DiNapoli: Cuomo budget plan increases debt burden

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Gov. Andrew M. Cuomo's new budget plan includes some positives -- smaller structural gaps, and funding for infrastructure, including superstorm Sandy rebuilding, a state official said Wednesday.

But Comptroller Thomas DiNapoli added that those positives are partly offset by negatives, including rising debt, a reliance on temporary funds and overly optimistic growth estimates.

DiNapoli, a Democrat, said the governor's new budget plan "appropriately restrains" spending during what he called a challenging economy.

The Democratic governor's $143 billion plan for the fiscal year that starts on April 1 raises spending the state controls by only 1.6 percent -- less than the rate of inflation.

However, DiNapoli said: "It increases our debt burden and relies on temporary actions that will get us through short-term problems, but pushes off some hard choices for another day."

Robert Megna, Cuomo's budget director, reacted angrily to the criticisms, telling reporters some comments were "misrepresentations or just totally wrong."

He added: "We believe the comptroller's staff did him a disservice."

DiNapoli warned the budget is based on a 4.6 percent increase in wages and salaries, and employment growth of 1.3 percent. In contrast, independent forecaster IHS Global Insight expects total wages to rise only 2.8 percent in 2013, and employment to grow 0.9 percent, the comptroller said.

He also said Cuomo was predicting personal income tax revenue will rise 6.6 percent -- a level not achieved in recent years.

Cuomo's budget chief said DiNapoli had failed to account for the way taxpayers rushed to sell assets at the end of the year to avoid expected tax hikes. This phenomenon will boost tax collections in April.

"If you subtract that money out of our forecast, we have a very conservative forecast, which is probably in the neighborhood of one to two percent," Megna said.

Much of the clash revolved around DiNapoli's criticism that Cuomo was increasing the use of "backdoor borrowing," or allowing public authorities to issue more debt without voter approval.

Cuomo would let public authorities sell $3.3 billion more debt, plus an unspecified amount backed by sales tax revenue, DiNapoli said. "We need more effective debt reform that gives taxpayers a voice," the comptroller said.

Megna countered that total state debt, as measured as a percentage of total personal income, will slip to 4.6 percent by the 2017-2018 budget year from 5.5 percent now."Most importantly, the level of debt we expect to be issuing will average about $5.1 billion a year," he said.

Still, Deputy Comptroller Robert Ward noted that is an increase from the $4.4 billion amount estimated last year.

DiNapoli's list of risks in Cuomo's plan includes a possible $1.1 billion cut in federal health aid for individuals who are developmentally disabled.

If Congress fails to ward off "sequestration" -- looming automatic spending cuts -- the state and its local governments will lose about $5 billion over the next nine years, beginning in March. The comptroller also warned that the new budget plan relies on $1.4 billion of temporary funding, including a $750 million transfer from the state insurance fund.Megna said those funds will be used for a "transformative capital plan" for urgent projects that will rely on pay-as-you-go spending, reducing borrowing.

The governor will control that capital spending, preventing the legislature from so-called "pork spending," Megna said.

DiNapoli said the arrangement lacked transparency.

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