DiNapoli: State Revenues Continue to Decline
State Comptroller Thomas P. DiNapoli today released the October 2008 Cash Report. Reflecting the turmoil in the economy, the report found that growth in personal income tax collections continues to decline. Business taxes were still significantly below last year and are expected to continue to fall off.
“The big picture is becoming even more dismal,” DiNapoli said. “The numbers continue to fall, and it’s expected to get worse in December and January. The massive losses in the financial sector aren’t over yet. We can’t afford to cross our fingers and hope things get better. We have to get to work on this. It will be easier if we start now, rather than if we wait until January. Governor Paterson has called for action. The Legislature may not agree with the specifics of his plan, but they should agree to take action.”
Among the report’s findings:
- Overall General Fund Revenues: General Fund revenues (including transfers) of $31.3 billion ended October $44.8 million below the Division of the Budget’s (DOB) financial plan projections. Compared to last year, revenues have grown $2.1 billion or 7.2 percent.
- Business Taxes: General Fund business tax collections were $35.6 million in October, slightly above financial plan projections for the year by $34.9 million. However, General Fund business tax projections have been lowered by more than $900 million since the start of fiscal year, and collections are down in a year-to-year comparison by $444.6 million, or 15.5 percent.
- Personal Income Taxes: General Fund personal income tax collections were $251.8 million for the month and overall were $24.8 million below projections through October. Total personal income tax collections of $14.5 billion are $1.8 billion over last year through October. Withholding payments, the best measure of current personal income tax performance, grew 5.1 percent, or $708.7 million, compared to last year. Although withholding collections have remained strong throughout the year, growth does appear to be slowing. Year-to-year growth was 6.8 percent in July and 5.9 percent last month. In addition, refunds have increased 8.8 percent from the same period last year.
- Overall General Fund Spending: General Fund spending of $30.2 billion was $371.5 million below projections (including transfers), primarily due to lower than anticipated spending for local assistance programs ($381.2 million), but $769.2 million, or 2.6 percent, above the same period last year. The year-over-year increase is primarily due to increased grants for education ($757.6 million), health and environment ($138.4 million) and Medicaid ($37.8 million). These increases are offset by lower spending for mental hygiene ($440.7 million) and other social service programs ($169.2 million).
All Funds spending of $67.5 billion is $437.9 million below plan (not including transfers). The variance is primarily due to lower than anticipated spending for local assistance programs ($399.4 million below plan), lower than anticipated spending for General State Charges ($78.4 million) and capital projects ($10 million). This was offset by slightly higher than anticipated spending for State Operations ($46 million). All Funds spending was $4.3 billion, or 6.7 percent, over the same period from 2007-08, primarily due to growth in spending for education ($885.5 million), Medicaid ($421.1 million), other social services ($662.8 million) and State Operations ($852.5 million). All Funds receipts (not including transfers) of $66.8 billion through October 31 were $50.3 million below projections updated in the Midyear Update to the Financial Plan.
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.
Click here for a copy of the October 2008 Cash Report.