screen-shot-2014-05-16-at-11024-pm-150x150-9628336Based on the latest revenue numbers, New York State’s fiscal situation is getting tighter by the month.

Total state tax receipts for September came to $8 billion, according to the monthly cash report issued by the state comptroller’s office late Friday. That was $91 million below the target set in the revised financial plan issued by Governor Cuomo’s Division of the Budget (DOB) in mid-summer—which, based on weak first quarter performance, already had made a $600 million a year downward adjustment in projected annual tax revenues through 2020.

Boosting concerns about underlying economic conditions, the weakness is concentrated in the state’s largest revenue category, the personal income tax (PIT).  September is an especially important month for evaluating the outlook for PIT receipts, because it marks the mid-point of the fiscal year and because Sept. 15 is one of four quarterly filing periods for estimated tax payments by investors, business owners and self-employed people.

PIT receipts in September totaled $4.7 billion, a full $300 million (7.4 percent) below the reduced estimate in the July financial plan.  The results were also $343 million below PIT collections for September 2015.  Through the first six months of the fiscal year, net personal income tax receipts are a whopping $734.3 million below the amount collected by the state at the same point a year ago.

Consumption sales and use taxes were basically on target at $1.6 billion. This number, however, incorporates a very weak growth rate of 1 percent for the month of September and 2 percent through the first six months of the year.

Withholding tax payments are up just 0.9 percent, or $139 million, while PIT estimated payments are down a whopping 9.3 percent, or $966 million, including another $130 million (5 percent) dip in September receipts alone.

These suggest two things:

  • while payroll employment in New York continues to increase slowly on a statewide basis, net taxable wages and bonuses have barely grown; and
  • capital gains have been weak, reflecting continued slow growth and volatility in stock prices, and high-income investors and business owners do not expect their incomes to increase much before the end of the year.

So, what does this mean for next year’s budget?

In the short term, the state has a big enough cushion of ready cash to absorb the further revenue decline.* But if the downward trend keeps up for the next few months, next year’s budget will require belt tightening beyond the 2 percent cap Cuomo already has imposed. School districts, in particular, should not expect anything approaching a repeat of this year’s record $1.5 billion (6.5 percent) state aid increase—although advocacy groups will surely demand it.

* PS — Maybe.  Then again, if PIT receipts for December and January are off the mark as much as September’s, the added shortfall would translate into a more significant, added problem of $777 million.

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

What’s Keeping the Heat On?

As another Arctic blast hits the Northeast and temperatures plunge, more energy is needed to keep New Yorkers warm.  Where is that energy coming from?  Read More

Ten Reasons the Climate Leadership and Community Protection Act May Cost More than It’s Worth

Over budget, over time, over and over – that’s the   Megaprojects are transformational, multi-billion-dollar, multi-year projects involv Read More

First fiscal overview of Hochul’s second budget

The unveiled today by Governor Hochul would stay on the course she set last year — raising spending to unsustainable levels, pointing towards deep holes for the future. Adjusting for surplus-funded debt service prepayments (which distort the bottom 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

Summary of Climate Leadership and Community Protection Act’s Scoping Plan

The Scoping Plan makes the following recommendations to guide CLCPA implementation. Read More

All Fired Up Over Gas Stoves

Governor Hochul is pushing back against the fear that she’s coming after homeowners’ gas stoves. She that she’s not, and that she’d “like to deal in the truth here because a Read More

Do NY families have school choice?

Organizations across New York and the country last week observed to raise awareness of the educational pathways that exist outside of residentially-assigned public school systems. But what does Read More

Emails show Cuomo’s staff working on his memoir at the peak of New York’s pandemic

Newly available records shed further light on the origins of former Gov. Andrew Cuomo's pandemic memoir, which won him a $5.1 million publishing contract before contributing to his political downfall. The records reveal that his government staff were a Read More

Empire Center Logo Enjoying our work? Sign up for email alerts on our latest news and research.
Together, we can make New York a better place to live and work!