New York Secretary of State Cesar Perales came to Riverhead Thursday to present Gov. Andrew Cuomo's executive budget and reform package to local officials and residents.
Perales spoke at the Suffolk County Community College Culinary Arts Center on East Main Street Thursday afternoon. First District Assemblyman Dan Losquadro introduced Perales, a career public servant appointed to the position of secretary of state in 2011.
Perales outlined the governor's executive budget and reform proposals, touching on everything from state spending to economic development and mandate relief.
Cuomo's plan calls for closing a $2 billion budget deficit by keeping state agency spending and aid to local governments flat year-to-year. These are cuts to "anticipated growth," Perales said, "not below-the-line cuts."
"This budget has no sale of state assets, no one shots, no new fees and no new taxes," Perales said.
The budget, which the governor has called "straightforward," is just one part of the overall economic plan for the state, which also includes economic development, "re-imagining" government, mandate relief and addressing what the governor calls "the education crisis."
The state can gain $25 billion worth of economic activity by leveraging just $1.5 billion of state investment, Perales said. The centerpiece of the Cuomo plan is the construction of "the country's biggest convention center" and a gaming casino on the Aqueduct Racetrack site in Queens. The facility would be built, owned and operated by private industry regulated by a new state commission, which will also oversee racing and the state lottery, Perales said. The ripple effect of that massive project would include thousands of construction jobs and, once the convention center and casino is operating, an estimated $1 billion in annual revenues for the state, Perales said.
Cuomo is advocating an amendment to the state constitution to legalize casino gambling in New York, to pave the way for his "dream casino," Perales said.
The state will also accelerate planned infrastructure improvement projects that have already been bonded and were going to be undertaken over a three-year period. These projects, which include work on 100 bridges and 2,000 miles of roads, will be undertaken all at once, in one year. The construction of a new Tappen Zee Bridge is among the infrastructure projects on the governor's list.
"Re-imagining" government as "entrepreneurial government" will include a thorough review of state agencies and programs, so that duplicate programs are eliminated and similar programs and agencies are consolidated, Perales said. He cited as an example of programs in need of "re-imagining" the 91 job-training programs currently administered by more than 40 different state agencies.
"We need to eliminate hundreds of redundant and obsolete programs," Perales said.
The state will be taking a hard look at the 140,000 contracted agencies performing services for the state, as well.
"We need to cap and control administrative costs in contracted agencies," he said. Administrative overhead runs from 3 percent to 50 percent of a contracted agency's budget, according to the governor. Perales cited one agency as a poster child for the need for reform: a downstate early intervention and special education provider with a $19 million annual operating budget that's 99 percent-funded by public money. The organization's CEO is paid salary and other compensation totaling $3.2 million — nearly all of the agency's $3.3 million administrative budget.
"How do we justify this kind of spending to the taxpayers of this state," Perales asked.
The state will redesign health care by enacting the federally funded health exchange program, he said. It will provide health care coverage for one million uninsured New Yorkers, cut the average expense of individuals' health insurance premiums by 66 percent, and cut the cost of health care coverage for small businesses by 22 percent, Perales said.
Cuomo's mandate relief focus is two-pronged: medicaid and pensions.
The state is committed to "holding harmless" its 62 counties for all increased Medicaid costs for three years, Perales said.
Cuomo wants to establish a new "Tier VI" to the state pension system, which will be mandated for all new hires, that moves away from the defined-benefit pension system and implements a pension plan more like a 401k.
The pension change will not affect current state employees or retirees, Perales said, but it's needed going forward because the current system is "unsustainable."
Cuomo is also calling for the elimination of overtime in the calculation of pension benefits for employees covered by current pension system tiers. There has been a lot of abuse of overtime to artificially inflate pension benefits, Perales said. This consists of an employee being granted a huge amount of overtime during his last year of employment, because the last year's pay is the basis for the calculation of the employee's pension benefit.
Finally, the governor's economic plan for the next fiscal year takes aim at the state's "education crisis." Education is our "priority mission," according to the governor.
"Education is not an employment program for the adults," Cuomo said in his budget address last month. See video. "We have come to focus more on the business interests of the system than on the students. Education is about the students and we're going to shift our focus back to the students," Cuomo said.
The correct measure of success in our education system is student achievement, Cuomo said. "It's not about how much you spend."
The correct measure of success is "about performance for the student and performance for the taxpayer," the governor said.
New York has some of the highest costs per pupil and highest property taxes in the country, yet ranks 38th in terms of graduation rates.
The governor is calling on the teachers' union and the state education department to settle a lawsuit brought by the union over the state's mandatory evaluation program. The governor said if they can't do it, he'll do it for them in his 30-day budget message.
Local districts that implement an evaluation system by Sept. 1, will be eligible to participate in a competitive bonus pool, under the government's plan. All districts must implement the evaluation system by Jan. 17, 2013 in order to be eligible for a 4 percent state aid increase in the next fiscal year.
The evaluation system is required if New York is going to access $700 million in federal "Race to the Top" funds.
"It's a simple equation: no evaluation, no money. Period," the governor said in his address. "But it's not just about money." He said an evaluation system is "the way to reform education."
Perales and other members of the governor's cabinet are making 200 budget presentations in communities throughout the state.
Thursday's presentation at the culinary arts center in Riverhead was sparsely attended. Riverhead officials in attendance were Supervisor Sean Walter, Deputy Supervisor Jill Lewis, Councilwoman Jodi Giglio, assessor Laverne Tennenberg, and Riverhead IDA director Tracy James. Culinary Arts dean David Bergen, SCCC students, teachers and administrators also attended the talk.
In a question and answer session following the presentaion by Perales, Tennenberg asked the secretary of state whether the governor's budget would impose a cap on STAR rebates as it did in 2011. That functioned as a "hidden tax" on residents, Tennenberg said. Lost property tax savings ranged from $135 to more than $200 per household, she said.
Perales said he didn't know the answer to Tennenberg's question, but the governor's office staff members present at the meeting would get back to the assessor.
"Last year an awful lot of things were cut to plug the $10 billion gap," Perales said. "Some of those things were re-evaluated this year."