The 2012-13 Executive Budget projects a $3.5 billion shortfall that is closed through the following mechanisms:

• $1.5 billion in new resources enacted as part of the initial phase of tax reform enacted in Extraordinary Session in December 2011.
• $1.15 billion in state agency savings related to continued reductions in state agency staff through attrition and tight controls on hiring; enterprise-wide consolidation of procurement, information technology, real estate and workforce management.
• $756 million in savings through reducing local assistance payments, primarily by repealing automatic cost of living increases and trend factors in SFY 2013 for all human service providers, and beginning in SFY 2014 establishing a new system of granting annual increases based on performance reviews. The broad parameters of savings include (described in more detail later in the report):
  • Eliminating COLA’s and trend factors ($150 million),
  • Mental Hygiene ($172 million),
  • Social Services/Housing ($144 million),
  • Public Health, Early Intervention ($105 million), and
  • Others ($185 million).
• $140 million in debt management (prepaying 2013 debt service in 2012).

The Budget maintains the 2-year budget commitment for Education and Medicaid with both areas receiving 4 percent increases based on ten year average increase in personal income and the medical component of the consumer price index respectively.

If enacted as presented, the Executive Budget assumes continued fiscal gaps in the future.

• SFY 2014 ($715 million)
• SFY 2015 ($2.97 billion)
• SFY 2016 ($3.7 billion)