Report Finds $14.8B of Waste and Corruption Prone Pots of Money in NY State Budget

Watchdogs Release Joint Report: “Lump Sum Warning”

Watchdog groups Reinvent Albany and Citizens Budget Commission today released a joint report, “Lump Sum Warning,” which found $14.8 billion in proposed lump sum pots in Governor Hochul’s Executive Budget, including $8 billion in COVID emergency pots that are not subject to review by the State Comptroller. 

The report also reviewed the Legislature’s one-house budget bills, which would add millions in new lump sum pots, including a notable $2 billion in new lump sum pots proposed by the Senate to be distributed to hospitals.

Lump sums are appropriations that authorize spending on a broad range of projects or purposes to be determined and allocated at a later date. In New York, lump sums are often also called “discretionary funds” because the Governor and the Legislature decide where, when, and how they are spent, typically months or years after they are budgeted, and without public scrutiny.   

Both watchdog groups and the Office of the State Comptroller (OSC) have issued repeated warnings about the elevated risk of waste and corruption from lump sum spending. Aggravating the risk of abuse is the private process for awarding the money, which is typically not subject to Comptroller’s contract oversight—a crucial check against abuse and a way to help ensure the taxpayer gets the best value on goods and services.

The groups said public dollars should not be spent through lump sum appropriations that increase the risks of waste, distortion of priorities, low return on investment, and corruption.

Recommendations

1. This budget, the Governor and Legislature should:
   1. Not enact any new lump sum appropriations.
   2. Omit the $6 billion Special Public Health Emergency Appropriation from the budget.
   3. Reduce the Special Emergency Appropriation to $1 billion, and ensure it is subject to OSC oversight and competitive procurement rules.
   4. Fully and completely disclose distributions from all lump sum pots currently being spent. The Executive should improve the transparency of existing lump sum databases and disclosures by consolidating them as much as possible. The Senate and Assembly should also provide a centralized database of lump sum funding, with much more detail than currently provided in resolutions passed by each house. 
       
2. Within the next few years, the Governor and Legislature should:
   1. Pass a law codifying the Governor’s discretionary lump sum database. This should include improved requirements for disclosure. As spending from prior lump sums continues, there should be robust transparency and accountability for that spending. 
   2. Provide full data for lump sum spending dating back to at least 2020. 

The report is available in PDF here or below. The list of lump sums is available in Google Sheets here.