2013 budget presentation
TRANSCRIPT
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2013-14 Governor Andrew M. Cuomo
January 22, 2013
Executive Budget & Management Plan
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Two years ago...
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Needed...
“Fundamental Change”
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REBUILD GOVERNMENT From the ground up...
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RESTORE TRUST + RENEW PURPOSE
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...to make it work once again.
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Two years later...
...Government is working.
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The budget was a flashpoint for dysfunction.
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New York has a promising economic outlook.
Over the last two years New York State has
successfully tackled serious budget issues…these
actions helped improve the State’s fiscal condition…
--Citizens Budget Commission
Now the budget is the symbol of government working.
“ “
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...simple and straightforward.
2013-14 Executive Budget is...
Executive Budget
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...It’s not supposed to be traumatic.
Executive Budget
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2013-14 budget gap is....
Executive Budget
$13 billion.
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2013-14 budget gap is....
Executive Budget
$1.3 billion.
2013-14 budget gap is...
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2013-14 Executive Budget: Financial Plan
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If we didn’t take action in 2011 and 2012, budget gaps would
have been in the double-digits
2013-14 2014-15 2015-16
$17.4B
$20.9B $22.5B
$1.3B $2.0B $3.6B
Financial Plan
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2011-12 2012-13 2013-14
Estimated Gap to Close $10.0B $3.5B $1.3B
Estimated State Operating
Funds Receipts $81.9B $84.1B $86.9B
Gap as a Percentage 12.2% 4.2% 1.6%
Fiscally responsible budgets have
closed the gaps
Financial Plan
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How do we close a $1.3B deficit?
Financial Plan
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First, what we don’t do...
Financial Plan
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NO NEW TAXES.
Financial Plan
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How do we close $1.3B? Scheduled
Increase
Proposed
Increase
Savings
State Operations (NPS, consolidating
State back office functions) 1.4% FLAT $434M
Local Aid 3.1% 2.3%* $509M Debt Management (Smarter debt
practices and refinancing) 5.2% 1.1% $128M
Workers’ Comp Reform/Rightsizing
SIF __ __ $250M
Sales and other tax enforcement __ __ $35M TOTAL Gap Closing $1.3B
State of the State Investments __ __ $543M
Financial Plan
*Inflation is 2.1%.
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State of the State Initiatives Initiative Total
General Fund Spending Education (Full-Day Pre-K, Longer Day and Year, Incentivizing High Performing
Teachers, Community Schools), Upstate Tourism (Market-NY), Taste-NY and
Innovation Hot Spots Professional Support
$89M
Capital Spending NYSUNY 2020, NYCUNY2020
$110M*
Affordable Housing ($1B over 5 years) First year of a multi-year plan (HFA mortgage refinancing, housing fund reserves
and capital) $194M*
NYS Innovation Capital Fund Financed by ESDC $50M* NY Green Bank/Solar Jobs/Charge-NY $100M* TOTAL $543M Proposed Hurricane Sandy Funding $3.6B
Financial Plan
*Does not count in annual operating expenses.
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2012-13 2013-14 Change
OSC $139M $139M FLAT
OAG $163M $163M FLAT
OCA $1.87B $1.87B FLAT
Partners in Government
Financial Plan
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Summary: State Operating and All Funds 2012-13 2013-14
Proposed
Change Percent
Change
State Operating $89.4B $90.8B $1.4B 1.6%
All Funds (w/o Hurricane Sandy Aid
and w/o Affordable Care Act)
$134B $136.5B $2.5B 1.9%
All Funds (w/Affordable Care Act)
$134B $137.5B $3.5B 2.6%
All Funds (w/ Hurricane Sandy Aid
and Affordable Care Act)
$135.5B $142.6B $7.1B 5.2%
Financial Plan
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Education and Medicaid spending
make up 50% of the total state budget.
Financial Plan
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In 2011 we eliminated the unsustainable
automatic13% annual increases in
Medicaid and education spending.
Financial Plan
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The law replaced them with reality-based
growth indices in education and Medicaid.
Financial Plan
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This budget continues a fiscally
responsible course.
Financial Plan
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2013-14 Executive Budget: Education
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Current law links the annual education spending
index to the rate of that year’s growth in State
personal income.
Education
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Education index applied to this year =
3% growth (additional $611M).
Education
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However, we propose a pension and
fiscal stabilization adjustment.
Would add an additional 1% for pension and fiscal
stabilization for districts, which equals $203M.
