The State Budget Process

New York State’s budget process is established in both the State Constitution and in various sections of the State Finance Law. Compared with other states, New York State’s Governor has considerable power in the budget process. The following is a summary of the budget process, highlighting key dates and important times when advocacy can play a key role in shaping the process.

The State Fiscal Year begins each April 1 and runs through March 31, but the actual budget cycle for a given year from development of the budget through the end of an appropriations authority actual runs more than 20 months.

SEPTEMBER: Budget Call Letter

The official beginning of the budget cycle is the issuance of the budget call letter by the Director of the Division of the Budget (DOB). The call letter is supposed to give state agencies an outline of the priorities for the coming year and a general schedule for submitting budget recommendations to DOB.

Comment: The call letter rarely contains any surprises or information that is not generally known. The call letter does try to set the tone for the coming fiscal year by setting out the general parameters for review and submission of budget requests by the state agencies.

SEPTEMBER TO DECEMBER: Executive Budget Development

From the issuance of the call letter through December, the State agencies and DOB begin the nuts and bolts process of putting together the state financial plan and the actual budget bills. In late October, the State issues a public report detailing the State’s financial picture for the first half of the fiscal year. This report can have a significant impact on shaping the development of the budget. By the middle of November or beginning of December, State agencies may begin to get an idea about how the Governor’s budget proposal will affect the agency. Most final decisions regarding the budget are made by the end of December.

Comment: During this period, it is important to focus advocacy efforts on state agencies, DOB and the Governor’s office, because each plays an important role in budget development. State agencies can act as an advocate inside the administration for programs or policies and are often relied upon to advise DOB and the Governor’s office particularly on technical and implementation issues. DOB is the focal point for budget development and has the overall responsibility to put together an agency’s budget. The Governor’s office often makes the final decision regarding major policy actions.

MID-JANUARY TO FEBRUARY 1: Executive Budget proposed

The State constitution requires the Executive to submit a budget either by the third week of January or as late as February 1 in a gubernatorial election year. The Governor presents appropriation bills detailing state operations, aid to localities, capital projects and also any other legislation, commonly referred to as Article VII bills (after the section of the State constitution), necessary to implement the proposed budget.

FEBRUARY: Legislative Review and Hearings

Beginning a few weeks after the Governor’s budget is presented, the Legislature holds a series of budget hearings on the Governor’s proposal. The hearings cover the major areas of the budget, such as taxes, health, education, higher education, state workforce and mental hygiene. The hearing topics may vary slightly from year to year depending on which issues are in the public spotlight. Each hearing begins with the relevant State commissioner testifying about his or her agency’s budget. Following this testimony, interest groups and individuals testify regarding the proposed budget.

Comment: By publicly highlighting issues of concern, budget hearings can be extremely important. The hearings require Commissioners to defend their budgets in public, creating an opportunity to gain legislative or media attention on an issue that is important to your constituency. Often times, advocate groups will recommend questions for legislators to ask. Testifying at the hearings is less important. Most legislators and members of the press leave long before most groups testify. In most cases, submitting written testimony for the record can accomplish the same purpose as testifying.

FEBRUARY: 30-day amendments

The State constitution gives the Governor 30 days to make changes to the proposed Executive Budget.

Comment: The Governor seldom makes major changes to the Executive Budget within the 30-day amendment period. Most changes are technical. Occasionally, an issue will become such a liability that the Governor will propose a change. The Governor generally does not change the proposed budget since he will have to negotiate the entire budget with the Legislature over the next couple of months.

MARCH: Consensus Economic Forecast

The State Finance Law requires the Executive and the Legislature to develop a consensus economic and revenue forecast on tax, lottery and miscellaneous receipts prior to March 10.

Comment: The State Finance Law does not provide a mechanism for resolving disputes or for enacting any penalty or default mechanism when there is no agreement. Therefore, the actual consensus forecast is seldom met. But it is very important to highlight the crucial role that estimating revenue plays in the budget negotiations. In many cases, the economic forecast and tax projections are the most heated areas of discussion in budget negotiations since the amount of available funds will determine the overall size of the budget. And, the overall size of the budget will determine if the Legislature has any flexibility to add money to programs. In most years, the major delay in securing an on-time budget is lack of agreement on revenue.

MARCH: Budget resolutions and Legislative Conference Committees

In recent years, the Legislature has used a process known as conference committees to create a final budget proposal. Under this process, each house passes a budget resolution. The resolution is less detailed than the final budget bills. Resolutions highlight where each house wants to make adds or deletions to the Governor’s proposal. After each house passes its resolution, the leaders of the Senate and Assembly establish a main conference committee and appoint members to the seven or eight subconference committees. The main committee sets spending targets for the sub-committees. The conference committees then meet in public to negotiate the parameters of the final budget deal in their respective areas. In most years, conference committees are not used. In these situations, ad hoc negotiations go on between the two houses and the Governor.

Comment: Whether by conference committee or through staff and member negotiations, most of the real decisions are made during closed-door negotiations between the Assembly, Senate and Governor. During these negotiations, the fortunes of an issue can change dramatically. Needless to say, advocates need to be ready to move quickly to contact legislators to support their cause.

APRIL 1: Budget deadline and extenders

New York State has not had a budget enacted by the constitutional deadline of April 1 since 1983. Since no elected official wants to be accused of shutting down state government, the Governor and the Legislature enact emergency bills to spend state money without a final budget enacted. In the past, emergency spending bills have been as short as a week and as long as six weeks. It is important to note that the Governor must send a budget extender bill to the Legislature in order for the Legislature to act. Typically, the Governor and the Legislature agree to keep the basics of government operating, such as paying state workers, reimbursing for Medicaid claims and making welfare payments. Perhaps the most important consequence of missing the budget deadline is this: Since 1999 if the State Budget is
not enacted by April 1, the Legislators do not get paid.

Comment: Budget extenders are important because they allow the State and some of the programs that depend on State funding to continue to function. For instance, without funding for Medicaid claims, many health and mental hygiene programs would simply be unable to pay workers. Other forms of state aid are generally not included in the emergency spending bills, creating financial hardship for many programs.

FINAL ACTION - Legislative budget

At some point, the Legislature comes to an agreement with the Governor and a final State Budget is enacted, or the Legislature comes to an agreement and the Governor exercises his right to veto portions of the budget. Once a budget bill is passed by the Legislature, it is considered law without any further action by the Governor, except where the Legislature has added funds. When the Legislature adds funding to the budget, the additional funds must be “lined out” separately from the main appropriation. The Governor may line-item veto funds added by the Legislature while keeping the main appropriation enacted. The Legislature may then, by a two-thirds vote of both houses, override the Governor’s veto, as happened in 2003.

Comment: In most years, the Assembly, Senate and Governor will negotiate a budget that has substantial agreement amongst the three parties. In the past 23 years, there have been only two successful overrides of a Governor’s budget vetoes, 1982 and 2003. And, there has also been only one year in which a Governor did substantial vetoes, 1997.

Budget Related Litigation

Since 1997, litigation related to the State Budget process has been working its way through the court system. When the case is finally decided, it could have a substantial impact on the budget process. The litigation is focused the interpretation of the State Constitution regarding the Legislature’s ability to amend the Governor’s budget.

The Federal Budget Process

Policy Basics: Introduction to the Federal Budget Process

To develop tax and spending procedures, Congress must follow specific procedures outlined in the Congressional Budget Act of 1974. To learn more about the President’s annual budget request, congressional budget resolution, enforcement and budget reconciliation and passage visit the Center on Budget and Policy Priorities at by clicking here.