DiNapoli: Despite Positive Signs, Budget Risks Remain
Tax collections for the first quarter of the state fiscal year (SFY) 2011-12 were $799 million higher than Enacted Budget Financial Plan projections according to the June 2011 Cash Report released today by State Comptroller Thomas P. DiNapoli. However, the higher than anticipated growth in Personal Income Tax collections was driven by robust estimated tax payments based on 2010 earnings unlikely to be repeated in the coming months. Business tax collections were also up, rising 32 percent from last year. .
"Revenue collections in the first quarter were strong, but our fiscal health is tenuous," DiNapoli said. "We received the last of the significant federal stimulus funding in June, and the temporary PIT surcharge ends in the third quarter this year. The federal debt limit crisis, weakness in the housing market, and international financial and political instability continue to pose threats to the recovery. The Blue Chip consensus economic forecasts for growth continue to be revised downward. State leaders need to focus on diversifying our economic base, creating jobs, and rebuilding reserves to prepare the state for any fiscal difficulties ahead."
The General Fund ended June with a balance of $2.5 billion, $2 billion higher than projected in the Enacted Budget Financial Plan. Receipts, including transfers, grew $3 billion over last year primarily because of higher PIT collections in April and $500 million in delayed refunds that lowered last year's revenue. PIT collections ended the month $366.5 million higher than the latest projections. Spending, including transfers, declined $458.3 million (3 percent) from the same period last year and was $1.2 billion below projections primarily because of Medicaid and education payment delays.
Other findings from the June Cash Report include:
- General Fund receipts (including transfers from other funds) of $15.7 billion through June 30 were 24.1 percent, or $3 billion, higher than receipts from the same period last year. General Fund receipts were $809.2 million higher than projections in the Enacted Budget Financial Plan.
- General Fund tax collections totaled nearly $11.7 billion, reflecting an increase of $2.3 billion, or 24.8 percent, from last year for the same period. Tax collections were $638.8 million higher than Enacted Budget Financial Plan projections, primarily due to PIT collections. The Division of the Budget will be releasing updated projections in the First Quarterly Update to the SFY 2011-12 Enacted Budget Financial Plan later this month.
- General Fund Personal Income Tax collections through June 30 totaled $7.8 billion and grew 30.2 percent, or $1.8 billion, from last year. Year-to-date PIT collections were $366.5 million higher than Enacted Budget projections. Withholding collections grew 1 percent through June 30. Reflecting gains in tax settlements from 2010, year-to-date estimated payments grew 35 percent or $1.5 billion.
- Year-to-date PIT refunds were $555.5 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 to address cash flow issues.
- Consumption and use taxes increased 6.2 percent to $2.2 billion in the General Fund, which is $16 million higher than Enacted Budget projections. General Fund sales tax collections grew 7 percent through the first quarter of the fiscal year, compared to the same period last year.
- General Fund business tax collections of $1.4 billion were $385.1 million more than collections through June 30, 2010, which is $231.6 million above Enacted Budget projections.
- All Funds receipts of $33.4 billion were 10.4 percent, or $3.1 billion, higher than last year, primarily because of PIT collections, which increased $2.5 billion, or 26.3 percent. All Funds receipts were $362.8 million lower than Financial Plan projections, primarily because of federal receipts, which were $1.1 billion below plan, largely due to the timing of payments reimbursed with federal funds.
- All Funds tax collections of $17.2 billion increased by 20.5 percent, or $2.9 billion, from last year, primarily from PIT collections (up $2.3 billion). Consumption and use taxes grew $205.1 million or 6.0 percent. Business tax collections grew $451.1 million and other taxes declined $7.2 million. All Funds Tax collections were $799 million over Enacted Budget Financial Plan projections.
- General Fund spending (including transfers to other funds) of $14.6 billion fell by 3 percent, or $458.3 million, from the same period last year. Local assistance declined $907.5 million, or 8.2 percent, primarily from the timing of payments. General state charges grew $207.0 million from last year, primarily reflecting the effect of cash flow issues in the first quarter of SFY 2010-11 as well as increased health insurance premiums. Departmental operations rose $88.8 million. General Fund spending was $1.2 billion below Enacted Budget Financial Plan projections primarily because of the timing of local assistance payments.
- All Governmental Funds spending increased 1 percent, or $299.9 million, largely reflecting social services payments (up $451.3 million) as well as General State Charges (up $465.4 million). This was $1.8 billion below plan projections, primarily due to the timing of payments financed with federal funds. Debt service increased $50.8 million (5.3 percent) while capital spending declined 0.7 percent. Spending for Departmental Operations increased 7 percent, or $298 million, through the first quarter 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.
A copy of the June cash report can be seen here: http://www.osc.state.ny.us/finance/finreports/cash/monthly/june11.pdf