Education: Pension and Fiscal Stabilization
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Education: SOS Initiatives
Education State of State Initiatives • Full-day pre-k for highest needs students: $25M*
• Extending school year and day: $20M*
• Community schools: $15M*
• Master teachers: Pay for performance: $11M*
*Would be funded through unallocated education performance grants.
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Formula-Based Aid $611M
Fiscal Stabilization Funding $203M
SOS Initiatives $75M
TOTAL $889M
Education aid increase
Education
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Total Education Spending=
$889M or 4.4% increase.
Last year’s increase was $805M or 4%.
$300 per student average increase over last
year’s increase.
Education
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8.6%
4.1%
1.6%
-0.8%
Total education aid increase over
2-years is $1.7B
Education
2-year education
spending increases
2-year inflation rate 2-year growth in
home values 2-year student
enrollment
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The teacher evaluation system is a success. Only a handful of
schools did not have a plan approved.
Education: Teacher Evaluation System
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Education: Teacher Evaluation System
0 0 0
685/691
2010 2011 2012 2013
Evaluation systems implemented before and after our
evaluation system and state aid increase linkage
Evaluation
Deadline
for State
Aid
Increase 99%
Compliance
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We will continue to link State aid increases to districts to
ensure compliance of evaluation systems.
Education: Teacher Evaluation System
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2013-14 Executive Budget: Medicaid
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Like education, current law sets Medicaid
growth to the index of the 10-year average of
healthcare CPI.
Medicaid
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Last year’s Medicaid index was 4% ($613M).
Medicaid
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This year’s Medicaid index is 3.9% ($593M).
Medicaid
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2 years ago we established an MRT process—
it’s working.
Medicaid
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• Spending has stayed under the Medicaid index
for 2 years.
• Planned savings of $17 billion over next five
years.
The MRT Process is Controlling Costs and
Improving Care
Medicaid
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2013-14 Executive Budget: Economic
Development
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Round II of the Regional Economic Development
Councils was a great success.
Economic Development: Next Round of Regional Councils
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We propose a Round III of the REDCs:$150M in capital
and $70M in tax credits for next round of awards.
Economic Development: Next Round of Regional Councils
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$50M innovation venture capital fund for State to make
investments in commercialization deals and $5M for
professional services for winning incubators.
Economic Development: Innovation Hot Spots
Innovation Hot Spots
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$5M performance grant to incentivize community
colleges to place students in high demand jobs.
Economic Development: Next Generation Job Linkage Program
Next Generation Job Linkage Program
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$1B over 10 years.
$100M for second installment.
Total investment to date: $200M.
Economic Development: Buffalo Billion
Buffalo Billion
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$60M for stadium renovation and annual support.
Economic Development: Buffalo Bills
Buffalo Bills
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$2M for initial implementation costs of Taste-NY
specialty stores and kiosks featuring tax-free New York
products.
Economic Development: Taste-NY
Taste-NY
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$5M for competitive Upstate NY Marketing Campaign.
Economic Development: Upstate Regional Marketing Competition
Upstate NY Marketing Campaign
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$110M for NYSUNY 2020 Round III & NYCUNY 2020.
Economic Development: NYSUNY 2020 & NYCUNY 2020
NYSUNY 2020 & NYCUNY 2020
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Extend for an additional 5 years ($420 million annually) and
increase accountability and transparency.
Economic Development: Film Production Tax Credit
Film Production Tax Credit
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Extend for an additional five years ($5 million per project)
and increase the credit value by making it refundable.
Economic Development: Historic Preservation Tax Credit
Historic Preservation Tax Credit
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Upstate Destination Resort/Casinos 3 new Upstate casinos
Est. $150M revenue for schools and property tax relief
beginning 2016.
Economic Development: Casino Gaming
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Increase the Minimum Wage From $7.25 to $8.75 effective July 1, 2013.
Economic Development: Minimum Wage
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Economic Development: Minimum Wage
More than 705,000 workers would be affected.
Total wages would increase by $1B per year.
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Economic Development: Minimum Wage
With more disposable income, workers will
spend more and sales taxes will increase.
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2013-14 Executive Budget: Government
Operations
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Grow the Environmental Protection Fund • EPF has been held harmless at $134M for the past 2 years.
We propose a two-prong approach to grow the EPF.
• First, we propose adding $15M to the EPF.
Government Operations: Environment
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• Second, we propose strengthening the Bottle Bill law’s
enforcement provisions which will result in an additional $4M
this year and $8M in the out years that will go to the EPF.
• Both actions will increase the EPF by $19M from $134M to
$153M this year.
Government Operations: Environment
Grow the Environmental Protection Fund
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$1B House NY Affordable Housing Initiative
• $100M for Hurricane Sandy recovery.
