Watchdog Groups Urge Governor and Legislature to Not Enact Extraordinary Executive Budget Powers for FY22

Seventeen major New York State watchdog groups are asking Governor Andrew Cuomo, Senate Majority Leader Andrea Stewart-Cousins, and Speaker Carl Heastie to disclose full details about State funding withheld from agencies and local governments in the State’s current fiscal year 2021. The groups want full transparency about which programs had funding withheld and exactly how much the state is repaying. Importantly, the groups are also asking the Legislature to omit from the budget the extraordinary budget powers the Governor proposed for fiscal year 2022.

The Legislature rolled back the Governor’s powers to issue directives related to the COVID-19 emergency on March 5th, but did not change the extraordinary budget powers enacted with the fiscal year 2021 budget.

The groups say the State’s current fiscal and economic conditions do not justify extension of the extraordinary Executive budget powers that were enacted last year, or the new powers proposed in the Fiscal Year 2022 Executive Budget. Compared to last year, the State’s economic conditions and tax revenues are more favorable and clear. The state also is expected to receive approximately $12.6 billion in direct fiscal aid from the passage of the federal American Rescue Plan.

In December 2020 many of the same groups asked the Governor and Legislature to fully disclose details of the State funding withheld by the Governor using extraordinary pandemic-related powers enacted last year. (Based on Freedom of Information requests, the groups say the State has not provided complete details on withholdings and payment adjustments, having only disclosed details of about 25 percent of funds withheld during fiscal year 2021 in formal notices to the Legislature.)

Watchdog groups request the Governor and Legislature make four changes:

1. Fully disclose withholdings, repayments, and recurring reductions for fiscal year 2021 Budget: In response to the groups’ December 2020 letter, the Division of the Budget (DOB) said that a full breakdown of withholdings would be provided with the Governor’s Executive Budget in January 2021. However, the Executive Budget and 30-day amendment financial plan update did not provide that breakdown.
2. Remove the authority for the Governor to modify the budget midyear based on the State receipt of federal aid: The Executive Budget for fiscal year 2022 would give the Governor the extraordinary authority to revise the State’s spending plan if federal aid is not received by August 1, 2021, similar to the process that was adopted for this year’s budget, but which was not followed.
3. Remove State Operations appropriations transfer and interchange authority: The proposed budget for fiscal year 2022 includes broad provisions to allow DOB to transfer appropriations, including by “interchange.” State Operations spending should be managed within amounts appropriated for specific, clearly identified purposes by the Governor and Legislature in the budget.
4. Remove the COVID-19 Extraordinary Relief Fund controlled by the Executive: The Governor’s 30-day amendments to the Executive Budget for fiscal year 2022 would create a special fund controlled by the Governor for all receipts from new taxes and from the elimination of tax credits or deductions. This proposal should be omitted for three reasons. First, these revenues should be treated like all other general revenues and should be the subject of standard budget negotiations and enactment. Second, the disbursement procedures of these funds subvert Legislative budget authority. Lastly, the proposal fails to provide adequate public transparency of how these funds would be spent.

The full letter is here and below.

Andrew M. Cuomo
Governor, State of New York

Andrea Stewart-Cousins
Majority Leader, New York State Senate

Carl Heastie
Speaker, New York State Assembly

Re: Please Provide Transparency of Withholdings, Repayments, and Ongoing Cuts by Individual Agency and Program, and Omit Extraordinary Budget Powers from the Fiscal Year 2022 Enacted Budget

Dear Governor Cuomo, Majority Leader Stewart-Cousins, and Speaker Heastie:

We write to follow up on our December 21, 2020 letter that requested increased transparency on State spending reductions and withholdings implemented during fiscal year 2021. In order to provide greater transparency to the public and stakeholders, we again ask the Division of the Budget (DOB) to publish on its website timely and complete information about funds that were withheld and repaid as part of the fiscal year 2021 State budget midyear adjustment process. This information should be provided monthly and broken out by agency or recipient, and major program.

We also ask that you omit from the Enacted Budget three extraordinary budget powers that are unnecessary and inhibit the Legislature’s ability to exercise its appropriate role in the budget process: (1) midyear budget modifications authority tied to receipt of federal aid; (2) State Operations appropriations transfer and interchange authority; and (3) the creation of a COVID-19 Extraordinary Relief Fund controlled by the Executive.

Withholding Transparency Still Needed
In response to our December 2020 letter regarding withholdings, a spokesperson for the DOB responded that a full breakdown would be released with the Governor’s Executive Budget proposal in January 2021. However, the Executive Budget and 30-day amendment financial plan update did not provide that breakdown.

Mr. Mujica said in his budget briefing on January 19, 2021 that “most” withholdings would be reduced from 20 percent to a total of 5 percent and become cuts. Without information about how much money has been withheld by each agency and program, however, the public is not able to understand the impacts of the withholdings, proposed repayments, and recurring reductions. For example, the public does not know whether withholdings were across-the-board or affected some programs, localities or functions proportionately more than others. According to press reports, funds have not been withheld equally, with funding restored to school districts last fall. Additionally, detail of the 5 percent cuts being made for fiscal year 2022 and beyond should be provided, including a clear summary of all dedicated fund transfers to State’s general fund, so the Legislature and public can have appropriate information to evaluate and debate the Governor’s proposal.

