DiNapoli: Significant Tax Revenue Growth Needed to Meet Year-End Projections
Tax collections for the remaining four months of the fiscal year will have to grow significantly more than year-to-date growth to meet Financial Plan projections, according to the November 2010 Cash Report released today by State Comptroller Thomas P. DiNapoli. While the state’s General Fund ended November with a cash balance $885.9 million over mid-year projections, the increase is primarily due to lower local assistance spending than planned and the timing of payments.
“There is some positive news,” DiNapoli said. “But the Financial Plan’s revenue growth expectations for the remainder of the fiscal year may be difficult to achieve. All Governmental Funds tax collections over the first eight months of the fiscal year have increased 4.2 percent over last year, but the pace of growth will need to double in the last four months to meet year-end projections. That’s a tall order in this economy. There are already indications that certain revenues will not materialize.”
Other findings from the November Cash Report include:
- General Fund receipts (including transfers from other funds) of $31.6 billion through Nov. 30 were 2.3 percent, or $699.5 million, higher than collections from the same period last year. General Fund receipts were $185.4 million above updated projections.
- General Fund tax collections totaled $23.5 billion through the first eight months of the fiscal year. This is an increase of $1.1 billion, or 5 percent, and is $147.4 million over Financial Plan projections released Nov. 1. However, to reach year-end projections General Fund tax collections will have to grow nearly 11 percent for the remaining four months of the fiscal year.
- General Fund personal income tax collections through Nov. 30 totaled $14.8 billion and grew 7 percent, or $962.8 million, from the same period last year. Withholding collections have grown 6.4 percent year-to-date and are on target to meet year-end projections. Conversely, estimated payments have grown 11.2 percent through Nov. 30, but will have to increase 20 percent during the remainder of the year. In addition, the Financial Plan anticipates an additional $250 million in capital gains to be realized by the end of the fiscal year, based on the incorrect assumption that the Bush tax cuts would expire.
- Consumption and use taxes increased 6.8 percent to $5.7 billion in the General Fund, which is $22.5 million below projections. Collections will have to increase 10.5 percent throughout the rest of the fiscal year to meet year-end projections. Sales tax has grown 7 percent for
the first eight months of the year, which is a positive sign of taxpayer behavior going into the holiday shopping season. However, sales tax must increase 11 percent for the next four months to meet year-end projections.
- General Fund business tax collections through Nov. 30 of $2.3 billion were $369.6 million, or 14.1 percent, below collections for the same period in SFY 2009-10, which is $68 million above updated projections. However, business tax collections need to grow 28.5 percent over the next four months to meet current projections for year-end.
- All Funds receipts of $81.8 billion through Nov. 30 were 6.2 percent, or $4.8 billion, higher than the same period last year, primarily because of federal receipts, which increased $3.3 billion, or 11.6 percent. All Funds receipts were $161.4 million higher than Financial Plan projections for the first eight months, primarily because of federal receipts ($225.8 million over plan) and tax collections ($146 million over plan). Miscellaneous receipts were $210.4 million below plan.
- All Funds tax collections of $35.2 billion through the first eight months of the fiscal year is an increase of 4.2 percent, or $1.4 billion, from the same period last year, primarily from personal income tax collections (up $838.9 million). Although All Funds Tax collections through Nov. 30 were $146 million higher than Financial Plan projections, to reach year-end projections, All Funds tax collections will have to grow 9.9 percent for the rest of the year.
- General Fund spending through Nov. 30 (including transfers to other funds) of $32.2 billion is a decrease of 1.5 percent, or $479.1 million, primarily in state operations (down 8.7 percent or $515.0 million from the same period last year). General Fund spending was $700.8 million below Financial Plan projections.
- All Governmental Funds spending increased 2.7 percent, or $2.1 billion, over the first eight months, although this is $1.4 billion below projections. This year’s spending increase is primarily the result of Medicaid and school aid payments that were not made last year and deferred until the first quarter of the current year. Capital spending decreased 1.7 percent through Nov. 30 while local assistance spending grew 4.8 percent.
- The General Fund ended the month of November with a balance of nearly $1.7 billion, which was $885.9 million over projections.
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.
To view the November Cash Report, visit here.
To view a chart summarizing receipts to date versus year-end plan and last year, visit here.