By Joseph Spector
Albany Bureau Chief
ALBANY New York state's spending dropped for the second year in a row, but its debt hit a record $63.5 billion in the last fiscal year, a report Tuesday found.
The annual Financial Condition report from state Comptroller Thomas DiNapoli offered a mix picture of the state's finances, showing that spending has been controlled but taxes continue to increase and the state's budget faces ongoing pressure.
"State policy decisions in the past three years have helped New York better align state spending with revenue, but difficulties remain," DiNapoli said in a statement. "The aim should be to build on the progress made and put New York state on a truly sustainable fiscal path."
DiNapoli's report found total state spending decreased 0.3 percent, or $407 million, in the 2012-13 fiscal year from the prior year. The 2013-14 fiscal year started April 1.
But since 2009, state spending outpaced inflation, growing a total of 9.5 percent - in large part due to borrowing $17.8 billion since 2009, including $3.5 billion this year.
In fact, New York was the second most indebted state after California, ranking fifth in the nation in per capita debt: $3,246 per person.
Still, the state has made progress since the depth of the recession in 2009. Tax receipts increased 11.3 percent since 2009, totaling $66.3 billion in March, the report said.
Public health and education continue to dominate taxpayer spending, accounting for 68 percent of the state's overall budget, which totaled more than $130 billion in the 2012-13 fiscal year.
Medicaid remains the state's top expense, totaling $51.2 billion in federal and state costs, up from $44.3 billion four years ago. But Medicaid costs, which are partially paid by county governments, decreased 1.5 percent over the past two years - the first time since 2007, DiNapoli said.
Mainly by enrolling eligible recipients into managed care plans instead of Medicaid, the state has been able to control costs despite a 4.5 percent increase in Medicaid enrollees in the 2012-13 fiscal year, the report said.
The number of New Yorkers receiving Medicaid, which provides health care to the poor and disabled, reached a record 5.2 million in March.
New York leads the nation in several spending categories, the report said.
New York, in the 2010-11 school year, spent the most per pupil for public education than any state in the nation at $19,076, up 2.5 percent from the previous year.
The school spending in New York is 81 percent higher than the national average. Annual per pupil spending in New York averaged an increase of 4.5 percent over the past five years, outpacing the 2.2 percent national average.
In 2010, New York's state and local tax revenue was 41 percent above the national average. Local taxes were 67.9 percent above the national average, the report said.
New York had the second highest state and local taxes as a percentage of personal income in the nation -- with local taxes ranking first and state taxes ranking 12th.
In 2012, New York's local governments collected nearly $52 billion in property taxes, and nearly two-thirds was collected by school districts.
DiNapoli warned that the damage from Superstorm Sandy and a decrease in federal aid for people with developmental disabilities have "created new and unprecedented fiscal challenges."
He said the current budget depends on nearly $5 billion in one-shot revenues to cover operating expenses.
Also, the nation's Gross Domestic Product grew at a slightly faster pace than the state's growth. But job recovery in New York has outpaced the nation.
Still, New York's population has been growing slowly, rising by 2.1 percent between 2000 and 2010, which ranked 46th in the nation and brought New York's population to 19.4 million - third largest in the nation.
The population growth in New York was concentrated mainly in the New York City area - representing 63 percent or 12.5 million of the state's population.