Furthermore, legally required notification to the Legislature by DOB has only included payments that were withheld beyond a statutory payment date. This subset of withholdings totaled about $700 million in calendar year 2020, or roughly one quarter of all withholdings. This is the latest data available as of the drafting of this letter. According to a list of withholdings in the Assembly Majority’s “Yellow Book” analysis of the FY 2022 Executive Budget, there are still broad categories of withheld funds that are not itemized or broken out by agency. For example, of $628 million in total Transportation withholdings, $584M is listed as “non-statutory, non- 18b Transit Operating Aid, Mobility Tax.” In response to a press inquiry on February 19, 2021, a DOB spokesperson stated that $426 million was withheld from and will be repaid to the Metropolitan Transportation Authority (MTA), and $98 million would be cut from the authority in fiscal year 2021, pending receipt of federal aid. This level of detail has not been provided for each State agency, however, leaving the Legislature and public in the dark about the effect of the withholdings on individual agencies and programs.

Given that the budget adjustment process for fiscal year 2021 budget has not been used as expected, without formal cuts proposed or sufficient transparency as of the date of this letter, we are also concerned by the continuation of this process proposed in the fiscal year 2022 Executive Budget. Additionally, the State’s fiscal picture is significantly clearer today; the uncertainty and extremely dire fiscal landscape when last year’s budget was enacted are not the case today. During the year, the State has received billions in federal aid, tax receipts have repeatedly exceeded projections, and significant unrestricted federal aid is likely forthcoming.

Extraordinary Executive Budget Authority Should be Removed from Enacted Budget
The current conditions do not justify the extraordinary Executive Budget powers that were enacted last year, nor the new powers proposed in this year’s Executive Budget. We ask you to omit from the fiscal year 2022 Enacted Budget three proposals that grant unnecessary extraordinary budget authority to the Executive:

• Midyear budget modifications authority tied to receipt of federal aid: The Executive Budget includes provisions allowing the Executive extraordinary authority to revise the State’s spending plan if federal aid is not received by August 1, 2021. In this increasingly unlikely event, the Governor and Legislature should convene to adjust the State’s spending plan.
• State Operations appropriations transfer and interchange authority: The proposed budget includes broad provisions to allow DOB to transfer appropriations, including by “interchange.” State Operations spending should be managed within amounts appropriated for specific, clearly identified purposes by the Governor and Legislature in the budget.
• COVID-19 Extraordinary Relief Fund controlled by the Executive: The 30-day amendments to the Executive Budget in Part UU of the Public Protection and General Government Article VII bill would create a special fund for all receipts from new taxes or fees, and proceeds from the elimination of tax credits or deductions. Under the proposal, the authority for disbursement or transfer of receipts in this fund belongs solely to the Executive. This proposal should be omitted for three reasons. First, these revenues should be treated like all other general revenues and should be the subject of standard budget negotiations and enactment. Second, the disbursement procedures of these funds subvert Legislative budget authority. Lastly, the proposal fails to provide adequate public transparency of how these funds would be spent.

In summary, we ask that you provide transparency of the fiscal year 2021 withholdings and repayments by agency or recipient, and provide similar detail for the final proposed 5 percent spending reductions in the current year and permanent spending reductions in the out-years, including detail about proposed dedicated fund transfers to the State’s general fund. Additionally, we ask that you omit from the Enacted Budget those extraordinary budget authorities which are unnecessary and subvert the ability of the Legislature to carry out its appropriate role in the budget process.

Sincerely,

Andrew Rein
President
Citizens Budget Commission

John Kaehny
Executive Director
Reinvent Albany

Susan M. Dooha, JD
Executive Director
Center for Independence of the Disabled, NY (CIDNY)

Betsy Gotbaum
Executive Director
Citizens Union of the City of New York

Susan Lerner
Executive Director
Common Cause New York

Peter Iwanowicz
Executive Director
Environmental Advocates NY

Jonas J.N. Shaende, PhD
Chief Economist
Fiscal Policy Institute

Lisa Daglian
Executive Director
Permanent Citizens Advisory Committee to the MTA (PCAC)

Laura Ladd Bierman
Executive Director
League of Women Voters of New York State

Meghan Parker
Director of Advocacy
New York Association on Independent Living

Eman Rimawi
Access-A-Ride Campaign Coordinator and Organizer
New York Lawyers for the Public Interest (NYLPI)

Blair Horner
Executive Director
New York Public Interest Research Group

Tom Wright
President & CEO
Regional Plan Association

Betsy Plum
Executive Director
Riders Alliance

Eric McClure
Executive Director
StreetsPAC

Danny Harris
Executive Director
Transportation Alternatives

Felicia Park-Rogers
Director of Regional Infrastructure Projects
Tri-State Transportation Campaign

Cc.

Robert Mujica, Director of the NYS Division of the Budget
Liz Krueger, Chair of the Senate Finance Committee
Helene Weinstein, Chair of the Assembly Ways and Means Committee