New York State’s personal income tax (PIT) collections in April were a whopping $1.3 billion lower than in the same month last year, according to state Comptroller Thomas DiNapoli’s just-released monthly cash report.*
The sharp drop in PIT receipts was anticipated (barely) by a significant but largely unnoticed downward adjustment in DOB’s Enacted Budget Financial Plan, released last week, which reduced the state’s April personal income tax projection by $987 million from the February forecast. For the entire 2015 fiscal year, the projection of net PIT receipts was taken down by about $400 million, and the forecast of total state tax receipts for fiscal 2015 is now about $600 million lower than the February figure.
PIT receipts over the past two years have fluctuated because many high-income New York taxpayers chose to accelerate capital gains income into 2012 to minimize the hit from a federal income tax hike that took effect in 2013. This component of income taxes was expected to decline somewhat the following year–but the net result, as reflected in April’s final returns for the 2013 tax year, was a much bigger decrease in final payments than DOB had expected as recently as February.
The bottom line: this doesn’t necessarily signal any fundamental erosion in underlying economic indicators, but Governor Cuomo’s budget cushion is now much thinner than he might have assumed just a few weeks ago. As a result, the September mid-fiscal-year revenue numbers will bear especially close watching this year.