1 / 12

2009-10 Fiscal Plan Update

2009-10 Fiscal Plan Update. August 14, 2009. DOB Projections. $38.2 B Cumulative 4 Year Budget Gap $260 M in Workforce Reduction Savings over next 2 years “To achieve the needed Financial Plan savings, more stringent workforce measures beyond those outlined above may be necessary”

pia
Download Presentation

2009-10 Fiscal Plan Update

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. 2009-10 Fiscal Plan Update August 14, 2009

  2. DOB Projections • $38.2 B Cumulative 4 Year Budget Gap • $260 M in Workforce Reduction Savings over next 2 years “To achieve the needed Financial Plan savings, more stringent workforce measures beyond those outlined above may be necessary” • Current recession to end during second half of 2010

  3. $38.2 B Cumulative 4 Year Gap 2009-10 2010-11 2011-12 2012-13 $2.1 B $4.6 B $13.3 B $18.2 B Increase of $13 B from the Enacted Budget forecast

  4. Reduction in Revenue Reduction in forecast for State tax receipts: • $6.6 B: Personal income taxes ($4.6 B) and sales taxes ($2B) are showing the greatest downward revisions. • Increase in PIT collections from high income surcharge coming in more slowly than anticipated • Lower estimates for lottery receipts ($1.4 B) • Reduced investment income ($1.2 B)

  5. Increased Spending • Increase in General Fund support for school aid ($1.4 B) due to lower estimates for lottery receipts • Substantial increases in the State’s pension contributions ($2.1 B) • Higher growth in human services spending ($870 M)

  6. State Share Pension Contribution • Common Retirement Fund showing lower returns on investments, resulting in increased employer contributions • ERS pension contribution rates are projected to grow from 7.2% in 2009-10 to 24.1% in 2012-13 • PFRS also projected to increase 14.7% in 2009-10 to 33.1 % in 2012-13 • According to DOB, pension costs could be reduced by the enactment of legislation to: 1) allow amortization of increased costs over several years; 2) create a new Tier V

  7. Workforce Reductions • Executive estimate of amended WRP saving $260 M over next 2 years by: • Continuation of the hiring freeze, eliminating funded vacancies and not filling attritions in State agencies • Severance program to reduce the workforce in the current year • Additional Savings from: • VRWS • Withholding of MC salary increases • Tier V

  8. US Economic Forecast (DOB) Recovery to begin by the fourth quarter of 2009 • Housing market showing signs of stabilizing, • Job declines have begun to moderate • US economy contracted less than anticipated in the first quarter, with more improvement in 2nd quarter • US economy projected to grow 1.7% in 2010 • Unemployment rate near or above 10%, will stay there through 1st quarter of 2010

  9. NYS Economic Forecast (DOB) • Current recession to end during second half of 2010 • NY’s recession started later, expected to last longer • Employment projected to decline 2.3% for 2009, 0.3% 2010, downward revisions from April forecast • Private sector employment projected to fall 2.7% in 2009, 0.5% in 2010: • Financial services down 5.3% in 2009, • professional scientific and technical sector 6.2% in 2009

  10. Severe impact on wages: • Due to dependence on financial sector, wages fell 13.1% in first quarter of 2009 • 4.8% decline in State wages for 2009 • Credit market conditions and rising debt default rate will exert downward pressure on NY’s income and tax base by continuing to depress real estate activity

  11. What to Expect • Difficult revenue and spending decisions • End of recession does not mean financial recovery for State, can take 3-4 years • Employment can lag GPD recovery, so can non-wage income • Capital gains can recover sharply and still be far below former peak, and tax payments on capital gains can lag the income • Source: presentation by Rockefeller School of Government at Governmental Research Association Annual Conference

More Related