Substantially revises provisions of the constitution relating to the state's budget and finances; provides for an independent budget office; repealer

* permitting the legislature to amend the executive budget,

* changing the budget from an appropriation budget to a cash budget,

* the creation of an independent budget office,

* establishing a contingency budget,

* ending backdoor borrowing,

* giving the state the limited power to issue revenue bonds,

* reforming the revenue estimate process,

* preserving the line item veto of expenditure,

* allowing either house to reconsider the governor's veto first,

* requiring a balanced budget,

* requiring a long-term capital plan, and

* making other technical and timing changes.

Summary of specific provisions

Section 1 amends Article VII, §1 to require that:

* the comptroller and newly created independent budget office provide preliminary revenue forecasts and make such forecasts available to the public.

* requires the comptroller certify the actual moneys and anticipated receipts to be available for the proceeding year.

* if the legislature cannot agree upon revenue forecasts by the 10th of March, the revenue forecasts provided by the independent budget office shall be binding.

* the governor hold hearing of the capital needs of the state.

* the governor submits to the legislature a detailed, multi-year capital program and financing plan to the legislature.

Section 2 amends Article VII, §2 to:

* make certain technical changes to clarify elections of the governor in

* change the executive budget to a cash budget. Section 3 amends Article VII, §3 to:

* change the time that the governor has to adjust the executive budget from thirty to twenty-one days.

* include a new provision that prohibits the governor from including language, which attempts to modify any general, special or local law.

Section 4 amends Article VII, §4 requires:

* that the budget be balanced, and

* that the legislature may strike items and the conditions contained therein.

Section 5 amends Article VII, §5 to create:

* a contingency budget. The contingency budget would automatically take effect on the fifteenth of April if a budget agreement is not reached.

Section 6 amends Article VII, §6 to:

* allow the governor to submit budget bills that only involve expendi- tures, not statutory changes.

Section 7 amends Article VII, §7 to:

* make technical changes.

Section 8 amends Article VII, §11 to:

* authorize the submission of more than one work or purpose in a bond issue and would prohibit the state from "backdoor borrowing."

Sections 9. and 10 amend Article VII, §§12 and 13 to:

* make technical changes.

Section 11 amends Article VII, §16 to:

* allow that state the authority to issue revenue bonds, as the legisla- ture shall provide by law.

Section 12 repeals Article VII, 517 and:

* adds a new article 17 to strengthen the "rainy-day" fund and provide additional revenue in times of need.

Section 13 amends Article VII by adding a new §20 to:

* create an independent budget office.

Section 14 amends Article IV, §7 to:

* clarify the governor's line item veto to expenditures only, and

* allow either house to reconsider the governor's objections, regard- less if the house is of original jurisdiction or not.

Justification

As is evidenced by the series of late budgets and grid- lock, there is serious need for constitutional budget reform. Reform is needed because there are structural institutional deficiencies exacer- bated by partisanship.

History is needed to shed light on the current structural deficiencies of the state budget process. Under the leadership of Governor Alfred E. Smith, New Yorker's supported a fundamental change to the budget process -- a move from a legislative driven process to a more executive centered process. These changes dated back to the 1915 constitutional convention. Although New York was one of the first states to propose fundamental budget changes, it was one of the last to make such changes. These changes were critical. The former budget process was fraught with corruption and created economic instability. Providing a centralized budget process would stabilize the process and make it more fair and equitable.

While most states changed their budget process statutorily, Governor Smith recognized the volatility of statutory change and therefore pushed for constitutional change. However, certain of these great constitu- tional reforms had unintended consequences that must be remedied.

First and foremost, the Constitution must rebalance the power between the legislative and executive branches. In the 1920s the line item veto was adopted to remedy the problem of legislative logrolling. Scholars and fiscal experts agree that the line item veto protects the stability of the budget process. The State Constitution, is clear that the gover- nor has the ability to veto only appropriations. However, a series of court cases and positions taken by the current governor have distorted this constitutional power to equate appropriations with other non-appro- priation language. The Association of the City of New York agrees. The Bar's committee on State Affairs believes that several court decisions have upset the delicate balance of power. See: The City Bar's Committee on State Affairs, 'The New York State Budget Process and the Constitu- tion: Defining and Protecting the 'Delicate Balance of Power'", THE RECORD OF THE ASSOCIATION OF THE BAR OF THE CITY OF NEW YORK, 58, 345 (2003). We do not change or reduce the executive's power. We simply clarify the executive's power.

There needs to be more independence in the budget process often fraught with partisan wrangling. We have therefore created an independent budget office. This idea works in other states like Florida and even in New York City. The independent budget office will objectively forecast revenue.

Another structural problem came after the constitutional changes in 1927. Public authorities have become epicenters of isolated political power in New York. While public authorities must self-rely on generating their own capital, but are of instances backdoor borrowing, whereby State revenue is used to support authorities. In 1993 constitutional changes closed this door but loopholes remain. This amendment closes the remaining loopholes.

Besides Vermont, which has no constitutional or statutory requirement that their budget be balanced, New York has one of the weakest balance budget provisions in the country. It is generally understood that the governor must propose a balanced budget (See; Article VII, §2), but the final passed budget does not. The amendment will require New York join the many other states in requiring that the final budget enacted be balanced.

Finally, other changes such as the creation of a contingency budget period and changing which house may consider vetoes will end gridlock and ensure the needs of the People of this State are met.

Prior legislative history

A.11860 2004, A.596 (2005-06). Al232 (2007-2008).

Fiscal implications

None.

Effective date

Resolved (if the Senate concur), That the foregoing amendment be referred to the first regular legislative session convening after the next succeeding general election of members of the assembly, and in conformity with section 1 of article 19 of the constitution, be published for 3 months previous to the time of such election.