DiNapoli: State Tax Collections Continue to Trail Projections
Tax collections through November were $71.7 million below recently adjusted estimates, reflecting an economy that continues to struggle, according to the November 2011 cash report released today by New York State Comptroller Thomas P. DiNapoli. Year-to-date growth of 10.9 percent in 2011 compared to 2010 largely reflects April collections and is not indicative of current conditions.
“We’ve seen the growth in tax collections slow throughout the year,” DiNapoli said. “Financial sector downsizing, as well as lower profits and bonuses on Wall Street, may result in lower than expected state revenues over the next several months. The Personal Income Tax (PIT) actions taken by the governor and the Legislature this month should reduce projected deficits in the near-term, but balancing next year’s budget will again be a struggle, and current conditions add risk to the upcoming state budget.
Last week, the Legislature and governor agreed on a plan that should offset some of the projected budget shortfall this year as well as over the next three years. While these actions will help, more information on Wall Street bonuses and profits and December tax collections will indicate whether more actions are needed to plug budget gaps.
In November, DiNapoli projected lower tax collections in the current year as well as the next two years. The Division of the Budget (DOB) lowered its projected current year tax collections in the Mid-Year Financial Plan Update by $473 million, as well as in subsequent years, to reflect economic conditions. Other states are also facing mid-year budget shortfalls and are addressing them in various ways, including automatic spending reductions.
Other findings from the November Cash Report include:
- General Fund receipts (including transfers from other funds) of $35.4 billion through the first eight months were 11.9 percent, or $3.8 billion, higher than the same period last year. This was $113.8 million above updated Mid-Year Financial Plan projections primarily due to higher than anticipated miscellaneous receipts.
- General Fund tax collections totaled $26.4 billion, an increase of $2.9 billion, or 12.2 percent, from last year for the same period. Tax collections were $48.8 million lower than Mid-Year projections primarily due to lower (PIT) collections.
- General Fund PIT collections through Nov. 30 totaled $17.1 billion and grew 15.8 percent, or $2.3 billion, from last year. Year-to-date PIT collections were $43.6 million lower than Mid-Year projections.
- Withholding collections grew 3.5 percent through the first eight months, compared to the same period last year. Largely due to gains in tax settlements from 2010, year-to-date estimated payments grew 30.5 percent, or $1.9 billion. Year-to-date PIT refunds were $701.5 million lower than last year primarily because $500 million in refunds were moved from the final quarter of SFY 2009-10 into the first quarter of SFY 2010-11 for cash flow relief, thereby artificially increasing refunds last year. General Fund consumption taxes increased 4.4 percent from last year to $5.9 billion, which was $9 million lower than Mid-Year projections. General Fund sales tax collections grew 4.9 percent through Nov. 30, compared to the same period last year.
- General Fund business tax collections totaled $2.6 billion through the first eight months of SFY 2011-12, which was $299.4 million more than the same period a year earlier, and $19.6 million less than Mid-Year projections.
- All Funds receipts of $83.3 billion were 1.8 percent, or $1.5 billion, higher than last year, primarily because of PIT collections, which increased $3.1 billion, or 14.9 percent. However, this was offset by $2.6 billion in lower federal receipts from the same period last year, although they were $811.9 million higher than projected through November 30. All Funds receipts were $726.8 million higher than Mid-Year Financial Plan projections, primarily because of federal receipts.
- All Funds tax collections of $39.1 billion increased by 10.9 percent, or $3.8 billion, from last year, primarily from PIT collections (up $3.1 billion). Consumption taxes grew $365.5 million, or 4 percent. Business taxes grew $320.9 million and other taxes grew $87.8 million. All Funds Tax collections were $71.7 million less than Mid-Year projections.
- General Fund spending (including transfers to other funds) of $33.5 billion increased 3.9 percent, or $1.3 billion, from the same period last year. General Fund spending was $648.1 million below Mid-Year projections, primarily due to lower local assistance payments ($340.6 million) as well as lower general state charges ($278.8 million).
- General Fund local assistance increased $1.6 billion, or 7.6 percent, primarily reflecting higher spending for Medicaid due to the June 30 end of federal stimulus funding. Education spending declined $1.6 billion, because of a non-recurring increase of spending in the first quarter of SFY 2010-11. General state charges from the General Fund grew only $33 million from last year, primarily due to increased reimbursements from other funds for fringe benefits costs. Departmental Operations declined $280.6 million compared to last year.
- All Governmental Funds spending increased 1.1 percent, or $898.9 million, compared to last year, primarily due to increased spending for Medicaid (up $1.7 billion or 6.3 percent), other social services (up $588.8 million or 13.4 percent) and general state charges (up $350.5 million). All Funds spending was $653.2 million higher than Mid-Year projections. Debt service increased $68.3 million (2.7 percent). Departmental Operations spending declined 1 percent, or $117.9 million, compared to the same period last year.
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.