Chances of speeding the state budget process any time soon appear extremely slim. Like a habitually truant teenager, the state budget is always coming in late. And true to form, as Gov. George Pataki prepares to release his third budget proposal later this month, chances are overwhelming that an agreement on it will not be hammered out before the April I start of the state's fiscal year.
The budget has been late 12 consecutive times and 15 times overall in the past 18 years, making the deadline a bit of an annual joke in Albany but an item of major concern to Wall Street and local officials from Buffalo to Brooklyn.
State Senate Majority Leader Joseph Bruno, a Brunswick Republican, says he has pushed hard for budget reforms to move the process along since he took over the state Legislature's top GOP post in 1995. But so far, he admits, nothing has worked. "Everyone says they want budget reform, but when you get right down to it, you never get a budget [reform] bill written," Bruno says.
The majority leader himself seems uncertain how best to approach the subject. On Dec. 17, the Senate passed a one-house bill that would require the governor to present the budget more than a month earlier than is presently the case. But just days before the Senate's action Bruno said changing the date of submission won't speed the process.
For his part, Assembly Speaker Sheldon Silver, a Manhattan Democrat, has been proposing solutions to speed up the process since 1993, when he was still head of the Assembly's influential Ways and Means Committee, according to spokeswoman Patricia Lynch.
Yet the state's recent track record for on-time budgets has been getting worse, not better. Lawmakers reached a nadir in budget futility last year when it approved a $66 billion state budget on July 13, a record-shattering 104 days late. No state has ever gone as long as New York did in 1996 without a budget in place, according to the National Conference of State Legislatures.
It has become one of the most intractable problems in state government, despite annual attempts to fix it.
In some ways, the budget process has come full circle. Until the late 1960s, the budget was typically the last item the governor and the state Legislature dealt with before going home. That's also when legislative sessions in Albany ran only three months, instead of the six- to seven-month cycle that is now the norm.
From the early 1970s until a few years ago, however, the budget was the first major issue lawmakers dealt with. Other contentious issues were taken up once the budget was settled. "Now they're back to having the budget being the last thing they do. They've delayed it so long that other things come into play," says David Shaffer, president of the Public Policy Institute, an arm of the state Business Council.
Indeed, recent budget wrangling has stretched out so long that major items that were taken up separately near the conclusion of the legislative session have become inextricably linked to the budget process. Last summer, Pataki used the budget as leverage to get Silver to agree to a package of major workers' compensation reforms the governor favored. The year before, Pataki was able to get some criminal justice reforms enacted, partly because the budget wasn't passed until June 7. "In the last year or two, issues that have little or nothing to do with the budget are held hostage in the mix to get a budget passed," says Assemblyman Jack McEneny, an Albany Democrat
The Pataki administration disagrees. "To say that workers' comp. reform doesn't have an impact on the budget is inaccurate," says John Signor, spokesman for Pataki's Division of Budget. "Every issue that is passed has an impact on the budget."
Republicans say that issues such as a workers' compensation overhaul and other reforms, which normally would languish in the Legislature for years, finally got done as a result of the budget pressure.
While politics has helped forge some of these legislative compromises, time and again politics has managed to delay the budget's passage. Pataki found that out the hard way. As the Republican gubernatorial candidate running against former Gov. Mario Cuomo, he tried to gain political advantage by promising to put together an on-time budget after years of tardy spending agreements presided over by Cuomo. But Pataki as governor has presided over two of the latest budgets in state history.
Yet the governor is hardly the only one to blame for chronic delays. Legislative leaders have figured prominently in the mix. All major ticket items in any budget are essentially decided behind closed doors by the governor and the Legislature's chief representatives: the Assembly speaker and Senate majority leader, both of whom fight first and last for their own agendas.
Besides the inevitable political obstacles, other factors figure prominently in budget delays. Most analysts believe the foremost hurdle is that New York lawmakers have much less time to pass a budget than other states. New York is the only state in the nation that operates on an April to April fiscal calendar instead of the more common July to July fiscal year. Three other states have later fiscal years.
