FOR RELEASE:

Comptroller DiNapoli Releases February Cash Report

State Comptroller Thomas P. DiNapoli today released the February 2007 cash report. 

With eleven months of the State’s 2006-07 fiscal year complete, General Fund receipts (including transfers) were $3.9 billion or 9.3 percent ahead of last year.  All Funds receipts were $4.0 billion or 4.2 percent ahead of last year.

General Fund spending (including transfers) was $40.9 billion in the first eleven months of the fiscal year.  This is $4.1 billion or 11.1 percent higher than during the first eleven months of the 2005-06 fiscal year.  All Funds spending of $95.3 billion was $7.8 billion or 8.9 percent higher than last year.

The General Fund closing cash balance on February 28, 2007, was $8.7 billion.  General Fund disbursements, including transfers, were below plan by $311 million, while General Fund receipts, including transfers, were above plan by $717 million.  The increased revenues currently in the closing balance can be attributed to slower than anticipated refunds issued to date.  Also, spending is below the Financial Plan primarily due to the timing of Local Assistance payments planned for February, but will have been paid in March in four areas, including education aid, welfare, special education and children and family service spending.

General Fund Receipts and Disbursements

Personal income tax collections prior to transfers to dedicated funds were $3.6 billion or 12.4 percent higher than last year.   This is largely due to 13.2 percent year-to-year growth in estimated payments, and 8.6 percent growth in withholding receipts.  In addition, while $500 million in personal income tax refunds were accelerated at the end of the 2005-06 fiscal year, which would have the effect of increasing year to year variance,  planned refunds expected to be paid in February 2007 did not accumulate as anticipated in the Financial Plan.  As a result, to date, collections after refunds are currently higher than projected.  It is expected that refunds in March 2007 will accelerate and therefore be on target with Financial Plan projections.

Consumption/use tax receipts in the first eleven months of the fiscal year fell 4.9 percent, or $386.6 million, compared to last year.   The major factor in this decline is the elimination of sales tax on clothing priced under $110, which took effect April 1, 2006.  

Business tax receipts rose by $1.2 billion, or 32.9 percent.  The largest growth was in the corporate franchise tax, which rose from $2.0 billion last year to $2.9 billion this year, or 44.6 percent.   Collections in both the bank tax and the insurance tax were also higher this year as compared to last.  Bank tax collections grew from $566.9 million to $713.0 million, or 25.8 percent; insurance tax collections rose from $659.2 million to $773.6 million, or 17.4 percent.

All Other General Fund taxes rose from $835.8 million to slightly over $1.0 billion, an increase of $183.8 million or 22.0 percent.  This increase was generated entirely by the estate and gift tax, which rose from $813.1 million in the first eleven months of 2005-06 to $999.4 million in 2006-07. 

Total General Fund disbursements increased $4.1 billion or 11.1 percent as compared with the first eleven months of 2005-06 fiscal year. The growth in General Fund disbursements is driven by increases in education, health,  and social services spending, along with additional payroll disbursements associated with retroactive collective bargaining agreements during this year compared to the same period last year. 

Local Assistance grants increased $2.3 billion over last year, or 10.1 percent. The largest dollar increase was in education spending, which rose from $10.5 billion to $11.4 billion, an increase of $855.8 million or 8.1 percent.  This growth is due to increased State Aid to Public Schools and reimbursements to City University of New York (CUNY) for collective bargaining agreements.  However, much of the $311 million variance between actual year-to-date disbursements and the Financial Plan is due to school aid payments that were initially planned for February but now are expected to be made in March.

Spending in the Health and Environment category nearly tripled from $398.9 million to $1.1 billion, due primarily to the State’s obligation to pay prescription drug costs for New Yorkers who are eligible for both Medicaid and Medicare and who have temporarily lost prescription drug coverage because of complications with the Federal government’s implementation of its Medicare Part D prescription drug program.

Social Services spending increased 5.3 percent, from $9.7 billion to $10.2 billion, due to several factors including:

• increasing cost of the Medicaid program providing health care services and prescription drugs,
• rising number of recipients of publicly financed health care,
• increasing medical service utilization in hospitals, nursing homes, and managed care programs, and
• an additional Medicaid cycle payment through February 2007.

Two changes, effective January 1, 2006, also contribute to higher spending in 2006-07:  the State began paying 100 percent of the local share of Family Health Plus (FHP), compared to the 75 percent share the State paid during 2005, and the State began capping local Medicaid expenditures.  In calendar year 2006, the State financed all local costs in excess of 103.5 percent of 2005 expenditures.  The Financial Plan, released January 31, 2007 and updated February 21, estimates that the FHP takeover and local cap together will result in increased costs to the State of $553 million in 2006-07.

Department Operations spending increased 12.4 percent or $945.0 million, while General State Charges grew 8.3 percent, or $316.6 million.   General Fund transfers to other funds rose 21.1 percent, from $2.4 billion to $2.9 billion, primarily due to the transfer of $250 million to the Debt Reserve Reduction Fund to finance the defeasance of a like amount of outstanding State-supported debt.

Total Governmental Receipts and Disbursements

Total governmental receipts in the current fiscal year increased $4.0 billion or 4.2 percent from the first eleven months of 2005-06.  Personal income tax receipts grew $3.6 billion or 12.4 percent over 2005-06, although final collections are expected to slow in March. 

Consumption/use taxes decreased slightly: 2.8 percent, or $350.2 million.  This decrease reflects the exemption of clothing from the State sales tax.  Business taxes increased 25.4 percent or $1.3 billion, largely on the strength of the corporate franchise tax.  All other taxes increased $252.9 million or 14.8 percent. 

Miscellaneous receipts declined from $16.3 billion to $16.0 billion, a decrease of 2.0 percent.  Much of this is from decreased reimbursement from public authority bond proceeds for capital spending that has already taken place, but it is primarily due to lower receipts received from the Public Asset Fund in 2006-07. Federal receipts decreased slightly, from $31.2 billion to $30.7 billion, or 1.6 percent. 

Total governmental funds disbursements increased $7.8 billion, or 8.9 percent.  Local Assistance grants rose 9.2 percent from $61.2 billion to $66.8 billion.  Of that amount, $682 million was disbursed as checks to homeowners through the STAR Local Property Tax Rebate program.  The State also made payments associated with the June 2006 flooding in the Southern Tier and the October snowstorm in Erie County. 

Health and Environment spending increased $1.0 billion, from $3.0 billion to $4.0 billion, due partly to the prescription drug obligation mentioned above, but also to the full impact of Health Care Reform Act (HCRA) spending coming on-budget.  Along with the reasons stated above, another factor in the increased Local Assistance spending is the intergovernmental transfers (IGTs) and upper payment limit (UPL) payments that were not made through this time last fiscal year. 

Department Operations increased $968.8 million, or 6.5 percent, and General State Charges increased $375.6 million, or 8.3 percent.  Debt Service payments increased $380.8 million or 13.1 percent, reflecting the $250 million paid out of the Debt Reduction Reserve Fund.  Spending on capital projects increased $420.5 million, or 10.7 percent.

Click here for a copy of the report.