State Bill Seeks Budget Reform
Legislation Aims at 20-Year-Old Problem

By Simon Eskow

In 1984, cell phones were unheard of, the Soviet Union spanned a continent, and New York state failed to pass its budget on deadline. So much has changed since then. Except for the late budget.

On April 1, the state legislature and governor once again neglected to pass a timely budget, for the twentieth consecutive year.

And for the second year in a row, legislators have proposed a bill that would send fiscal tardiness the way of the hammer-and-sickle.

The Budget Reform Act would move the fiscal year to begin on July 1, and change certain deadlines to give the governor and lawmakers more time to approve a budget. It would establish an automatic contingency spending plan in the event a budget comes in late, and it would implement reserve funds for services like education and Medicare.

But, good intentions aside, the bill now languishes in the Senate Ways and Means Committee, where it has sat since Jan. 20 and where it may die a quiet death, leaving school districts, municipalities and nonprofit organizations to wonder how much money they might expect from the state in the next fiscal year.

“Working under current restraints, (schools and municipalities) have gotten this thing down to an art,” said David Hasso. “With the budget being late so long, they’re working ways around the problems.”

Hasso, chairman of the New York State Society of CPAs’ Government Accounting and Auditing Committee, said late budgets don’t have a direct negative impact outside of Albany because state government appears to continue working seamlessly.

But New Yorkers are paying attention. A recent Marist College poll showed that almost half of state residents say it matters to them “a great deal” that the budget is late again. More than half of the 602 residents polled blamed the state legislature for the budget problems.

What the poll didn’t show is what happens on a local level when state budgets aren’t passed in time. School districts outside the state’s five largest cities hold annual referenda on proposed budgets, which include setting tax levies on district residents.

Without knowing what kind of funding to expect from Albany in funding allocations, school districts are left drafting budgets in the dark.

“What happens with regard to late budgets is counterproductive,” Phillip Pearlstein said. “School districts don’t know how much they’re going to have to spend. The fact is, they don’t know how much to charge (in taxes).”

Pearlstein, a government relations director for the Society’s Mid-Hudson Chapter, said this applies to agencies, nonprofits and local municipalities throughout the state. How they’ve managed to operate from year to year under these circumstances has been a matter of assimilation.

“Local towns (and school districts) are so used to this process,” he said. “They’ve had years of experience. They estimate. What happens is that they’re required to ask for more money for a cushion.”

While Pearlstein wouldn’t say if this adds pressure to rising local tax rates, he did call the annual budget troubles “an inefficiency.”

“Inefficiencies do contribute to higher tax rates,” he said.

The Budget Reform Act (S1-A) could help. According to a release issued from Sen. Joseph Bruno’s office, the act would change the start of the state fiscal year from April 1 to May 1 while requiring the governor to submit his budget to the legislature by Jan. 15 (or Feb. 1 for first-time governors), with a shortened amendment period. Agencies would have to make public their budget requests prior to the submission of the executive budget.

Under the proposed legislation, an automatic contingency budget kicks in if a new budget is not adopted. The contingency budget would continue the previous year’s budget for the ensuing fiscal year. There are also additional requirements to shore up reserves and spending for agencies, and to improve accountability in financial reporting of the executive budget.