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March 8, 2013

DiNapoli Urges Caution as Budget Progresses

Risks Include Impact of Federal Sequestration

The amendments to the Executive Budget for state fiscal year (SFY) 2013-14 curtailed some risks contained in the originally proposed budget, but the impact from federal sequester cuts represent a risk to the Financial Plan according to a report released by Comptroller Thomas P. DiNapoli.

“Uncertainty in the economy and the effects of federal sequestration cuts to the state budget pose risks that we need to recognize appropriately.” DiNapoli said. “Discussions with the federal government over Medicaid reimbursement add to the uncertainty.”

DiNapoli’s report analyzed the amendments to the Executive Budget and Financial Plan, including actions that would address the anticipated loss of $1.1 billion in federal revenue associated with Medicaid financing for the developmentally disabled. The amendments propose $500 million in state Medicaid savings actions and changes intended to generate $600 million in new federal Medicaid funding.

Additionally, the Division of the Budget (DOB) increased current year tax projections by $227 million and correspondingly lowered projections for subsequent years, primarily due to timing effects associated with federal tax law changes.

Legislative revenue estimates released in accordance with the revenue consensus process ranged from $331 million lower to $529 million higher than the All Funds estimate by DOB included in the Executive’s amended Financial Plan. The March 1 revenue consensus between the Legislature and the Executive resulted in a two-year estimate that was $200 million higher than current Financial Plan estimates.

Remaining risks in the SFY 2013-14 Executive Budget include tax receipt projections that may be too optimistic and revenues that may not materialize as expected, depending on the pace of economic recovery, and other factors.

In March, the Federal Funds Information for States, a joint program of the National Governors Association and the National Conference of State Legislatures, estimated an impact of $436.2 million in New York State during the remainder of the 2013 federal fiscal year as the result of sequestration. This estimate includes $287.9 million to the State, $139.6 million to New York's local governments, and $8.7 million in other impacts within the State. The Executive Budget includes no specific actions to address the potential loss of this revenue.

For a copy of the report, visit: http://www.osc.state.ny.us/reports/budget/2013/30_day_amends.pdf


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