Options for Budget Reform in New York State Citizens Budget Commission – September 20, 2007

2 AGENDA 1.The Problem – Deficiencies in Accountability and Transparency 2.Progress in Next Steps: Recommended Options

3 The Problem – Deficiencies in Accountability and Transparency Neglect of Long-run Fiscal Stewardship:  Budgets are not balanced  Too much debt  Inadequate Reserves Problematic Budget Processes and Practices:  Imbalance of power between Legislature and Executive  Limited time for budget deliberations  Late budgets are common  Rank and file members have limited budget roles  Large spending for Member Items with limited accountability  Misuse of Message of Necessity  Manipulation of General Fund spending No Unified Approach to Performance Measurement and Reporting

4 Progress in 2007 The Budget Reform Act:  Requires General Fund Balance and increases multi-year reporting  Enhances Rainy Day reserves  Enhances Consensus Revenue Process  Requires Conference Committees  Requires Budget Summary for Legislators  Prohibits the use of certain lump sum appropriations  Creates “Quick Start” process for budget deliberations in the Fall Public Authorities Reform:  Public Authorities Accountability Act of 2005  In 2007 ABO: Trained staff, completed compliance review, issued report on authority compliance, and established reporting framework for authorities

5 Next Steps: Recommended Options Long-run Fiscal Stewardship: 1.Establish a more rigorous and comprehensive balanced budget requirement  Require balance beyond the General Fund  Measure balance on GAAP not cash basis 2.Establish a more meaningful debt limit  Create constitutional debt limit  Make all debt subject to the limit – eliminate “back- door” borrowing 3.Enhance the capacity for preparing for a Rainy Day

6 Next Steps: Recommended Options Budget Processes and Practices: 4.Expand the Legislature’s budgetary powers 5.Allow more time for deliberation by changing the fiscal year 6.Create more meaningful and formal committee roles for members of the Legislature 7.Provide legislators and the public more timely fiscal information 8.Reduce and make more accountable spending on Member Items

7 Next Steps: Recommended Options Performance Measurement 9.Develop a comprehensive approach to performance measurement and reporting  Establish a more centralized administration effort to create metrics – benchmarks and targets should be required  Collect performance metrics in a central report available to the public – New York City’s Mayor’s Management Report could serve as a model  Create program-based budgets with performance metrics integrated

8 Citizens Budget Commission September 20, 2007