Continuing a trend from mid-summer, New York’s private jobs recovery slowed a little more in September—but state tax receipts came in a bit stronger than expected, according to two monthly reports released by the state late today.

On the employment side, the state Labor Department’s September count of private-sector jobs was up 75,300 on a seasonally adjusted basis, but remained more than 1 million below the level of the same month a year earlier. As shown below, the pace of the state’s jobs recovery on an annualized basis has fallen off considerably since regional economies first began reopening in spring and early summer.

Private employment in the Empire State as of September was still 12.1 percent below the level of a year earlier, compared to a net 6.9 percent drop during the same period nationally.

On a regional level, as shown below, COVID-ravaged New York City unsurprisingly remained the furthest below its 2019 job count, but all of upstate’s largest metro areas also remained deep in negative territory, with declines ranging from 9.6 percent in Buffalo to 11.8 percent in Syracuse—even though these regions had much less severe COVID-19 outbreaks, and their business shutdowns began lifting sooner. The much smaller Glens Falls and Watertown-Fort Drum areas had job declines rivaling New York City’s.

Mid-year tax numbers

The monthly cash report from state Comptroller Thomas DiNapoli’s office surprised moderately on the upside. Particularly noteworthy was the personal income tax (PIT) receipts total for September: at nearly $5.3 billion, the total net of refunds was a solid 7 percent above the mid-year projection for the month of $4.9 billion, and also above the September 2019 net PIT receipts total of $4.8 billion. (The gross before refunds was also up over last year, but by a much smaller amount.)

In fact, despite the crushing impact of the coronavirus, PIT receipts for the month of September alone were the highest on record. To be sure, some of this might be a product of technical factors, such as shifting calendar payroll periods and a large decrease in refunds paid compared to September 2019. Still, the net number for the month was a positive development when compared to projections laid out in the first quarter financial plan update released by Cuomo’s Division of the Budget two months ago.

The components of September PIT receipts also were noteworthy. Quarterly estimated tax payments by business owners, investors and the self-employed were down $232 million, or 8.5 percent, on a year-to-year basis. But income tax withholding payments, reflecting a set percentage of weekly and biweekly paychecks, were actually up at $3.15 billion, a 10 percent increase over the roughly $2.9 billion collected in September 2019.

The withholding numbers reflect the disparate impact of the pandemic recession: job losses are concentrated among New York’s lower-paid service-sector workers, who generally pay little or nothing in state PIT while working in part-time or partially tip-based jobs. Better-paid workers with secure work-from-home or otherwise “essential” public- and private-sector jobs—subject to higher withholding rates—have held their own on the wage front.

On the whole, PIT receipts through the first half of the state’s 2021 fiscal year remain $1.1 billion, or 4 percent, below the FY 2020 first half level. The first quarter financial plan projected that PIT receipts for the entire fiscal year, through next March 31, would be down 9 percent.

Consumption and use taxes in September also were surprisingly strong, coming in at $1.7 billion, compared to a projection of just under $1.3 billion. But the monthly total remained almost $100 million below the level of September 2019. Dragged down by the horrible spring, state consumption and use taxes for the first six months of FY 2021 are still down a whopping $1.4 billion, or nearly 16 percent, from the total a year ago for the first half of FY 2020.

Including business taxes and other tax categories, the bar chart comparative figures on the comptroller’s cash report page show state receipts are up about $870 million $1.145 billion from first quarter projections, and federal receipts are about $804 million above the last projection—and, boosted by enhanced Medicaid reimbursements and other coronavirus relief aid from Washington, nearly $11 billion above the FY 2020 level at this point in the fiscal year.

If revenues remain this far above projections, they will help erase at least some of the current state budget gap—which, allowing for other actions, appears to be in the neighborhood of $8 billion (perhaps a bit higher or lower, but certainly not the $14.5 billion deficit frequently claimed by Governor Cuomo). Still, there is nothing in the latest revenue report—or the employment numbers—to suggest a significantly more rapid recovery than DOB’s original, pandemic-adjusted projection, which said total taxes won’t recover to fiscal 2020 levels until fiscal 2023.

In fact, if the feared second wave of COVID infections causes Cuomo to reimpose business restrictions on any broad scale, the tax numbers could still easily fall below even the reduced projections for the year.

Tags:

About the Author

E.J. McMahon

Edmund J. McMahon is a senior fellow at the Empire Center.

Read more by E.J. McMahon

You may also like

New York’s Jobs Recovery Chugged to a Near-Halt in October

After rising sharply once the economy began to reopen, private payroll growth in New York ominously ran out of steam in October, according to the state's monthly jobs report. Read More

New York’s Rising COVID Curve Casts Doubt on Cuomo’s ‘Micro-Cluster’ Strategy

The ongoing surge in New York's coronavirus pandemic raises doubts about the effectiveness of Governor Cuomo's "micro-cluster" strategy. Read More

Thanks to Unions, NYC’s School Reopening Deal Was Costly and Educationally Hazardous

New York City schools reopened this fall under terms dictated by the city's teacher and principal unions. Now, as city schools close -- once more at the unions' behest -- the city is left with thousands of extra teachers hi Read More

The Autumn Coronavirus Wave Is Hitting New York’s Nursing Homes, Too

Coronavirus infections are again rising in New York's nursing homes, a sign that blanket testing, tight limits on visitors and other precautions have not fully isolated their acutely vulnerable residents from conditions in Read More

DiNapoli Predicts $3.8B More in State Tax Receipts

New York State's tax receipts in the current fiscal year will exceed Governor Cuomo's latest projections by $3.8 billion—still down from last year, but a big improvement over the governor's worst-case scenario—according to updated estimates from state Comptroller Thomas DiNapoli's office. Read More

Fewer Workers, Not More Jobs, Explains NY’s September Unemployment Rate Drop

New York State's unemployment rate has fallen sharply since the economically devastating pandemic lockdown last spring. But as state Comptroller Thomas DiNapoli points out in  his latest economic report, the jobless rate doesn't tell the whole story. Read More

A Fight Over COVID’s Toll in Nursing Homes Highlights FOIL Weaknesses

The legal fight over coronavirus data from New York nursing homes is putting a spotlight on weaknesses in the state's Freedom of Information Law. Read More

Here’s Why Coronavirus Infection Rates Are Rising as ‘Positivity’ Stays Stable

A growing disconnect between two coronavirus benchmarks – the positivity rate and the infection rate – is stirring confusion about New York's pandemic outlook. 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.