• $706M for preservation of 8,600 units of Mitchell Lama
housing.
• $230M for 5,400 new units of affordable housing.
• Funding from HFA mortgage refinancing, housing fund
reserves and capital.
Government Operations: Housing
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State continues to have excess prison beds—
estimated 2,300 (4%) decline in prison population
over next four years.
Government Operations: Corrections Facilities Consolidation
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Government Operations: Corrections Facilities Consolidation
Plan to close least efficient prison facilities
• Bayview (Manhattan). Already vacant due to
Superstorm Sandy. Total staff cost per inmate is
$74,385 vs. $34,193 benchmark against most
efficient DOCCS facilities
• Beacon (Dutchess). 53% vacancy rate. $69,863
staff cost per inmate vs. $34,193 efficient facility
benchmark.
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Juvenile Justice
• Extends the “Close to Home” model to the rest of the State for
youth in non-secure settings, which builds on successful initiative
to move NYC juvenile delinquents out of institutional settings to
more appropriate, community-based settings.
• Reduces capacity of the State system by an additional 88 beds by
closing 4 non-secure institutions: Redhook (Dutchess), Middletown
(Orange), Lansing (Tompkins), Brentwood (Suffolk).
• State savings of $1.4 million annually, and local savings of $2.8
million annually.
Government Operations: Juvenile Justice
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2013-14 Executive Budget: Financial Relief
for Local Governments
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National economic downturn puts local
governments under significant fiscal stress.
Financial Relief for Local Governments
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Last year we began enacting mandate relief.
Financial Relief for Local Governments
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Pension Reform (Tier VI), Medicaid Relief and
Early Intervention.
Financial Relief for Local Governments
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We capped the local growth in Medicaid to 3%. Last
year we started taking over growth of Medicaid.
FY13 FY14 FY15 FY16
3% 2% 1% 0% Local
Savings:
$111
million
$260
million
$370
million
Financial Relief for Local Governments: Medicaid
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One of the most common complaints from
municipalities is the process of binding
arbitration.
Financial Relief for Local Governments: Binding Arbitration
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Reform binding arbitration process
• “Binding arbitration” expires on July 1, 2013. Current
statute directs arbitrators to consider a government’s
“ability to pay” but it is not defined.
• If a government is under “fiscal distress”, ability to
pay cannot exceed 2%, like their property tax cap.
Financial Relief for Local Governments: Binding Arbitration
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Local governments and school districts
continue to struggle with pension costs.
Financial Relief for Local Governments: Pension Crisis
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2002 2012
ERS and PFRS local pension cost increase
$190M
$2.2B
Financial Relief for Local Governments: Pension Crisis
1,000%
increase
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Tier VI Savings Financing Plan
• We propose offering local governments and school districts the option
to “lock in” long-term stable rate pension contributions for ERS, PFRS,
and TRS in FY 2014.
• Pension system will be fully funded – safeguards in place.
Financial Relief for Local Governments: Pension Crisis
TRS ERS PFRS
Current Rates (12-13) 11.8% 18.9% 25.8%
Scheduled Rates (13-14) 16.5% 20.9% 28.9%
Financing Plan Rates 12.5% 12.0% 18.5%
Reduction in Rates 4.0% 8.9% 10.4%
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First Year
Significant
Savings
As a Percent
of Budget
Syracuse $12M 4.0%
Rochester $21M 5.6%
Buffalo $19M 5.0%
Yonkers $21M 4.7%
Albany $8M 4.7%
Tier VI Savings Financing Plan Impact for Big 5 Cities
Financial Relief for Local Governments: Pension Crisis
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No one-size solution to local fiscal stress. The Financial Restructuring Assistance Task Force made up
of the Comptroller, Attorney General, Division of Budget and
private-sector restructuring consultants will provide
assistance to localities. The Task Force could recommend a
range of financial options, including the creation of a financial
control board.
Financial Relief for Local Governments: Financial Restructuring
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This year’s budget is
straightforward.
2013-13 Executive Budget
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The machinery of government is
working again.
2013-13 Executive Budget
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We resolved a crisis...
2013-13 Executive Budget
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But now we have another crisis that
will test us once again to deliver for
our people.
2013-13 Executive Budget
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Hurricane Sandy was the largest storm to hit the
Northeast in recorded history.
Responding to the Crisis
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Responding to the Crisis
We have 300,000 properties damaged, 2,000
miles of affected roads and massive
infrastructure rebuilding projects.
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We must make government work for the people
smarter, faster and more efficiently than ever before.
Responding to the Crisis
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A positive development is it looks like we will get
$30B in the Sandy Aid package.
