[NYAPRS Enews] Mental Health Services Brace for 1% Cut Amidst State Budget Uncertainty

[Harvey Rosenthal]

NYAPRS Note: So far, thanks to our combined state mental health budget
advocacy over the past few years and the Administration's willingness to
absorb most cuts on the state operations side, community mental health
services have avoided across the board cuts. 

But, while Congress' recent extension of enhanced federal Medicaid rates
(FMAP) helped considerably, it only approved 2/3 of what was originally
banked for in New York, leaving a gap of roughly $2-300 million. 

New York's plan to fill that gap is to cut roughly 1% of undisbursed
state funds, calculated from September 16 to the end of the fiscal year
(March 31, 2011). 

Advocates are pushing for state agency flexibility in delivering the
cuts, hoping to blunt their impact on the community mental health safety
net.

Stay tuned for more details!

 

Will This Year's State Budget Hold Together?
By Joseph Spector   Gannett News   August 14, 2010
In April 2008, lawmakers and Gov. David Paterson closed a $4.6 billion
budget gap. A few months later, as the economy dived, a $2 billion
midyear deficit emerged.

A year later, state leaders closed a massive $18 billion deficit, but
just as soon as the ink dried, Paterson was warning of a $3 billion hole
later that year. His predictions proved true, leading lawmakers to
cobble together a plan in late December to balance the state's books.

This month, lawmakers and Paterson agreed to close a $9.2 billion
deficit in the current fiscal year through an array of new taxes and
spending cuts.

So once again, the question arises: Is this year's budget made of bricks
and mortar or sticks and straw?

State officials believe the budget with hold together.

They estimate the midyear gaps over the past two years that played havoc
on New York's finances -- which led the state to essentially go broke
twice since December and forced delays of billions of dollars in aid to
schools and local governments -- shouldn't happen again this fiscal
year, which runs until March 31.

The budget has fallen out of balance in recent years because spending
outpaced revenue as the economy soured and tax revenue fell.

Paterson, who has been credited with sounding the alarm over the state's
financial woes, said he expects the budget to stay in balance. Revenues
have stabilized and some spending cuts were made, he has said.

The state also received good news this week: about $1.4 billion in
federal aid is coming for Medicaid and schools and $380 million is
expected from a licensing agreement to allow Aqueduct Race Track in
Queens to have video lottery terminals.

"We're in a much, much better situation than we were this time last year
when I was telling you we were $3 billion in debt," Paterson said
Thursday in a radio interview.

Paterson's budget director, Robert Megna, was less definitive, but also
optimistic. But Megna said the state still has cash-flow issues that
will force later payments to schools next month.

"Is it out of the realm of possibility that we'd have to deal with a
problem again within the fiscal year? No. But we are a lot more
confident that we're in better shape," Megna told Gannett's Albany
Bureau.

But for some lawmakers and fiscal experts, they've heard similar
promises made before. Some critics said the $136 billion budget spends
too much during an economic downturn and relies on risky revenue
raisers, such as $300 million from lifting the exemption starting in
October on sales tax on clothes purchases under $110.

"I don't see how" the budget stays balanced, said Assemblyman David
Koon, D-Perinton, Monroe County, who voted against the budget. "It's
like a farmer using bailing wire and duct tape."

Some analysts indicated they would expect a budget gap to emerge of less
than $1 billion this year, which would be more manageable than the
recent midyear gaps.

Elizabeth Lynam, deputy research director at the Citizens Budget
Commission, said a gap of $500 million is possible if the economy
doesn't worsen. Robert Ward, deputy director of the Albany-based
Rockefeller Institute, said it could be about $1 billion, which the
governor might be able to manage with agency cuts and other cutbacks.

"I would suspect that the governor may have to take some action," Ward
said. "I don't expect there will be problems so severe that the
Legislature has to get involved."

But the budget is not without risks. The state, for example, is banking
on $440 million in revenue from a $1.60 tax increase on a pack of
cigarettes and a tax on cigarettes sold on Indian reservations to
non-tribal members.

The cigarette tax, which at $4.35 a pack gives New York the highest tax
in the country, is already forcing New Yorkers out of state to buy
cigarettes, which may cut into the revenue anticipated. And Indian
tribes are expected to fight the tax on their reservations, which starts
Sept. 1.

In all, Comptroller Thomas DiNapoli said in an estimate last month that
the budget could be out of whack by as much as half the $9.2 billion
deficit, but that was before the federal aid and the Aqueduct license
came through.

Still, the state's fiscal picture doesn't get any rosier in future
years. State officials estimate next year's budget gap could be as much
as $9 billion and as high as $15 billion in the 2012-13 fiscal year,
when most of the federal stimulus money that the state has been
receiving runs out.

This year's budget relies on about $5.7 billion in stimulus aid, the
comptroller's office said. Also, higher income taxes on the wealthy are
set to expire in two years, which this year is expected to bring in
about $5.5 billion.

In DiNapoli's report, he notes: "Despite a consensus that the budget
process is badly flawed and a chorus of public and private proposals for
budgetary and fiscal reform, the enacted budget contains no reforms that
would help impose the fiscal discipline necessary to realign recurring
spending with recurring revenue."

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