DiNapoli Releases Quick Start Budget Forecast
State Comptroller Thomas P. DiNapoli today released a forecast on estimated receipts and disbursements for State Fiscal Years 2007-08 through 2009-10. The forecast predicts slow but moderate growth for tax receipts from $117.5 billion in 2007-08 to $126.6 billion in 2009-10. Spending is expected to total $118.8 billion in 2007-08 and grow to $134.1 billion in 2009-10. The report meets the requirements for the “quick start” budget process.
“Our budget forecast shows that serious fiscal challenges and serious fiscal choices lay ahead,” DiNapoli said. “The Governor and Legislature must work together to make those difficult choices to improve the fiscal health of the state. The alternative is a bleak fiscal future for New York State.
“There are still five months left in the fiscal year; things can and probably will change. Wall Street, which provides as much as 20 percent of the state’s revenue, is coming off a slow third quarter. How well Wall Street performs in the fourth quarter and the first quarter of next year will have a significant impact on the state,” DiNapoli said. “But right now, both spending and revenues are expected to be lower than originally estimated for 2007-08. The state’s reliance on revenue from Wall Street and our continued dependence on debt and non-recurring revenues puts us in a precarious position.”
Under an agreement passed last January, the Comptroller, Governor and Legislature are required to separately submit a report by November 5 that details receipts and disbursements estimated for the current and ensuing fiscal years.
The Office of the State Comptroller (OSC) estimates for All Fund receipts and disbursements for 2007-08 through 2009-10 compared to the Division of the Budget’s (DOB) Mid-Year Financial Plan Update are as follows:
|* (millions of dollars)
After tax receipts grew close to 10 percent in both 2005-06 and 2006-07, tax receipts are expected to slow to 4.6 percent in 2007-08, 5.2 percent in 2008-09 and 5.5 percent in 2009-10.
OSC projects All Funds school aid, Medicaid and public assistance spending to increase $1.3 billion to $57.4 billion for 2007-08, and total $62.1 billion in 2008-09 and $66.6 billion in 2009-10. All other spending is estimated to total $61.4 billion in 2007-08, $65.9 billion in 2008-09 and $67.5 billion in 2009-10.
DiNapoli noted several risks that could adversely impact the state going forward. The state continues to rely heavily on debt and one-shots, and over the last five years used nearly $19 billion in non-recurring revenues to pay for recurring expenses. More than 22 percent, or $11.5 billion (as of March 31, 2007), of existing outstanding state-funded debt was issued to provide budget relief or deficit financing. This reduces the state’s ability to address other critical priorities. In addition, spending is dominated by growth in Medicaid and aid to local school districts, which by 2010-11 will reach almost 50 percent of All Funds spending.
Among the report’s other findings:
- Personal Income Tax Receipts: In 2007-08, personal income tax receipts are forecast to grow by $2.3 billion over the prior year, or 6.6 percent. This is substantially lower than the prior two years when receipts grew by 12.2 percent and 8.6 percent. Receipts are projected to increase by 6.6 percent in 2008-09 and 6.7 percent in 2009-10.
- Business Tax Receipts: After rising dramatically in 2005-06 (22.1 percent) and 2006-07 (21.4 percent), business tax receipts are only expected to grow by 0.57 percent in 2007-08. Growth is expected to average 2.6 percent for the remainder of the forecast period.
- School Aid: School aid is expected to significantly increase over a four-year period. Based on historic data and increases in the 2007-08 Enacted Budget, OSC estimates school aid will be higher than DOB estimates and will increase to $23.5 billion in 2008-09 and $25.3 billion in 2009-10.
- Medicaid Spending: OSC estimates Medicaid spending for 2007-08 at $32 billion, a decrease of $1.1 billion from the previous year, while DOB is projecting that Medicaid spending will decrease by $1.3 billion. OSC and DOB both project spending will increase $3 billion in 2008-09. OSC projects an increase of $2.6 billion in 2009-10, and DOB estimates an increase of $2.9 billion.
OSC relied on a variety of data sources to compile the analysis including ten years of receipts and disbursements data from the state’s Central Accounting System and information from state agencies including the DOB, the Department of Health, the Department of Taxation and Finance, and the Office of Temporary and Disability Assistance.
Click here for a copy of the report.