DiNapoli: Tax Revenue Falling Short
Revenues must grow nearly 12 percent in the second half of the year to meet budget projections, according to the September Cash Report issued by State Comptroller Thomas P. DiNapoli. DiNapoli said that although overall General Fund tax collections were up 4.1 percent compared to this time last year, revenues would have to grow nearly three times faster to meet year-end projections.
“Last year was a fiscal train wreck,” DiNapoli said. “And now, half way through the state fiscal year, we’re heading down the same track. The budget was four months late and based on too much risk. The economy is getting better, but the state’s fiscal condition isn’t. September was supposed to be a strong month, and it wasn’t strong enough.
“There are big payments due in December, and I don’t see a lot of revenue growth between now and the end of the calendar year. Just like last year, my office will be watching the state’s cash flow very carefully. It is troubling that the updated financial plan was constructed only six weeks ago and tax revenues are already off target.”
DiNapoli noted that even though tax collections have increased more than $750 million in the General Fund from the same period last year, those collections are $375 million below year-to-date Financial Plan projections.
Among the report’s findings:
- General Fund tax collections totaled $18.8 billion through the first six months of the fiscal year. This represents an increase of $750.4 million or 4.1 percent and is $375.2 million below Financial Plan projections that were released August 20. To reach year-end projections, tax collections will have to grow nearly 12 percent for the remaining six months of the fiscal year.
- General Fund Personal Income Tax collections through September 30 totaled $11.8 billion and grew 6.3 percent or $703.3 million from the same period last year. To reach year-end projections, Personal Income Tax collections will have to grow 8.8 percent for the rest of the year. Most of that growth is expected to come from capital gains realized before the end of the fiscal year as a result of the expectation that the Bush tax cuts will be allowed to expire.
- Consumption and Use taxes increased 5.8 percent to $4.3 billion in the General Fund, but will have to increase 12.1 percent throughout the rest of the fiscal year to meet year-end projections. Sales tax has grown 5.8 percent for the first half of the year, in and of itself a good sign. However, sales tax must increase more than 11 percent for the next six months.
- General Fund business tax collections through September 30 of $2.1 billion were $324.5 million or 13.6 percent below collections for the same period in SFY 2009-10, which is $243.3 million below projections. Business tax collections need to grow 22.4 percent to meet current projections for year end.
- All Funds tax collections of $28.1 billion through the first six months of the fiscal year represent an increase of 5 percent or $1.3 billion from the same period last year, primarily from Personal Income Tax collections and Mobility Tax Collections, which didn’t begin until November 2009. However, All Funds Tax collections were $528.8 million below Financial Plan projections through September 30. To reach year-end projections, tax collections will have to grow 9 percent for the rest of the year.
Other findings from the September 2010 Cash Report include:
- General Fund receipts (including transfers from other funds) of $25.5 billion through September 30 were 1.3 percent or $318.9 million higher than collections from the same period last year. General Fund receipts were $484.9 million below projections.
- All Funds receipts of $63.6 billion through September 30 were 8.5 percent or nearly $5 billion higher than the same period last year, primarily because of federal receipts, which increased $3.9 billion or 18.6 percent. All Funds receipts were $258.4 million higher than Financial Plan projections for the first six months, again primarily because of federal receipts ($543.8 million over Plan). Miscellaneous receipts were $243.4 million over Plan.
- General Fund spending through September 30 (including transfers to other funds) of $25.4 billion represents an increase of 2.9 percent or $721 million, primarily in local assistance (up $1 billion). State operations declined 6.2 percent or $284.7 million from the same period last year. General Fund spending was $390.6 million below Plan.
- All Governmental Funds spending increased 6.3 percent or $3.8 billion over the first six months, although this is $120.3 million below projections. While capital spending increased approximately 4 percent through September 30, it was $191.3 million below projections. On the other hand, All Funds local assistance spending grew 8.5 percent and was $212.8 million over projections.
- The General Fund ended the month of September with a balance of nearly $2.4 billion, which was $94.6 million below projections.
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 to view September’s Cash Report.