New York's fiscal year used to begin on Oct. 1, until Gov. Charles Whitman succeeded in getting it moved up to July I in 1916. It remained that way until 1943, when the April to April fiscal year was put in place as a result of a joint legislative resolution approved in 1937. That resolution advocated the change mainly because the legislative session usually only extended until mid-March or April. That meant lawmakers were enacting a budget months before the fiscal year went into effect.
The change was aimed at eliminating the gap between the enactment of the budget and the start of the new fiscal year. State records show that between 1917 and 1940, the Legislature had to return to Albany for 13 special sessions in the fall to fine-tune budget snags.
The change also eliminated the need for tax anticipation notes that had to be issued every year, according to records obtained by the Citizens Budget Commission, a New York City-based fiscal group.
When the fiscal year was July to July, lawmakers complained that it left them no way to forecast revenue estimates accurately or to determine whether the budget truly was balanced when they approved it.
Ironically, many lawmakers now say they need more time to make those very same determinations. But "what looked right 50 years earlier doesn't necessarily work today," Silver spokeswoman Lynch says.
The current fiscal year leaves little time for the governor's office to prepare a budget that's larger than any other state's, excluding California. By law it must submit the budget by early February, although it is usually released in January.
That leaves legislators about eight weeks to examine a budget document the approximate size of a Manhattan telephone directory. "It's especially ludicrous when we elect a new governor and we give him a few weeks to formulate a $66 billion budget," McEneny says.
Still, despite the complaints uttered throughout the century about the timing of the fiscal year, on-time budgets routinely were passed until the mid- 1970s.
Lawmakers partly were able to comply with the deadline because the governor's office possessed the only real fiscal staff in the state Capitol, something the Legislature lacked. That meant the budget was based almost solely on the revenue estimates put out by the governor's office.
During the reign of the late Gov. Nelson Rockefeller in the 1960s, for instance, the governor s power in budget negotiations was overwhelming in comparison with that of the Legislature. Budgets were rammed through with nominal tinkering by the Senate and Assembly.
It wasn't until after Rockefeller s tenure that the Legislature was allocated funds to hire its own fiscal analysts and thus successfully challenge the governor's budget numbers. This naturally led to disputes between the governor and Legislature over how much revenue was really available, and it partly contributed to the late budgets that began surfacing in the mid-1970s. A severe fiscal crisis in New York City during that time didn't help either, as state leaders agonized over whether to bail out the Big Apple.
In the late 1980s, when the state was relatively flush with cash, the issue of large tax cuts and how to spend the extra money further delayed enactment of a budget. And the tax cuts led to even more late budgets down the road.
Also, the recession of the early 1990s hit New York harder than any other state. Money was tight, and the tax cuts meant fewer revenues flowing into state coffers.
Painful political wrangling over how to balance the budget, which included an unprecedented array of creative one-shot revenue raisers and pension raids, led to more delays.
Budget delays have gotten easier to weather because the political consequences of not passing a budget on time appear negligible While late budgets generate plenty of editorials and newspaper ink, lawmakers have found that the issue does not necessarily resonate strongly with voters.
There are some real effects, however. "It undermines the public's confidence and becomes a national embarrassment," says Cynthia Green, vice president of the Citizens Budget Commission.
The practical impact on taxpayers is more significant. School districts across the state have to borrow to cover bills when state aid checks are delayed, costing them millions of dollars in unforeseen interest payments. Several years ago, state lawmakers responded to annual negative publicity surrounding delayed state aid checks to schools by enacting changes to make sure districts got paid on time in April and May. This was done by tying those months' state aid checks to the previous year's budget, rather than the current one.
But with recent budget deliberations running well into June, districts again have had to resort to borrowing to make ends meet. Last year, exasperated officials at the Washingtonville Central School District in Orange County went so far as to send all 211 state legislators a "bill" for $8,318 to cover the cost of their borrowing.
