screen-shot-2018-05-11-at-9-21-47-pm-150x150-3375825New 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.


About the Author

E.J. McMahon

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

Read more by E.J. McMahon

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