DiNapoli: Despite Positive Fiscal Signs, Caution Needed
All Funds tax collections for the first two months of State Fiscal Year (SFY) 2011-12 were $365.8 million higher than Enacted Budget Financial Plan projections, mostly due to higher than anticipated Personal Income Tax (PIT) collections, according to the May 2011 Cash Report released today by State Comptroller Thomas P. DiNapoli. The year-to-year growth in PIT collections is primarily due to higher estimated payments from April, which reflected settlements of 2010 taxes, as well as the delay of $500 million in refund payments from March 2010 to April 2010. All Funds spending was $975.3 million below projections, primarily due to the timing of federally financed local assistance grants. Federal receipts were nearly $700 million below Financial Plan projections.
“The substantial volatility in tax collections over the last four years continued in May,” DiNapoli said. “Revenue is above initial projections, but it’s too soon to determine if this is a trend or an aberration. The state can’t revert back to its bad habit of over-estimating revenues to justify unaffordable spending. The economy is still too uncertain, and there are still significant risks to the financial plan.”
The General Fund ended May with a balance of $1.8 billion, $711.2 million higher than projected in the Financial Plan released on May 6. General Fund receipts grew $2.2 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 in the General Fund ended the month $252 million higher than the latest projections.
Other findings from the May Cash Report include:
- General Fund receipts (including transfers from other funds) of $9.2 billion through May 31 were 31.2 percent, or $2.2 billion, higher than receipts from the same period last year. General Fund receipts were $407.7 million higher than updated projections in the Enacted Budget Financial Plan.
- General Fund tax collections totaled nearly $7.0 billion, reflecting an increase of $1.6 billion, or 30.3 percent from last year for the same period. Tax collections were $274.5 million higher than Enacted Budget Financial Plan projections released May 6, primarily due to Personal Income Tax collections.
- General Fund Personal Income Tax collections through May 31 totaled $5.2 billion and grew 35.6 percent, or $1.4 billion, from last year. Year-to-date PIT collections were $252.0 million higher than Enacted Budget projections.
- Withholding collections grew 7.9 percent in the month of May (compared to last May), which was not quite enough to make up for the decline that occurred in April. As a result, year-to-date withholding collections were $39.1 million or 0.9 percent lower than collections for the same period last year. Conversely, reflecting gains in tax settlements from 2010, year-to-date estimated payments grew 42.6 percent or $1.3 billion. Year-to-date PIT refunds were $465.6 million lower than last year primarily because of $500 million in refunds that were moved from the final quarter of State Fiscal Year (SFY) 2009-10 into the first quarter of SFY 2010-11 to address cash flow issues.
- Consumption and use taxes increased 7.8 percent to nearly $98.4 million in the General Fund, which is $2.3 million higher than Enacted Budget projections. General Fund sales tax collections grew 8.5 percent through the first two months of the fiscal year, compared to the same period last year.
- General Fund business tax collections of $189.3 million were $127.2 million more than collections through May 31, 2010, which is $16.7 million below Enacted Budget projections.
- All Funds receipts of $20.5 billion were 13.8 percent, or $2.5 billion, higher than last year, primarily because of PIT collections, which increased $1.8 billion, or 35.6 percent. All Funds receipts were $368.7 million lower than Financial Plan projections, primarily because of federal receipts, which were $698.4 million below Plan.
- All Funds tax collections of $10.1 billion increased by 26.9 percent, or $2.1 billion, from last year, primarily from PIT collections (up $1.8 billion). Consumption and use taxes grew $134.5 million or 6.5 percent. Business tax collections grew $155.4 million and other taxes grew $28.7 million. All Funds Tax collections were $365.8 million over Enacted Budget Financial Plan projections released May 6.
- General Fund spending (including transfers to other funds) of $8.8 billion increased by 14.4 percent, or $1.1 billion, from the same period last year. Local assistance increased $113.3 million, or 2.2 percent, primarily from the timing of various payments. General State Charges grew $573.5 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 increased $138.2 million. General Fund spending was $303.4 million below Enacted Budget Financial Plan projections primarily because of the timing of local assistance payments.
- All Governmental Funds spending increased 4.6 percent, or $809 million, largely reflecting social services payments. This was $975.3 million below Plan projections, primarily due to the timing of payments financed with federal funds. Debt service declined 33.3 percent primarily because payments due in September 2010 were prepaid in May. Capital spending increased 7.8 percent and spending for departmental operations increased 1.7 percent or $50.0 million.
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 report visit: http://www.osc.state.ny.us/finance/finreports/cash/monthly/may11.pdf.