Cuomo Reaches Deal With Top New York Legislators to Close $10 Billion Gap - BloombergNew York Governor Andrew Cuomo and top lawmakers agreed on a budget that eliminates next year’s $10 billion deficit by sticking close to the governor’s proposals for spending cuts without new taxes, they said...
The agreement “transforms the way we do business,” Cuomo said. Lawmakers agreed with Cuomo’s proposals to limit future spending growth on Medicaid to U.S. medical-cost inflation, starting in April 2012. School aid would grow no faster than personal income among the state’s residents.
Unlike some of the showdowns in other states, it appears that New York State's lawmakers might have been able to come together to reach a mutually acceptable agreement to address that state's current budget deficit. IMO, the package is encouraging as it caps the rate of Medicaid spending growth, which accounted for a disproportionate share of the state's increase in spending in recent years. Although the cap is tied to the Medical Inflation Index (which is running at a multiple of GDP growth and the overall CPI due to a chronic excessive cost problem that needs to be addressed in future health care reform), the cap marks an early attempt to budget health care expenditures. Given that states' finances are not unlimited, it makes sense to try to budget all expenditures to reduce the risk of unsustainable fiscal conditions, even as trade offs are inherent in such a decision (not unlike any other major decision).