Ironically, the state itself actually made $5.2 million from the budget delay by buying bonds that were sold by state aid recipients on Wall Street, notes Bill Pape, spokesman for the state School Boards Association.
There are other consequences as well. Most school superintendents submit their annual budget requests in May or June, often without knowing how much state aid they will receive. "It can get very dicey," Pape says. "Unfortunately, the public goes by what estimates are made. When they are wrong, they don't blame the state, they blame the district for not being honest."
Village mayors, who are required to submit their budgets in May, also work in the dark. "When they have to adopt those budgets, they're just guessing," says Edward Farrell, executive director of the state Conference of Mayors and Other Municipal Officials.
Vendors serving nonprofits and other recipients of state aid don't get paid on time. And the state's poor reputation reduces the number of businesses willing to bid on contracts with state agencies and entities dependent on state aid, which drives up costs "You don't hear as much about that, but in a way, it's the greatest cost," the Public Policy Institute's Shaffer says.
Budget delays also can hurt nonprofits and state aid recipients more than school districts and local governments. "Nonprofits don't have taxing authority so we're in a tougher position [to pay bills]," says Jim Flanigan, executive director of the Rensselaer County Association of Retarded Citizens.
And late budgets do nothing to improve the state's credit rating—the worst in the nation, although chronic budget deficits have more to do with the rating than whether the budget is passed on time, according to Richard Marino, director at Standard and Poor's, a leading Wall Street credit rating agency. "[Lateness] can have a negative impact on the rating if it demonstrates that states are not able to come to a balanced fiscal plan in a timely enough manner," he says.
The state's abysmal rating means it costs New York millions of dollars more when it has to borrow money on Wall Street. The costs of paying those higher rates vary from bond issue to bond issue, depending on the bonds and the state of the market. The upshot is that it all costs taxpayers, who eventually have to pay those extra bills.
Proposals on how to get a budget done on time are seemingly as numerous as snowflakes in winter and have ranged from the practical to the theatrical to the comical. They also have one indisputable element in common: They have been miserable failures.
Lawmakers did not seriously begin to discuss reforms until the late 1980s, when they began to recognize that late budgets were becoming the rule rather than the exception. They have tried to dock state workers' paychecks, open up budget negotiations to the public, and agree on consensus revenue forecasting. All options, however, have fallen flat.
The rationale behind compensation penalties—including docking the pay of state workers, legislators and gubernatorial staff for every day the budget is late—is that it would put pressure on leaders to agree on a budget or suffer the inevitable political fallout from outraged state employees and less well-off rank-and-file legislators.
But such moves have been ineffective and declared illegal in some instances. In 1995, for example, Pataki attempted to force passage of the budget by threatening to temporarily furlough 21 1,000 rank-and-file state workers. The threat of lawsuits and howls of protest from union-backed employees made the governor back off. Pataki's subsequent attempt to withhold the paychecks of state legislators, their staffs and administrative staffers was declared illegal by the courts.
Moving back the start of the state's fiscal year from April 1 to June or July is also an option that has been discussed repeatedly by Silver and others. This would give the governor and Legislature more time to examine complex budget data and give them a better idea on the amount of available state revenues and spending needs.
State Comptroller H. Carl McCall also favors lengthening the deliberation process, either by moving up the budget submission date or changing the fiscal year. A permanent change in the fiscal year likely would require a constitutional amendment, however, a long and daunting journey that the Legislature has been loath to embark on in the past.
Bruno says moving back the start of the fiscal year only will delay the day of reckoning even further. "I'm open to changing the date, but it won't make a bit of difference," he says. "It will be held up whether it's April 1 or June 1."
Bruno proposes that if a budget is not in place by April 1, an austerity budget, which would include 10 percent cuts from the previous year's spending plan, should kick in automatically. "That would eliminate all the hassles that come from the bills we