Our Current Fiscal Environment

November 12, 2020

During our weekly NYS Council Provider Support and Public Policy call this morning, we discussed the Division of the Budget (DoB) ‘Call Letter’ we sent to all members on Monday evening.  The Letter is directed at state agency leads. It also includes a discussion of New York’s the fiscal picture at the present time as well as a specific instruction from DoB to state agencies as to how they should prepare their proposed state agency budget for submission to DoB.

For those who have been following along through the years, previous ‘Call Letters’ have often instructed state agency personnel to prepare a budget submission that was flat in that it was not to include any increases or decreases in spending.  This year DoB instructed state agency leads to reduce spending across all areas of the agency budget by 5%.

We encourage NYS Council members to think of the Call Letter as symbolic.  It would be strange for DoB to issue a Call Letter that did NOT instruct the state agencies to hold the line and/or reduce spending given the DoB Financial Report that came out in April, as well as subsequent Updates to that Report that continue to remind us NYS is in a serious fiscal crisis and that we may well be facing cuts.   But having said this, it is also true that the direction to state agency leads to submit a proposed budget is not the same thing as a budget proposal from the Executive branch. The Call Letter continues a budget making exercise that will continue for some time and will no doubt one heavily influenced by a number of critical decisions being made at the federal and state levels.

We suggest you think of the Call Letter as a reminder to state agencies and to the general public that cuts could be in the future.  But don’t get hung up on the percentage being proposed.  Try to remember that in order for the Governor to amend the current enacted state budget, he needs to formally notify the members of the NYS Legislature of his intent to do so and then the Legislature has 10 days to issue a counter proposal.  And as for upcoming state budget negotiations, we have a ways to go before the Governor puts forward his proposed Executive Budget for 2021-2022.


‘No definitive plans’ for a late-year session, Stewart-Cousins says
By Bill Mahoney, Politico
11/12/2020 12:35 PM EST

Don’t worry yet about freeing up space on your calendar for a rare late-year legislative session. “There aren’t any definitive plans to have a lame-duck session,” Senate Majority Leader Andrea Stewart-Cousins said on the Capitol Pressroom on Thursday. “We’ve never adjourned, because of the pandemic and because of the unknowns that come, so we are obviously able to do that, but there’s no definitive plan.” After cutting short the regularly scheduled session in early April, lawmakers reconvened in June and July. There was a lot of talk in the late summer that they would return again in the fall to deal with recommendations arising from a series of hearings. And progressive groups have spent months urging them to reconvene to act on measures like tax hikes before Covid-driven budget shortfalls lead to intensified spending cuts. But Stewart-Cousins suggested on Thursday that the results of the presidential election make that less of a concern. “I am heartened by the election of the Biden-Harris ticket, because I believe, and the president-elect has said … that he understands the importance of state and local government funding,” she said. “It is much more promising than having Donald Trump, who is clearly an adversary.”


Congress deadlocked on stimulus as lame duck begins

By Burgess Everett, Sarah Ferris, Politico

11/12/2020 12:31 PM

WASHINGTON — Prospects for a new stimulus bill this year just about hit rock bottom on Thursday.

Democratic leaders Nancy Pelosi and Chuck Schumer said they have no plans to budge from their position of demanding a $2 trillion coronavirus relief measure, and no less. Barely an hour later, Senate Majority Leader Mitch McConnell rejected their approach in remarks to a pair of reporters.

The GOP leader said that he still believes a bill of about $500 billion is the way to go, even though Senate Democrats have repeatedly rejected his proposal. He said the improving economy only makes it clearer the Senate should do something “highly targeted at what the residual problems are.”

“I gather [Pelosi] and the Democratic leader in the Senate still are looking at something dramatically larger. That’s not a place I think we’re willing to go,” McConnell said. “But I do think there needs to be another package. Hopefully we can get past the impasse we’ve had now for four or five months and get serious.”

That leaves no clear way forward on the negotiations, even as the country sees record infections and a rise in hospitalizations and deaths from the virus. Pelosi’s talks with Treasury Secretary Steven Mnuchin faltered in late October, and they have not spoken since the election.

Senate Republicans appear favored to keep the majority next year unless Democrats can run the table in two Georgia runoff races. That gives McConnell little apparent incentive to come up to Pelosi and Schumer’s demands. But Democrats have made clear they would not scale back their ambitions for a broader package.

Pelosi has said she has no interest in a stimulus deal that is only $500 billion. Standing next to Pelosi at the Thursday news conference, Schumer called McConnell’s approach “emaciated.”

“Our position is the same it has been all along,” Pelosi told reporters when asked if her position had changed since the election. “We’re at the same place. Even more so.”

Pelosi and her top deputies have come under pressure from the centrist faction of their caucus to make a deal with the White House, with some Democrats saying they’d be willing to consider a series of piecemeal bills. Those calls have resurfaced after an election that cost House Democrats seats, with moderates urging immediate action as coronavirus cases surge.

But the majority of the House Democratic caucus would likely refuse to advance a slimmer package now, especially with President-elect Joe Biden just months from taking office. Many Democrats still believe they can reach a better deal with a president of their own party, even with a shrunken majority in the House.

The Trump administration, meanwhile, is concentrating more on President Donald Trump’s legal fights to overturn the election results than a new stimulus bill. After months of talks between Mnuchin and Pelosi, there’s been little apparent movement since October.

Even as some jobs return, millions remain unemployed. Democrats have warned for months that a delay in passing new relief could undermine the economy, though deficit-minded Republicans have resisted another massive package after passing one in the spring. Several Democrats have also voiced concern that waiting to pass another stimulus bill could hamper the early months of Biden’s presidency in an even more deadlocked Congress.