How Does the Fiscal Budget Process Work in New York State: New York State’s fiscal budget process uses an executive budget model. Under this system, the Executive (governor) is responsible for developing and preparing a comprehensive, balanced budget proposal, which the Legislature modifies and enacts into law. The governor is required by the State Constitution to seek and coordinate requests from agencies of state government; develop a “complete” plan of proposed expenditures and the revenues available to support them (a “balanced budget”); and submit a budget to the Legislature, along with the appropriation bills and other legislation required to carry out budgetary recommendations. The governor is also required by the State Finance Law to manage the budget through administrative actions during the fiscal year.
The state’s fiscal year begins April 1 and ends on March 31. However, the actual “budget cycle,” representing the time between early budget preparation and final disbursements, begins some nine months earlier and lasts approximately 27 months—until the expiration of the State Comptroller’s authority to honor vouchers against the previous fiscal year’s appropriations.
Although agencies begin to analyze their budget needs as early as May or June, the formal budget cycle begins when the Budget Director issues a policy memorandum—the “call letter”—to agency heads. The call letter outlines, in general terms, the governor’s priorities for the coming year, alerts the agency heads to expected fiscal constraints and informs agencies of the schedule for submitting requests to the Division of the Budget. The call letter signals the official start of the budget process.
The next part of the process begins in September or October and includes the Division of the Budget. In accordance with the schedule outlined in the call letter, agencies typically submit their budget requests to the Division of the Budget in early to mid fall, with copies provided to the legislative fiscal committees. Examination units within the Division then analyze the requests of the agencies for which they have responsibility. Examiners may seek additional information from the agencies and may hold informal hearings or meetings with agency management to clarify agency requests.
In November, the Budget Director conducts constitutionally authorized “formal” budget hearings, giving agency heads an opportunity to present and discuss their budget requests and giving the staff of the Division of the Budget and the governor’s office an opportunity to raise critical questions on program, policy and priorities.
Through late November, the Division’s examiners transform agency requests into preliminary budget and personnel recommendations, which are reviewed in detail with the Director.
By early December, the Division of the Budget will normally have completed its preliminary recommendations on both revenues and expenditures, and presented them to the governor and the governor’s staff, which leads into the next phase of the process.
The governor’s staff, who are also preparing the annual “State of the State” message to the Legislature, work with the Division throughout the development of the budget. The governor is kept up-to-date on changing economic and revenue forecasts, and confirms that executive program priorities are accurately reflected in the budget. Based on the preliminary recommendations and the most current reading of the economic and fiscal environment, the final Executive Budget recommendations are formulated in a series of meetings between Division of the Budget staff and the governor.
Typically, by mid-January, the governor submits the Executive Budget to the Legislature, along with the related appropriation, revenue and budget bills.
Based on their separate and joint deliberations, the two houses of the Legislature reach agreement on spending and revenue recommendations, which are reflected in amended versions of the governor’s proposed appropriation bills and related legislation, and are approved by both houses.
The appropriation bills, except for those items which were added by the Legislature and the appropriations for the Legislature and Judiciary, become law without further action by the governor. The governor must approve or disapprove all or parts of the appropriation bills covering the Legislature and Judiciary and may use the line-item veto to disapprove items added by the Legislature, while approving the remainder of the bill. As provided in the Constitution, the Legislature may override the governor’s veto by a vote of two-thirds of the members of each house. The appropriation bills legally authorize the expenditure of funds during the new fiscal year.
At this point, the budget process enters its last phase: budget execution. As a first step, the Division of the Budget approves “certificates of allocation” informing the State Comptroller that accounts may be established as specified in the certificates and that vouchers drawn against the accounts may be honored.
In addition, the Division of the Budget keeps a close watch throughout the year on the flow of revenue and the pattern of expenditure against its projections. This information is reflected in quarterly updates of the Financial Plan which are provided to the Legislature, as required by law, in April (or as soon as practicable after budget enactment), July and October and with the Executive Budget for the ensuing year (usually in January).
These updates serve as the basis of financial management during the fiscal year and may alert both the governor and the Legislature to potential problems in maintaining budget balance as the state fiscal year unfolds.
Shortly after the end of the fiscal year, the Division of the Budget issues a comprehensive report that (1) compares unaudited year-end results to the projections set forth in the Enacted Budget and in the final update to the Financial Plan and (2) summarizes the reasons for the annual change in receipts and disbursements.
The budget process is long and arduous, but it helps to identify the real problems New Yorkers face regularly. It provides insight into how New York can govern more effectively, make fiscally responsible legislation, and provide the necessary governmental programs to help every New Yorker, from Buffalo to Brooklyn.
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