender, explained

Since Gov. Andrew Cuomo took office in 2011, he has consistently negotiated an on-time or nearly on-time state budget agreement – until this year. After failing to reach a budget deal by the April 1 deadline, lawmakers on Monday approved the governor’s temporary legislation keeping state government running through the end of May.

Yet many questions remain about how the governor, legislative leaders and rank-and-file lawmakers will move forward, especially if the federal government makes devastating cuts in aid to New York. So City & State’s Ashley Hupfl reached out to Dave Friedfel, director of state studies at the Citizens Budget Commission, to clarify some of the details about the budget extender.

RELATED: 10 things to watch for in the state budget.

C&S: Legislators have said there are no surprises in the budget extender. Is this true? Did anything unexpected stick out to you?

DF: There’s a few things we weren’t expecting, per se. There was $2.5 billion in capital for the clean water infrastructure initiative, that’s not necessarily a part of a straight extender. Apparently it was agreed to by the three parties, so it’s not necessarily a bad thing it was included, but it’s not typically what you think of when you think of a straight extender.

Some of the other capital appropriations, there were some things that we’re hoping would not be in there that were on the economic development capital side. There’s things that the governor proposed that are getting included: the $300 million for life sciences, $180 million for the Kingsbridge Ice Center and there were a few pieces from the economic development budget that actually were left out, like the $200 million for New York Works, another $200 million for the strategic projects fund. Both of those were left out, which we’re kind of glad to see.

C&S: What repercussions could there be because the state Legislature failed to reach a budget compromise and instead are passing an extender?

DF: It depends on how long it drags out. If it actually goes the full two months, there could be a significant impact on schools, specifically, because they need to vote on their school budgets prior to the end of May, so they need their budgets ahead of time so they can know how much they’re getting in state aid. We understand school aid is a contentious issue. We’ve spoken extensively about reforming the Foundation Aid Formula and we’re hopeful the final budget will come out promptly and properly with changes ot he foundation aid formula accordingly.

C&S: While passing the budget extender, several state senators cited the need to continue paying state workers. Will legislators also continue to receive a salary?

DF: I don’t believe so. There is a statute that says legislators cannot get paid when the budget is late. No, it’s just he legislative staff (that gets paid) from what it looks like to me. 

C&S: So, if the state Legislature went until May 31, they would not get paid until that point?

DF: Correct, though they do get paid. They would get back pay.

C&S: While Cuomo has prided himself on delivering on-time budgets, this year he’s repeatedly said it’s more important to have a budget that is aligned with any potential federal cuts. Do you agree that is the smartest budget move at this point?

DF: From a budgetary standpoint, the state knew in January there were going to be some really significant changes from the federal level when the executive budget was originally proposed. So we know as much now as we did then, if not a little more with the failure of the American Health Care Act. But, not really, is the short answer. There are things that could be put in the state budget document that could make it so that the budget legislation could deal with certain changes and if there were really significant changes, the Legislature would have to come back and pass a new budget in May to change those things, since the federal budget isn’t enacted in May, just proposed. Generally, the changes on the federal level wouldn’t impact this year’s state budget, the (2017-18) budget until the (2018-19) budget. 

C&S: If there are severe cuts in federal funding after the state reaches a budget agreement, what steps can the state take afterwards to fix the potential funding gap?

DF: It would really depend on what those changes are. It’s possible they would have to come back and change some of the appropriations language because federal programs changed how they operate, not necessarily a fiscal change, but names of programs and who’s eligible and those kinds of things. It would also potentially have to cut spending if there’s a federal aid decrease, particularly in education, and a potential health plan could increase the state’s share. Unfortunately, there’s so many potential changes that the effects could be severe. The other change that could happen is not really on programs, but on the tax side, if the federal government were to change the deductibility of state and local taxes or (decrease) the overall deductions at a lower level than they currently are – that could have a significant impact on the taxpayers’ cost of the state personal income tax and the state’s tax on millionaires, which would then require some state action to alleviate those effects. 

C&S: Anything else to watch?

DF: One thing the budget extender did is reject the executive budget’s proposal interchange language that would have allowed him to increase or decrease state operations spending. There was new language that allows the governor to move money around in one department. So, within the state Department of Corrections, they could move money around a bit, which has had some serious concerns about the executive’s ability to increase appropriations, and this cuts down on that.

On the education side there is basically no money for the (2017-18) school aid formula. It basically just funded the tail end of the (2016-17) payments, which they always split the school aid across the state fiscal years because the years don’t (match up). They basically included most of that money from (2016-17) and the governor’s (proposal in the extender) is actually lower in the executive budget, so they may not be including the June payment.