New York’s massive $230 billion state budget ranks second only to California. To a considerable extent that ranking reflects New York’s population – the fourth largest number of residents among the states.
And New York being New York, the state budget process is idiosyncratic, with the state’s fiscal year starting April 1st – three months after the start of the legislative session. This is in contrast to the 46 states that began their fiscal years on July 1st. As a result, the Legislature has little more than two months after the governor presents her proposed budget in January to analyze the proposal, hold hearings, approve budgets for both the Assembly and the Senate, and then negotiate a final budget agreement by April 1st.
That short timetable is a handy justification for a budget process that largely shuts out the public. The public hearings held to receive input are essentially from the relevant agencies; public involvement is very limited, and the hearings are held during the day in Albany when most New Yorkers are at work. The budget negotiations are conducted in secret and the final agreement is usually passed through a loophole in the state Constitution that allows lawmakers to approve the budget without going through the normal three-day waiting period before the vote.
But there’s more. The deliberations are only on items that are considered “on-budget.” There are additional categories that are considered “off-budget” and thus not subject to the same scrutiny as the approved final budget.
Beyond that, New York State has hundreds of quasi-governmental agencies, known as public authorities and public benefit corporations that can be off-budget. Although these entities are created by and for government to provide government services, they are described as independent and not held to the same standards of public review as the state government itself.
While there are watchdogs that monitor the spending activities of off-budget items and authorities, the sheer scale of government services provided by these entities allows many activities to fly under the radar of normal accountability.
If the powers that be find accountability inconvenient and wish to limit the oversight provided by government watchdogs, laws are changed or necessary funding is withheld. Which is exactly what has happened in New York.
Much of this off-budget and authorities’ spending is directed to so-called economic development projects. While much of the state’s efforts to boost economic development are well-intentioned, there is very little in the way of rigorous analyses conducted to see if these programs deliver what is expected of them.
A report issued last week by the think tank Citizens Budget Commission, dug deep into the state’s publicly-available information to quantify how much the state is spending on economic development. Their report found that state and local governments combined to spend nearly $11 billion annually on “tax breaks and direct spending” to stimulate economic development and that amount is expected to rise to at least $13 billion by 2025. The report observed that “New York State and its localities’ spending on economic development programs has long exceeded spending in nearly every other state.” The report concluded, “State and local economic development spending continues to increase without sufficient evidence that these programs cost-effectively create jobs or are more beneficial than alternative uses of the funds.”
The lack of public accountability in such spending does not simply mean that money may be wasted. It was that combination of unaccountability and secrecy that resulted in one of the biggest scandals in the Cuomo Administration.
A combination of shadowy spending by public authorities, limits on outside oversight, campaign contributions, and hot-wired lobbyists, resulted in the convictions of Cuomo campaign donors and staff. Although the convictions were eventually overturned by the US Supreme Court’s decision to rein in federal prosecutors, there can be no doubt that the opaque nature of these types of programs are too often not designed to benefit the public interest. Indeed, they invite corruption.
July is the month when state agencies and the Hochul Administration begin to develop their proposed budget to be released in January. The governor would do well to heed the reports issued by watchdogs both inside government and outside to make New York’s spending more transparent and accountable to the public. Doing so will not only boost trust in government, but it will also reduce the risk of future corruption scandals.