Don’t look now, but there’s a nasty pool of red ink spreading beneath the state’s budget.  If New York State tax collections for the first quarter of fiscal 2009-10 are any indication of things to come, Governor Paterson and the state Legislature need to start cutting right away.

Net personal income tax (PIT) collections in the April-June period were down over 31 percent from the previous year, according to the state Department of Taxation and Finance (T&F).  This is considerably worse than the 27 percent drop in PIT revenues projected in the financial plan.

Sales and use taxes were even further off: the T&F data show a drop of 8.9 percent for the quarter, while the financial plan had projected a 2.5 percent increase over last year.

A caveat: financial plan numbers are not precisely comparable to what T&F would call “collections basis” numbers.  But the trend divergence is very wide and serious.  On an apples-to-apples basis, taxes in the first quarter were $433 million below projections–which would translate into a $1.7 billion deficit if replicated across the next three quarters.  But that might be the best-case scenario, for two reasons.  First, net PIT collections for the quarter were artificially inflated by a onetime positive “offset” of $240 million to reflect the state’s past overpayment of income tax revenue to New York City (whose own PIT is collected by the state).  Second, an unexpected jump of $194 million in bank tax collections probably reflected a change in the accounting treatment of investment losses by bank holding companies.  Bank taxes certainly won’t continue to run 149 percent above last year.

Adjusting for these factors, first-quarter tax collections would have been almost $900 million below plan. If collection trends stay on their current path, this year’s deficit could be over $3 billion.

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

Another Hochul To-Do: Timely Financial Reporting

The state will spend a record $212 billion in the current 2022 Fiscal Year, under the budget its elected leaders adopted in April. Read More

Sales Tax Receipts Surge Statewide, Filling Local Government Coffers

Local governments across every region of the state raked in robust sales tax collections during the three months that ended on June 30th Read More

Health Research Inc. Turns Over its Payroll Records Despite Claiming To Be Exempt from FOIL

The full payroll records of more than 2,400 de facto state employees are available to the public for the first time after being released by Health Research Inc. Read More

Emergency Billions Pose Opportunity—and Risk—for NYS Schools

New York schools are to post publicly today plans for spending a huge pile of unexpected and unbudgeted cash. Read More

Remote Threat 

Remote work and a more mobile professional class will increase the speed and scope of New York's ongoing out migration. Read More

New York’s Medicaid Rolls Kept Pace with a Nationwide Surge During the Pandemic

New York's Medicaid and Child Health Plus programs added three-quarters of a million enrollees during the coronavirus pandemic, roughly matching the pace of a national surge in sign-ups. Read More

New York’s Hospital Industry Ranks Near the Bottom of Two Quality Report Cards

New York's hospitals remain near the bottom of two quality report cards. The state's hospitals received the lowest rate of any state except Nevada and DC. Read More

New York’s Medicaid and Public Health Crises Get Short Shrift in the New State Budget

In spite of an ongoing pandemic and spiraling Medicaid costs, New York's health-care system received surprisingly little attention in the new state budget. On issue after issue, law 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

General Inquiries:

Press Inquiries:


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.

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!