When New York State’s first-quarter tax receipts came in nearly $800 million above the 2011-12 financial plan forecast last week, I warned in this space that the anemic 1 percent year-to-year quarterly growth in personal income tax (PIT) withholding payments was “grounds for concern” about the state’s economic outlook.  On closer inspection, however, it turns out the quarterly withholding number was a bit misleading.

adding-machine-400x374-8728166According to sources in the state Department of Taxation and Finance, withholding collections back in April 2010 were inflated by some unusually large payments by a few large employers.  Sure enough, PIT withholding receipts for April 2011 were actually 8 percent lower than the previous year, pulling down the total for the entire quarter ending June 30.

That sort of thing happens from time to time, which is why tax receipts trends cannot always be taken at face value. Another bit of occasional “noise” in withholding tax numbers is the number of Fridays (i.e., paydays) in a month. An additional Friday in a given month will also artificially pump up or deflate the year-to-year number.

On a more positive note: in the month of June alone, year-to-year withholding receipts were up a healthy 4.5 percent over June 2010, which would be consistent with a solid (if not roaring) economic recovery.  (The June calendars for 2010 and 2011 line up, with the same number of Fridays in each, and there were no other anomalies reported in collections.)

Today’s “tepid” GDP estimate is another story, of course, lending credence to Comptroller Thomas DiNapoli’s warning last week that “our fiscal health is tenuous” in light of macroeconomic trends.

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

As migrants flow to NY, so does red ink 

The influx of foreign migrants to New York could cost the state $4.5 billion more than expected next year, Governor Hochul today warned.  Read More

At mid-year, NY still far below most states in pandemic jobs recovery

New York has added private-sector jobs in all but three of the 38 months since the COVID-19 outbreak of March 2020—but the Empire State remains below its pre-pandemic employment level and continues to trail the national recovery. On a seasonally adju Read More

The Bill Arrives: NY Faces $9B Budget Gap Next Year 

New York’s outyear budget gaps, the shortfall between planned state expenses and state tax receipts over the next three years, has exploded to more than $36 billion, just-released documents show.  Read More

NY school spending again led US, hitting all-time high in 2020-21

Public elementary and secondary school spending in New York rose to $26,571 per pupil in 2020-21, according to the latest Census Bureau data Read More

A Tale of Two Levies

New York school districts are getting record levels of state aid. But how many are using it to cut taxes? Read More

Albany’s Belated Budget Binge 

State lawmakers have begun passing the bills necessary to implement the state budget for the fiscal year that began April 1. Read More

Courts set a limit on NY’s tax reach

Just in time for tax season, New York State's tax agency just lost a major legal challenge to its policy of pursuing maximum income tax payments from wealthy vacation homeowners—even when they live elsewhere. Read More

DiNapoli aims to curb NY’s borrowing binge

Comptroller Thomas DiNapoli has unveiled a new proposal for constitutionally curbing the state’s seemingly uncontrollable appetite for borrowing. Read More