DiNapoli: State Financial Picture Dismal,
Revenue Growth Continues to Decline
Growth in state revenues continues to decline as the year proceeds, New York State Comptroller Thomas P. DiNapoli said today as he released the November 2008 Cash Report. Even though the state has lowered projections twice (May and October) since the budget was passed in April, revenues are still $204.6 million below estimates for the year.
“The recession has dramatically slowed growth in state revenues. My office recently estimated that personal income tax receipts would grow by only $256 million, or 0.7 percent. Compare that to last year’s growth rate of 5.7 percent, and you can see the impact the recession is having. The state has reduced spending and lowered estimates several times already this year, but it’s not enough. Difficult decisions must be made and made soon to close this year’s gap.
“Tomorrow, Governor Paterson will release his budget proposal more than a month early. He’s providing ample time to analyze, debate and improve upon what will no doubt be a budget proposal built on tough choices. We must use that time wisely. New York cannot keep doing business as usual, because New York State doesn’t have the dollars to pay for business as usual.”
Snapshot of state revenues year-to-date and for November:
- Overall General Fund Revenues: General Fund receipts (including transfers) of $32.5 billion ended November $204.6 million below the Division of the Budget’s (DOB) financial plan projections. Although revenues have grown $1.8 billion year-to-date, or 5.9 percent, compared to last year, revenue growth is declining as the year proceeds. Growth in receipts is expected to continue to decline for the remainder of the fiscal year, with significant drops in December and January.
- Business Taxes: General Fund business tax collections were $2.5 billion through November, slightly above financial plan projections for the year by $36.9 million. However, year-end General Fund business tax projections have been lowered by more than $900 million since the start of fiscal year, and collections through November are down by $444.3 million, or 15.1 percent.
- Personal Income Taxes: General Fund personal income tax collections through November of $14.4 billion were $85 million above estimates and $1.6 billion over last year for the same period. Withholding payments, the best measure of current personal income tax performance, grew 4.1 percent, or $656.6 million, compared to last year, which in part reflects two fewer tax collection days than November 2007. Although withholding collections have remained strong throughout the year, growth is slowing. Year-to-year growth was 6.8 percent in July and 5.1 percent last month.
- Miscellaneous Receipts: Although General Fund miscellaneous receipts have been above 2007-08 collections for every month but April, collections have been below projections for five of the last eight months. Through November, miscellaneous receipt collections of $1.4 billion is $51.2 million over 2007-08, but $124.2 million below projections.
Snapshot of state spending year-to-date and for November:
- Overall General Fund Spending: General Fund spending of $34.1 billion was $447.9 million below projections (including transfers), primarily due to lower than anticipated spending for local assistance programs ($317.8 million), but $1.5 billion, or 7.3 percent, above the same period last year. The year-over-year increase is primarily due to increased grants for education ($1.3 billion), health and environment ($247.6 million) and Medicaid ($327.2 million). These increases are offset by lower spending for mental hygiene ($496 million) as much of this spending has been moved to other funds. It is important to note that the General Fund cash flow included with the Mid-Year Update to the Financial Plan did not include cuts anticipated from the November 18 Special Session.
For All Governmental Funds, spending of $76.7 billion is $741.8 million below plan. The variance is primarily due to lower than anticipated spending for local assistance programs ($422.2 million below plan), General State Charges ($160.7 million below plan), capital projects ($98.5 million below plan) and State Operations ($63.9 million below plan). All Funds spending was $4.8 billion, or 6.7 percent, over the same period from 2007-08, primarily due to growth in spending for education ($1.5 billion), Medicaid ($509.9 million), other social services ($655.6 million) and State Operations ($880.1 million). All Funds receipts of $73.7 billion through November 30 were $342.6 million below projections updated in the Midyear Update to the Financial Plan, primarily due to lower than anticipated miscellaneous receipt collections.
The state’s finances are generally broken down by two main categories: General Fund and All Funds. The General Fund is the major operating fund of the state and accounts for all receipts that are not required by law to be deposited into another fund. All Governmental Funds includes General, Special Revenue, Debt Service and Capital Projects funds, as well as funds from the federal government.
Click here for a copy of the November 2008 Cash Report.