Cuomo Tries to Reinvent Albany With Bold First Budget

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Governor Andrew Cuomo equated it to Enron, said it defied logic and warned (or perhaps, promised) that fixing it would send lobbyists "running around the hallways like their hair is on fire."

By the end of his hour-long budget presentation Tuesday, Cuomo had cast himself as a transformer: changing Albany's decades-old budget habits, and repositioning the state "nationally" as an economic destination for the private sector.

New York's new Democratic governor said he wanted to replace formulas that called for annual double-digit increases to the state's most expensive programs with more modest rates of growth that also, for the first time, took performance into account.

The most far-reaching proposal by the governor was his call to eliminate automatic cost increases in Medicaid and education, which he said are part of "permanent law" and rise regardless of the programs performance of the state's ability to meet those new costs. 

Any funding that did not match the rate of growth was considering a "cut" in what Cuomo described as the illogical math of "Albany budgeting."

"When you use reality-based budgeting, as opposed to Albany-based budgeting, which is where Albany meets Enron, in our opinion, the Albany-based budgeting institutionally assumes an exorbitant growth rate that is disconnected from fiscal reality," said Cuomo. "And this has been going on for many, many years."

Replacing those formulas with more modest and "objective" federal indexes would slow the rate of growth of Medicaid, from 13 percent, to four percent, he said. In changing the funding formulas for education and Medicaid, Cuomo stressed his desire to introduce a form of incentive pay.   

"More egregious in my opinion," Cuomo said, "the [current] formulas don't even call for performance for the people. There are no outcome measures, no performance measures. It doesn't say we're going to pay for programs that are doing well in terms of preventable hospital readmissions or wellness or quality care," he said. "It's just more money."

On education, Cuomo was even more blunt.

"You don't just sit there. ... You actually have to do something for the money," Cuomo said. "And we reward achievement. That's the culture that we're in."

The carrot he was offering came in the form of two $25 million grants: one for schools demonstrating gains in student achievement; the second for schools using innovative (i.e. money-saving) management techniques. 

After announcing a $1.5 billion, or two percent, cut to school districts, Cuomo immediately outlined how this could be sustained without a single layoff. Cuomo said school districts had $600 million unused federal dollars from last year, plus an additional $1.2 billion left in their "reserves."

Oh, there's a few other ways too.

Cuomo said the highest paid superintendent — whom he did not name — makes $386,000 annually. But this person isn't alone. In fact, "279 school superintendents" make more than $200,000 with salaries an benefits. Also, "More than 2,000 school administrators receive more than $150,000 in salaries and benefits," said Cuomo.

"If there was a wage freeze for management and teachers," Cuomo said, "that would amount to $1.1 billion. Again, our cut is $1.5 billion."

New York City schools are slating to take a $579.7 million cut in school funding. Mayor Bloomberg's aides said it's really a loss of more than a billion dollars, since they were banking on the state coming through with $800 million in funding they promised in November. That got wiped away in Cuomo's assault on those automatic formulas.

E.J. McMahon, a budget expert with the business-backed Manhattan institute, said eliminating the formulas was indeed a shock to the Albany system, but the rest of Cuomo's budget was not extraordinary.

The elimination of those automatic cost increases "'just drives people here crazy. I love it," said McMahon. He said Cuomo did nothing to empower school districts to cut program costs hoisted upon them. McMahon also doubted the Medicaid Redesign Team — which Cuomo empaneled and included legislator and organizations representing health care workers and hospital operators — would come up with any drastic changes to the program. 

"That crew on that Medicaid Redesign Team, they may hit a target of $2 billion and change — they aint going to change Medicaid," said McMahon. "All right. They're going to find a way to get through this year. ... That group, they putting the stakeholders in a can, shaking it up and seeing what comes out is not going to alter Medicaid for all-time. What it is, is 'I'm putting a gun to their head and saying $2 billion my way or $2 billion your way.'"

Cuomo said he wanted the Medicaid Redesign Team to find $2.8 billion in savings, or he'll do it. He took a similar approach when he announced he was creating another panel to consider the elimination of 3,100 beds in underutilized prisons. Cuomo said if recommendations from the newly formed panel were not adopted by the legislature, the Corrections Commissioner would take action.

It was, according to some, a tough, bold vision by a new governor, mixed with a shrewd maneuver to embrace would-be opponents into the decision-making process. Members of the Medicaid Redesign Team include representatives form 1199 SEIU, the health care workers union and the Greater New York Hospital Association — organizations that pummeled previous governors. 

On the prison-consolidation team will be an untold number of legislators, presumably many from the poor, rural upstate districts that count on those facilities for steady employment.

"I think it's fair and right that the legislature be part of it," said Cuomo. "There are political consequences to these determinations, I understand that. I think it's right the legislature be part of making that determination."  

Some of Cuomo's fellow Democrats did not see his budget having the same grand, sweeping impact as that the governor described.

Assembly Speaker Sheldon Silver seemed unphased when reporters asked him about the automatic funding formals. In an op-ed a day earlier, Cuomo said he was "shocked" to learn of them, and described them as a "sham." 

Silver said the deficits created by those inflated formulas had "all been created by budget officers and by governors."

Assembly Majority Leader Ron Canestrari, when asked if this budget was, as Cuomo described, one that would change the "trajectory" of the state for years to come, said: "Eh, they all say that. I think it's a bit hyperbole."

He said, it was Cuomo's "first year. I understand the enthusiasm" and that "every year is a defining year, this will be no different, good or bad."