Responding to the Crisis
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But it will not be easy.
Responding to the Crisis
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The management challenge is great, but we have
proven over the past two years that we can accomplish
great things.
Responding to the Crisis
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Rebuilding plans will be executed on 2 levels:
Responding to the Crisis
1. State planned and executed.
2. Community driven.
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We propose creating the Disaster Reconstruction Task Force to
oversee our Sandy recovery and rebuilding.
Responding to the Crisis: State Planned and Executed
Disaster Reconstruction Task Force State Planned and Executed
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The Task Force will expand the NY Works Board and
will use independent experts for planning and internal
control, like McKinsey & Co. and PwC. The Rockefeller
Foundation will also be advisors to the Task Force.
Responding to the Crisis: State Planned and Executed
State Planned and Executed
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Our agencies must be empowered to work
smarter and faster to rebuild.
• Design Build works—it reduced the cost of the Tappan
Zee bridge by over $1.0B—approximately 20 percent of the
originally estimated cost.
• We will expand Design Build to all State agencies
and Authorities.
Responding to the Crisis: State Planned and Executed
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State Projects
Responding to the Crisis: State Planned and Executed
Don’t just build back. Build back better.
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• Build it Back: Ocean Parkway, in Nassau County ($81M).
• Build it Better: Replace or mitigate roads prone to flood
damage ($1.9B).
Responding to the Crisis: Transportation
Highways More than 2,000 miles affected.
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• Build it Back: $6B in damage to the MTA and PA.
• Build it Better: Vent covers, tunnel bladders, pumping
capacity and other mitigation measures.
Responding to the Crisis: Transportation
Transit
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• Build it Back: Fire Island inlet repair ($34M).
• Build it Better: Mitigation construction of beaches, dunes,
wetlands and reefs to protect coastal communities ($125M).
Responding to the Crisis: Coastal
Coasts More than $600M in damage.
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• Build it Back: Homeowner assistance to repair homes.
• Build it Better: Recreate NY-Smart Homes Program will allow
owners rebuild to new mitigation standards.
Responding to the Crisis: Housing
Housing
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• Build it Better: And where it doesn’t make sense to build,
Recreate NY-Home Buyout program will give homeowners
who want to relocate a buyout option.
Responding to the Crisis: Housing
Housing
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• Build it Back: Repair hospitals, nursing homes and clinics
($2.2B).
• Build it Better: Mitigation construction of new backup power
systems and new patient tracking systems to prepare for
emergencies ($100M).
Responding to the Crisis: Healthcare Facilities
Healthcare
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• Build it Back: Terminal repairs.
• Build it Better: Fuel system backup power, reserves
and new pumping capacity ($160M).
Responding to the Crisis: Fuel Supply System
Fuel Supply
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• Build it Back: Repair treatment plants ($600M).
• Build it Better: Harden with flood walls and new
disinfection systems ($600M).
Responding to the Crisis: Water Supply System
Water Supply At least 21 facilities were damaged, some severely.
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• Build it Back: repair damaged electrical system.
• Build it Better: harden substations, selective undergrounding of critical
lines, and remote monitoring and distribution system to confine
outages ($2B).
Responding to the Crisis: Energy System
Energy System 2.1M properties lost power, some for as long as 21 days.
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While the State will develop a “top-down” recovery
plan, it’s important that plans from the “bottom up” be
developed by local communities.
Responding to the Crisis: Community Driven
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Therefore, we will also empower communities to create
their own recovery, reconstruction and mitigation
plans.
Responding to the Crisis: Community Driven
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Community Reconstruction and Mitigation Plans
• Redevelopment plans will be created in Community Reconstruction
Zones and communities in affected disaster declaration zip codes are
eligible.
• CDBG program criteria and target numbers will be used to govern the
program.
• Formula for funding will be based on population, number of claims filed
and damage assessments (e.g. housing units damaged and number of
businesses impacted).
Responding to the Crisis: Community Driven
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Eligible Community
Reconstruction Zones
Sandy
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Responding to the Crisis: Community Driven
Not just Hurricane Sandy, federal relief package
also covers storms Irene and Lee.
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Eligible Community
Reconstruction Zones
Lee/Irene
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To recap.
2013-14 Executive Budget
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2013-14 Executive Budget
Bad news is we have a lot of work to do.
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2013-14 Executive Budget
Good news is past 2 years has shown
we can do it.
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2013-14 Executive Budget
Better news is $30B is a lot of money.
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Best news is we are New Yorkers.
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January 9, 2013
October 29, 2012
NY RISING January 2013
October 2012
NY RISING