FROM: Ostroff Associates

DATE: November 12, 2021

RE: Quick Start Meeting

Attendees -
Robert Mujica – Executive Budget Director
Todd Scheurmann – Assistant Deputy Comptroller
David Friedfel – Senate Majority Finance Director
Blake Washington – Assembly Ways and Means Secretary
Shawn MacKinnon– Secretary for the Minority, Senate Finance Committee
Lauren O’Hare – Assembly Ways and Means Minority Committee Director

Robert Mujica – Today is a component of the Quick Start budget process, which was implemented as
part of the Budget Reform Act of 2007, and it requires the Division of Budget (DOB), the Senate,
Assembly and the Office of the State Comptroller (OSC) to separately publish revenue and spending
estimates for the current and upcoming fiscal years and then to meet to discuss those projections.
Following this meeting, by November 15th, DOB will post a report on their website to describe the
findings and discussion. The Quick Start process was created to encourage enactment of an on-time
budget.
For nearly two years, the Executive and the Legislature have worked together to support New
Yorkers through the pandemic which is still ongoing. While the effects of the pandemic continue,
the state’s finances have stabilized and vastly improved from where they were last year. The mid-
year financial plan released by DOB shows that the state has balanced budgets through 2025, which
is the first time that DOB has published a financial plan without any gaps in the outyears.
Foundation Aid is fully funded in this plan, as well as middle class tax cuts, which will continue. The
state workforce has declined significantly due to COVID-related retirements, and DOB is working to
stabilize the workforce by lifting the hiring freeze.
There are still difficult decisions to be made, and the state’s projections for the economy and
revenue are extraordinarily complex. All parties’ projections show the country’s GDP will grow
between 5.5 and 5.8% in 2021. These forecasts are not without substantial risk; DOB and the
Legislature agree that supply chain shortages, labor shortages and inflation represent significant
risk to projections and put pressure on household spending overall. The October employment
report shows some robust recovery in the market, but the labor participation remains depressed
compared to where it was pre-pandemic. In New York City, the unemployment rate remains double
the national average, at 9.8 percent. Governor Hochul understands these risks, and has taken steps
to mitigate them. Without sufficient reserves, the State may not be able to maintain current services
during a potential recession. Staffs have been meeting to compare each group’s mid-year report,
which will be detailed below.
Mujica – There have been significant gaps coming out of previous recessions. There have been gaps
every year, but they have been able to be closed before the end of the budget process.

Mujica – Receipts forecast goes up over the out-years. Mid- or end-of-year gaps have been
eliminated for this year for the first time.
Mujica – The 8.5% in FY 2022 includes about 4% of COVID-related expenses that will not reappear.
The actual number of recurring spending for 2022 is about 4.5 percent.
Mujica – The School Aid increase this year was the largest increase in the state’s history. These
increases will continue and is built into the state’s estimates.
Mujica – Medicaid within the global cap is balanced, but in Fiscal Years 2024 and 2025, there are
deficits of $1 billion and $1.3 billion. This is a deficit to the global cap, and this shows that spending
is going to grow faster than the cap in those years. That is something that will need to be dealt with
in the Executive Budget.
Mujica – For 2021 and 2022, public assistance caseloads will increase, but following those years it
should decrease again.
Mujica – There is generally consensus around these numbers. The biggest difference is between the
Senate and Assembly majorities and minorities, and that is due to some executive estimates for
School Aid and reimbursement formulas. This will be reviewed as part of the budget process.
David Friedfel – The Senate Democratic Conference is concerned with any cuts to Medicaid enrollee
benefits or healthcare overall.
Lauren O’Hare – The Assembly Minority Conference is focused on funds to the rainy-day fund, and
stressed transparency of where the funding is coming from and being utilized for. Inflation is also a
priority, because recovery is not the same for all New Yorkers. The Conference agrees with the
Governor that there should be no new tax increases in the future.
Shawn MacKinnon – The Senate Republican Conference is concerned about the impact of inflation.
These higher costs of living could continue until next summer.