New York’s newly enacted state budget is balanced with higher-than-anticipated tax receipts, but out-year projected budget gaps have grown significantly larger, according to a quarterly financial plan update issued late Friday afternoon by Governor Cuomo’s Division of the Budget (DOB).
The FY 2019 Enacted Budget Financial Plan report projects a general fund budget gap of $4 billion in fiscal 2020, growing to nearly $7 billion in each of the following two years. The previous financial plan had projected those gaps at $3.5 billion, $5.2 billion and $5.1 billion, respectively.
The baseline gap estimates assume current-law spending growth of 5 percent in fiscal 2020, 4 percent in 2021, and nearly 3 percent in 2022. If spending growth is held to 2 percent throughout the four-year period, the enacted plan indicates the state will still face budget gaps of $780 million in fiscal 2020, $1.4 billion in 2021, and $487 million in 2022. Estimated on the same basis, the February financial plan had projected budget gaps of $812 million in 2020 and $429 million in 2021, followed by a 2022 surplus of $528 million. So, in effect, the fiscal outlook for 2021 and 2022 has deteriorated by $1 billion a year.
The budget enacted by the Legislature for FY 2019, which began April 1, will boost the local assistance spending increase by an additional $500 million over the amounts projected in February, but the state operating funds spending total of slightly more than $100 billion only represents a net $133 million increase over the final total for 2018, thanks to changes in the timing of 2018 and 2019 debt service payments, and apparent re-estimates of other fiscal 2018 disbursements. This enables Cuomo to assert, for a sixth consecutive year, that he has held spending growth 2 percent—although the true figure is closer to 4 percent, counting the off-budget shift of a dedicated downstate mass transit tax and other timing items, as the state comptroller has noted.
Tax receipts in fiscal 2018 came in $334 million higher than the February estimate, and the projection for tax receipts in fiscal 2019 has been increased a net $500 million over the prior amount. The personal income tax is still coming in well above prior projections, but other tax categories are projected to be weaker than previously projected.