capital-1-pic-copy-150x150-1108330New York State’s fiscal outlook has deteriorated in the past four months, based on an initial look at the financial plan update released late today by Governor Andrew Cuomo’s Division of the Budget (DOB).

Tax receipts for the 2017 state fiscal year, which ended March 31, came in $601 million below the estimates in the governor’s February plan, according to today’s DOB report, which updates financial projections based on the enacted budget deal Cuomo finalized with the Legislature in early April.

For fiscal 2018, the tax estimate has been reduced by $1.5 billion, including a $1.3 billion decrease in projected personal income tax (PIT) revenue.

Meanwhile, the final 2018 budget deal added $547 million in spending beyond what Cuomo had proposed, while rejecting $171 million in tax and fee increases he had sought.

That all left the governor with a $2.2 billion hole to fill for the new fiscal year. To close it, the plan shows, he made a series of spending re-estimates and fund transfers—most notably peeling another $461 million from a fat stack of more than $10 billion in windfall cash he’s collected since 2014, thanks to a series of monetary settlements with banks found to have violated various state laws.  (Indeed, another $350 million check just arrived in Albany’s coffers—too late to be noted in today’s report.)

This will bring to $1.3 billion the amount of non-recurring windfall money that Cuomo has used to at least temporarily offset recurring operating expenses over the past four fiscal years, according to a table included in the financial plan update.

Trend drivers

So, what explains the drop in projected tax revenues? Regarding the change in the PIT outlook, the Enacted Budget Financial Plan says “taxpayers and employers appear to have been anticipating that the Federal government will lower personal income tax rates in 2017, prompting a shift of capital gains from 2016 to 2017” to an extent greater than DOB anticipated in the Executive Budget plan. (Sort of a Trump bump reverberation, in other words, although expectations of a federal tax reform plan anytime soon have been dampened quite a bit in the past few weeks.)

Projected state business taxes are down $237 million because “it appears that taxpayers responded to the State corporate tax reforms enacted in 2014 by overpaying their tax liability in calendar year 2015 to avoid future penalties, and are now reconciling the amounts owed by reducing payments in calendar years 2016 and 2017,” the plan says.

Cuomo’s fund shifts and re-estimates reduced the net impact of the budget deal to a small net increase of $72 million in fiscal 2018, compared to the February financial plan. But compared to the February plan, projections of added spending have grown $776 million in 2019, $1.1 billion in 2020 and $1.2 billion in 2021.

The bottom line result of these changes are projected gaps of $4 billion in 2019, to $5.6 billion in 2020, to $7.5 billion in 2021—much larger than those projected in the February update.

Even if Cuomo holds (officially reported) spending growth to 2 percent, today’s financial plan update indicates the state will face a $791 million budget gap for fiscal 2019, the governor’s next election-year budget. That’s still a manageable amount by historical standards, but it means he will have to work harder (or resort to more budget accounting gimmicks) to hold spending below revenues in his election-year budget.

About the Author

E.J. McMahon

Edmund J. McMahon is the Empire Center’s founder and research director.

Read more by E.J. McMahon

You may also like

New York lawmakers have sought to weaken police discipline

In the wake of George Floyd's death under a kneeling Minneapolis police officer, some New York State lawmakers are renewing calls for legislation designed to uncover police disciplinary records. But less than a year ago, state senators in both parties voted in favor of union-backed legislation that would make it harder to fire New York police officers credibly accused of using excessive force or other offenses. Read More

Ball of Confusion: New York’s Upcoming School Budget Votes Reshaped by Cuomo Order

As if the coronavirus hadn’t done enough to disrupt education in New York, Governor Cuomo has injected even more confusion and uncertainty into the public school budgeting and board selection process across the state. Read More

New York’s job losses were among the nation’s worst during April lockdowns

All but a few states imposed business lockdowns and "stay at home" orders in April. However, New York's private-sector job losses were well beyond the national norm—indicating the Empire State's economic recovery could lag behind the rest of the country Read More

NY’s job base is wrecked

It's official: the viral lockdown has been an economic catastrophe of historic proportions for New York State. Read More

Cuomo looks outside to track virus

New York State is deploying several thousand contact tracers, workers tasked with interviewing COVID-stricken residents and notifying the people they may have infected. But Governor Andrew Cuomo is taking a notable step that will likely make the effort faster and more efficient: he’s having someone else do the hiring. Read More

Hospitalization rising in some areas

Coronavirus hospitalizations are surging in parts of upstate, including three regions that the Cuomo administration authorized to begin reopening today. Read More

Uneven ‘relief’ for NY providers

A review of federal emergency payments to New York health-care providers reveals a striking disparity: Four of Manhattan's most prosperous private hospitals collected more individually than the 11 city-owned hospitals combined. Read More

Teachers work hard to stop working

New York’s statewide teachers union is exploiting a lack of direction from Governor Andrew Cuomo to force an early end to the school year. Read More


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


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

Phone: 518-434-3100
Fax: 518-434-3130


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.