Spending Cap
Spending Cap
Fixing New York's Spending Problem
Authored by

The New York State Constitution (Article VII, Section 2) grants the Governor the authority to submit an Executive Budget to the State Legislature containing proposed expenditures for the year.  Enactment of a State Spending Cap would necessitate the Governor's Executive Budget expenditures falling within the parameters of the spending cap (limiting the growth of state spending to no more than the average rate of inflation of the three previous calendar years). 

A State Spending Cap matters because, over the last 10 years (from 2000 to 2010), state government spending grew by 70%, almost $32 billion over the rate of inflation. Enacting a state spending cap based on changes in the Consumer Price Index (CPI), would provide a significant cost savings to New York’s overburdened taxpayers. In fact, if a state spending cap had been in place over the past 10 years, spending would have been $30 billion less this year. If the cap was enacted this year, next year’s All Funds budget could not grow by more than an estimated $1.3 billion, bringing spending to $133 billion next year, which is less than what the state spent in 2010-11. A spending cap will protect taxpayers and begin the process of forcing fiscal accountability on Albany.

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 of 7.86 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 cap limiting the growth of State Operating Funds spending. It also significantly increases the maximum capacity of the State's rainy day reserve so that surplus that accrue as a result of this cap can be used to help address revenue declines during times of economic difficulty.


Article VII

§2. "Annually ... the governor shall submit to the legislature a budget containing a complete plan of expenditures proposed to be made before the close of the ensuing fiscal year and all moneys and revenues estimated to be available therefor, together with an explanation of the basis of such estimates and recommendations as to proposed legislation, if any, which the governor may deem necessary to provide moneys and revenues sufficient to meet such proposed expenditures."

OPINION EDITORIALS ON THE CONSTITUTION
New York Times
Editorial
Thursday, December 15, 2011
"We need to live within our means. The challenge is to find ways to cut spending equitably and limit the disruption to essential services and the damage to the state’s future."
An important perspective from a 2011 New York Times editorial which outlines the various areas of the state's $132 billion budget that need close examination as a source of potential cost savings and spending reductions.
Link to Original Source - Link to Cached Version
 
New York Post
E. J. McMahon
Sunday, December 11, 2011
"Rising spending is a well-established trend in New York, as shown in the accompanying chart. Adjusting for average inflation during each fiscal year, the State Operating Funds budget — excluding the permanent, recurring federal share of...
Senior Fellow at the prestigious Manhattan Institute's "Empire Center for New York State Policy", E.J. McMahon's 2011 opinion piece written for the New York Post makes the case as to why higher taxes are not the answer to solving New York's chronic overspending problem and traces the growth of state spending over successive administrations.
Link to Original Source - Link to Cached Version
 
Daily News
Wednesday, October 14, 2009
"New York State must come to terms with a harsh economic reality: It can no longer tax and borrow its way out of the current economic crisis and remain competitive as a place to live, work and do business. Spending cuts are required, and they won...
2009 opinion piece for the New York Daily News written by Citizens Budget Commission President, Carol Kellermann making a clear and convincing case for New York's state government to control spending by addressing three of the principal cost drivers -- Medicaid, personnel costs and education -- in order to restore fiscal accountability in Albany and protect taxpayers.
Link to Original Source - Link to Cached Version
 
SOLUTIONS
A selection of relevant solutions from other states.

According to the National Conference of State Legislatures (NCSL), as of 2008, 23 states have some form of spending cap or spending limitation in place (roughly half are constitutional; the other half are statutory).  Source: National Conference of State Legislatures,"State Tax and Expenditure Limits - 2008."

 

 

A Project of the Howard Samuels New York Policy Center, Inc.
Web Development by Kallos Consulting 

Creative Commons License