2016-2017

FINANCIAL PLAN
Since he came into office five years ago, Governor Cuomo has sought to tightly limit the growth
in state spending and to limit local property taxes and spending by local school districts, counties,
towns, and villages. Early in his first term, the governor asserted that state government spending in
New York had long grown faster than the state’s economy and that state government spending
needed to be restrained so taxes could be reduced. 4 But, recent growth in state spending has been
well below growth in total personal income, which is a reasonable proxy for growth in the state tax
base. General-purpose aid the state provides to local governments has been held flat (meaning it
has declined when adjusted for inflation), which in turn heightens the fiscal pressure on localities
that face a tight limit on property taxes.
This unforced austerity budgeting has had a harsh impact on New York’s children, families, and
communities. When coupled with the governor’s two percent local property tax cap, unforced
austerity has meant that local government capacity in most parts of the state has suffered, resulting
in deteriorating services and an inadequate public response to hardships afflicting many families.
• State spending for social welfare and housing programs, for example, has fallen by 10 percent
or more in inflation-adjusted terms over the past five years. At the same time, a growing number
of families with children experienced hardship. Although there has been some reduction in the
past year, outside of New York City, the number of people receiving aid from the Supplemental
Nutrition Assistance Program (food stamps) is still 84 percent greater than in late 2007, before
the recession. Meanwhile, the number of people receiving safety net assistance, which is mainly
funded by local governments, is more than 40 percent greater than before the recession began.
• Although state-funded local school aid has risen during the past two years, it was still $4.8
billion below where it should be at this point according to the state’s 2007 response to the final
court ruling in the Campaign for Fiscal Equity (CFE) case.
• On an inflation-adjusted basis, the executive's proposed local government aid (AIM) is 13
percent less than it was five years ago. Declining real state aid together with capped property
taxes have severely constrained local budgets around the state. For example, adjusting spending
reported by the state comptroller for the 57 counties outside of New York City by inflation, it
is evident that from the 2012 fiscal year to 2014, counties reduced support for community
colleges and public health by 15 percent, fire protection by 14 percent, elder services by 13
percent, and youth services by 28 percent. This clearly shows that the state has not responded
to rising needs even though state tax collections have been increasing by about five percent
annually.
Not surprisingly, state budget austerity has led to a steep decline in state and local government
employment in recent years. The number of local government jobs outside of New York City is
down by about 60,000, or 8.6 percent, since 2009. While job losses have leveled off in the past
year, New York lost more state and local government jobs—like teachers, transit workers, parks
and library workers, for example—since 2009 than any other state, and only five states have lost a
4
The governor maintained that state spending had been outpacing income growth for the past fifty years, yet a closer
look at the historical trend shows that while state taxes did grow much faster than income from the early 1960s until the
mid-1970s, since then income has generally grown parallel to or faster than state taxes. Both state taxes and local taxes
outside of New York City relative to personal income were at about the same level in 2012 as in 1995. Only New York
City had an increase in taxes relative to personal income between 1995 and 2012. (See Fiscal Policy Institute, New
York City Taxes--Trends, Impact and Priorities for Reform, January 13, 2015, p. 27.)
8 | Fiscal Policy Institute