What Ever Happened to Budget Reform in Albany?

When Lt. Governor Dick Ravitch came out with his budget reform plan in March, it was greeted with a round of criticism from many corners of the capitol, mostly as many lawmakers attacked it for its reliance on borrowing and plans to weaken their budgetary powers.

But the criticisms were usually delivered with the disclaimer that the plan had its good individual elements. And even as it became clear the plan as a whole was unlikely to be approved, there was an emerging consensus on at least one point: Democrats in the Senate and Assembly both voiced support for a move to GAAP budgeting, a widely accepted superior system of bookkeeping. The Assembly passed it as part of its own budget package, and a set of key Senate Democrats announced a budgetary reform package of their own in April, GAAP included.

But even the relatively slight measure of GAAP—at least when compared to some of the other elements of the Ravitch plan—was apparently too much of a jump for Albany.

Last week, as the legislative session ended for the season—save the minor detail of a fully balanced budget—legislators left town without passing any major elements of budgetary reform, GAAP included.

Of course, while proposals such as GAAP are hailed by fiscal advocates and good government groups, they are not loved by everyone. GAAP is a budgeting format that ties the hands of lawmakers in some decisions on the budget—it limits the number of gimmicks that have long been used to balance a budget—something that legislatures are never eager to bring upon themselves without some sort of added benefit elsewhere.

One need only look at the revenue package proposed by the Senate and Assembly leaders to understand this. That package contains a plan to put off paying numerous tax credits to businesses until 2013, deferring $100 million in payments this year. In the state’s existing method of budgeting, that $100 million actually appears as a savings (allowing for a “balanced” budget), while, in reality it is simply putting off a payment, and, under GAAP, would be counted as such (according to multiple people familiar with GAAP).

The Assembly did not simply agree to GAAP on its own, and voted for the new restrictions only when they were coupled with a carrot: an allowance of $2 billion in borrowing.

“We were willing to adopt all these changes as part of the package,” said Dan Weiller, a spokesman for Assembly Speaker Sheldon Silver. “They were included in our Assembly budget proposal. The assembly voted to approve all of this.”

The Senate, which did not display the same alacrity for borrowing, never ended up voting on its budget reform package, as there apparently was not the support in the chamber.

Katie Kincaid, a spokeswoman for State Senator Liz Krueger, who was spearheading the package in that chamber, last week said the Senator is behind the budget reforms “either as an entire package or as free standing pieces. Either way, these reforms will go a long way in fixing Albany’s broken budget process.”