New York State’s tax receipts were down 7.7 percent in September compared to the same month in 2008, according to the monthly collections report from the state Department of Taxation and Finance. In virtually every major category, the tax numbers were below the trends forecast in the First Quarterly Update to the 2009-10 state Financial Plan, which had envisioned a net decrease of less than 0.6 percent in “all funds” tax revenues. In fact, this was the biggest drop in September tax collections since 2001, when the World Trade Center attack temporarily blew a record-large hole in New York’s revenue base.
The raw numbers: September’s net state tax receipts were $6.16 billion. That was $516 million lower than actual collections for September 2008, and nearly $500 million below the last forecast from the Division of the Budget (DOB) in July. More year-to-year state tax lowlights for the month of September:
- Personal income tax receipts were down 10.7 percent, or $410 million. This included a 17.3 percent decrease in quarterly estimated payments—which come largely from the same high-income taxpayers who were hit this year with a 31 percent state personal income tax increase. Withholding tax receipts were down 3.2 percent, reflecting continued decreases in payroll employment.
- Sales and use taxes declined by 2.2 percent, or $24 million, pointing to persistent weakness in retail sales activity in New York as well as declines in taxable business purchases.
- Business tax receipts were down 10.3 percent, or about $136 million.
DOB’s July update had projected that all-funds tax revenues for the first six months of fiscal 2009-10 would come in 13.5 percent lower than the same period in fiscal 2008-09. Actual first-half revenues have fallen 16.7 percent below last year’s level, which translates into an additional shortfall of $962 million. This explains why Governor Paterson had has been saying that the current year’s budget deficit has grown to $3 billion from the $2.1 billion projected in July. It doesn’t explain why the governor has yet to propose a detailed plan for closing the deficit, other than announcing some administrative budget cuts that will be barely sufficient to cover the tax shortfall for September alone.
Next shoe to drop: the September cash report from the state comptroller’s office, traditionally issued on the 15th of the following month, to be followed at the end of the month by DOB’s Mid-Year Update to the Financial Plan. Meanwhile, the governor reportedly is planning to present the Legislature with a “menu” of budget cuts as soon as next week.
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