The Time for Budget Reform Is Now

——– Original Message ——–

Subject: The Time for Budget Reform Is Now
Date: Tue, 08 Feb 2011 07:46:18 -0800
From: Micah Z. Kellner <news@micahkellner.net>
Reply-To: Micah Z. Kellner <news@micahkellner.net>
To: csmithsmithusa@netscape.net

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The Time for Budget Reform Is Now

Dear Friends,

Governor Cuomo has proposed important reforms that will dig New York out from under the $10 billion deficit we currently face. But it has become abundantly clear that the only way to avoid the pain of future deficits and further rounds of cuts is to fundamentally reform the way our state budget is prepared. We must stop relying on “cash budgeting” gimmicks, like rolling this year’s expenses into next year’s budget and using next year’s cash to pay this year’s bills.

It is time for New York to adopt Generally Accepted Accounting Principles, which are applied to both private companies and governments by the Governmental Accounting Standards Board. Ironically, the state forced the City of New York to switch from cash budgeting to GAAP budgeting during the fiscal crisis of the 1970s. If GAAP principles were a fiscally responsible methodology good enough to impose on the city some 30 years ago, it should be good enough for the state to follow these ideals now.

Today, I published an op-ed in the New York Post on the importance of adopting GAAP accounting in our state’s budget process. This reform is critical to the success of the Governor’s plans to remake New York’s government, and to ensuring not only that we avoid more deficits, but that services aren’t decimated in future recessions. And it will be an important step in renewing New Yorkers’ faith in their government.

You can also read the op-ed below. As always, please don’t hesitate to contact me at (212) 860-4906 if you would like to discuss this or any other matter that concerns you.

Very truly yours,

Micah Z. Kellner
Assembly Member

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NY Needs to Play by the Rules
By MICAH Z. KELLNER

In 1975, at the height of the fiscal crisis, the state set up an independent Financial Control Board to oversee New York City’s finances and ensure that its yearly budgets met Generally Accepted Accounting Principles. If that was good enough to save the city then, it’s good enough for the state now. Indeed, it’s critical to Gov. Cuomo’s plans to redesign our state’s government.

GAAP accounting is nearly universal in the private sector, but most governments are held to looser standards. Its rules prohibit “cash budgeting” tricks — like rolling this year’s expenses into next year’s budget and using next year’s cash to pay this year’s bills — and so forced the city to adopt a fiscally responsible approach and put it on solid financial ground.

Last week, the governor made headlines by exposing that what special interests decry as “cuts” are really just attempts to slow down the automatic increases that fuel runaway growth in our state’s budget. As he pointed out, spending has gone up more than 5.7 percent a year over the last decade — far faster than the growth in tax receipts, personal income or inflation. These automatic increases and accounting gimmicks have put New York deep in the red.

Meanwhile, as Cuomo noted, even as our state government spends too much, it produces too little for the people. You’d laugh at a business that constantly demanded you pay more for its product while giving you less of it. Our state spending is just as absurd: We spend the most on education but we rank 34th in results; we’re No. 1 in health-care spending but 21st in health outcomes.

The governor has proposed important reforms to slow down spending, including a new Medicaid formula based on the Medical Consumer Price Index, incentive-based funding to improve school performance and a plan to work with unions to bring down state workforce costs. I support these ideas, and I hope my colleagues in the Assembly will support them as well.

But unless we fundamentally change the way our state’s budget is prepared, there will be no strong incentive to ensure that these and other innovative ideas survive past this budget cycle. GAAP must be the spine we build our future budgets around.

By creating a Financial Review Board to ensure that the state budget meets GAAP standards, we can force the state to embrace the kind of transformative ideas that will prevent deficits and make government work better for all New Yorkers. We need to build a budget that functions not only in times of prosperity, but also ensures that services aren’t devastated in future recessions.

This current budget cycle is the time to start the conversation about this badly needed reform, and I hope the governor will lead the way. We in the Assembly should work with him.

Republicans like to say that government is the problem, not the solution. As Democrats, we have a responsibility to show that government really can work for the people. Ensuring that we adhere to GAAP principles will make our budget better, stronger and more efficient — and renew New Yorkers’ faith in their government.

Micah Z. Kellner represents the Upper East Side, Yorkville and Roosevelt Island in the state Assembly.

Visit my website: www.MicahKellner.com – Follow me on Twitter: @micahkellner


Contact My Office:

District Office of Assembly Member Micah Z. Kellner
315 East 65th Street New York, NY 10065
T: (212) 860-4906 F: (917) 432-2983
Hours: M-F 9:30 a.m. – 5:30 p.m.

Roosevelt Island Hours: Every Thursday, 3:00 p.m. – 7:00 p.m.
(At the RIOC offices, 591 Main Street)

Email me: KellnerM@assembly.state.ny.us
Visit my website: www.MicahKellner.com

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