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Is Cuomo's Budget Surplus for Real?

Governor Cuomo delivers his budget address on January 21, 2014
Governor Cuomo's office
Governor Cuomo delivers his budget address on January 21, 2014

Governor Cuomo has been taking credit for a $2 billion dollar budget surplus in his new spending plan. But critics say that claim is not entirely accurate, because the windfall does not actually materialize for another two years, and only if certain conditions are met.

Governor Cuomo is fond of making this comparison of  the difference in the state’s finances , since he took office three years ago:

“We’ve gone from a $10 billion dollar deficit to a $2 billion dollar surplus,” Cuomo told state lawmakers at his recent budget presentation. “I don’t know if I would have told you that was possible when we started this journey together. Let’s give yourselves a round of applause.”

Figures released by Cuomo’s budget office, show that the surplus does not actually occur this year. Instead, it would manifest if government spending is kept to 2% or less per year for the next three years.  The budget for the new fiscal year shows a surplus of just half a billion dollars.

EJ McMahon, with the fiscal think tank The Empire Center, says claiming credit now for something that could happen in the future is disingenuous.

“It’s like saying your goal is to lose a lot of weight, and then announcing to people that you’ve already lost it,” McMahon said.  

McMahon does give Cuomo credit for holding spending growth to an average of 2% per year, for the past three years, making the governor’s plan to reap a $2 billion dollar surplus more likely if he continues the habit.

“He says he has a specific goal of never increasing spending more than 2% a year in the future,” McMahon said. “That’s a pretty specific promise that he can be held to account for.”

But McMahon says unforeseen circumstances, like a severe economic downturn, or a natural disaster, could change the plan.

Cuomo’s budget plan also alters the way it reports projected deficits and surpluses. The newest version does away with a chart that shows projected deficits in future years, if spending continues to rise and nothing is done to rein it in. It’s now been replaced with a chart showing how much future surplus there could be, if spending growth is limited to 2% or less.

State Comptroller Tom DiNapoli is neutral on what he says is a “new strategy”, and he gives Cuomo and his budget office credit for trying to do something to curb future gaps before they grow out of control. But DiNapoli, who is examining the spending plan before he puts out a report, says he’d like to see more specifics on how the projected $2 billion dollar surplus will be reached.

“A little more detail as to what steps would be taken to achieve that would be helpful,” Di Napoli said.     

The Comptroller recently released a report that shows record overtime spending by the Cuomo Administration, but budget officials say that has nothing to do with holding the line on spending, including what is essentially been  a hiring freeze in the state workforce.

The governor’s budget director, Bob Megna, concedes that the $2 billion dollar surplus for 2016 is just a projection at this point, but he says he believes that it will become a reality, even if the economy goes south.

“We’ve imposed some discipline,” said Megna, who says he and his staff are seeking ways to curb artificially inflated spending in some parts of the budget, to leave enough room to continue to pay more for education and health care, and to “better withstand a downturn if it did occur”.

If the state does end up with a $2 billion dollar surplus in 2016, as Cuomo has projected, the governor wants to use it to fully fund his plan for business and property tax cuts.  

Cuomo is running for re election this year, and so far he has no announced opponent and $33 million dollars in a campaign war chest. However, if he is no longer in office,  after the end of this year, and someone else is governor, the future projected surplus, as well as the future plans for tax cuts, could change.