Thanks to a strong third quarter, New York’s state tax receipts through December were $1.3 billion above projections for the fiscal year that ends March 31, according to the latest monthly cash report from state Comptroller Thomas DiNapoli.

Assuming no erosion in revenues is expected during the last three months, having an extra $1.3 billion on hand will reduce a $4 billion current-year operating deficit driven by Medicaid over-spending, which is the main element in a prospective FY 2021 budget gap of $6 billion. Governor Cuomo will reveal more details of his proposal for dealing with that problem in his FY 2021 Executive Budget, which will be presented Tuesday.

Cuomo could use surplus revenue to paper over the true extent of excess “capped” spending increases in the budget as a whole, or in the Medicaid program in particular. This would be accomplished by pre-paying FY 2021 expenses just before the end of the current year, artificially reducing apparent growth from one year to the next.

But this would not fix the larger structural problem of Medicaid over-spending, which will be baked into the spending baseline until steps are taken to permanently reduce it.

DiNapoli’s December cash report said the added third-quarter revenue came mainly in the form of personal income tax (PIT) receipts, which were $1 billion ahead of projections in Cuomo’s Mid-Year Financial Plan Update, released (three weeks past the statutory deadline) Nov. 22. Most of the extra money flowed into the state’s coffers in November, usually the lowest month for PIT collections, when total PIT receipts of $2.5 billion exceeded the Mid-Year forecast by $813 million, or nearly 50 percent.

In addition to PIT, the comptroller reported state business taxes as of December were $343 million ahead of projections, while consumption taxes were about $50 million below the projection for the quarter. DiNapoli’s report also said miscellaneous receipts through December were $218 million above projections, bringing the total State Operating Funds revenue surplus through the first nine months of the fiscal year to $1.5 billion.

With only three months to go before the April 1 start of a new fiscal year, it’s still too early to assume the revenue picture will end up as (relatively) bright as it looks. The final quarter of the fiscal year is always a bellwether period for receipts from the PIT, New York’s largest tax source. Cuomo’s Mid-Year report projected PIT collections for the last three months of fiscal 2020 at $16.1 billion, more than half of which is expected in January. In addition, the unanticipated excess in business tax receipts for the third quarter could be timing-related, leading to a dropoff in what’s left of the year.

The governor’s adjusted revenue expectations—and how he might use surplus revenues to paper over a portion of the budget gap—will become clear on Tuesday when he presents his Executive Budget.

For now, at least, this much is already clearer than ever: New York does not have a revenue problem.

About the Author

E.J. McMahon

Edmund J. McMahon is Empire Center's founder and a senior fellow.

Read more by E.J. McMahon

You may also like

New York’s Shrinking Budget for Public Health Deserves More Attention

As Medicaid costs spiraled over the past decade, other parts of the state Health Department were losing money and staff—leaving New York with diminished public health resources when the pandemic struck last year. Read More

Despite pandemic, state FY21 tax collections continue to exceed Cuomo projections

New York State's tax receipts in January totaled $11.4 billion—outperforming Governor Cuomo's projections for the month by $1.7 billion, or 17 percent, according to the monthly cash report issued late today by state Comptroller Thomas DiNapoli. Read More

What to Expect When the Health Department Complies with the Empire Center’s FOIL Request

Although the state Health has recently revealed significant additional information about the pandemic death toll in New York's nursing homes, it has not fully complied with last week's court order in a Freedom of Information lawsuit brought by the Empire Center. Read More

House Democrats are working on the stimulus bailout of Cuomo’s dreams

The "state and local recovery" piece of the $1.9 trillion stimulus bill now being drafted by House Democrats in Washington would not by itself give Governor Cuomo the $15 billion in added federal aid he's been loudly demanding—but would come very, very close. Read More

Whoopee! NY pension fund investment returns climb to new heights

New York State's main pension fund investment pool earned 10 percent in its third quarter and has gained nearly 30 percent since the end of its 2020 fiscal year, according to state Comptroller Thomas DiNapoli, the fund's sole trustee. As of December 31 Read More

New York Reveals Another 1,516 COVID-19 Deaths in Long-Term Care Facilities

The death toll in New York's long-term care facilities jumped by another 1,516 this weekend as the Cuomo administration adjusted its reporting on adult-care facilities to include residents who died after being transferred to hospitals. Read More

The Cuomo Administration Releases More Data on Coronavirus Deaths in New York Nursing Homes

The state Health Department has revealed additional detail about coronavirus deaths in New York nursing homes, showing for the first time how many residents of each home died of COVID-19 outside of the facility, typically in a hospital. Read More

The State’s Revised Nursing Home Death Toll Leaves Many Questions Unanswered

Numbers belatedly released by the Cuomo administration last week pushed New York's COVID-19 mortality rate in nursing homes from 35th to 13th highest in the U.S., an Empire Center analysis shows. Read More

Subscribe

Sign up to receive updates about Empire Center research, news and events in your email.

CONTACT INFORMATION

Empire Center for Public Policy
30 South Pearl St.
Suite 1210
Albany, NY 12207

Phone: 518-434-3100
Fax: 518-434-3130
E-Mail: info@empirecenter.org

About

The Empire Center is an independent, non-partisan, non-profit think tank located in Albany, New York. Our mission is to make New York a better place to live and work by promoting public policy reforms grounded in free-market principles, personal responsibility, and the ideals of effective and accountable government.

Empire Center Logo "Readers will recall that the Empire Center is the think tank that spent months trying to pry Covid data out of Mr. Cuomo’s government, which offered a series of unbelievable excuses for its refusal to disclose...five months after it sued the government, and one week after a state court ruled that the Cuomo administration had violated the law and ordered it to come clean—Team Cuomo finally started coughing up some of the records."   -Wall Street Journal, February 19, 2021

SIGN UP TO STAY UP TO DATE ON THIS AND THOSE OTHER ISSUES THAT IMPACT NEW YORKERS.