DiNapoli: Mid-Year Revenue Results Show Continued Need for Caution This Year and Next
All Governmental Funds tax collections for the first half of state fiscal year (SFY) 2011-12 rose 12.6 percent from the same period last year, but were $391.9 million less than updated Financial Plan projections, according to the September 2011 Cash Report released today by New York State Comptroller Thomas P. DiNapoli. Year-to-date growth of 18.3 percent in General Fund Personal Income Tax (PIT) collections largely reflects robust estimated tax settlements based on 2010 earnings and does not necessarily reflect current economic conditions.
“Growth in revenue collections in several major categories of taxes is slowing, and at the midpoint of the fiscal year, Personal Income Tax, sales tax, and business taxes are lagging recent projections by $400 million,” DiNapoli said. “If these trends continue, the state may need to adjust its revenue projections downward. The Quick Start process in November, designed to jump-start 2012 budget talks, will be an opportunity for all parties to discuss and adjust revenue and spending projections to ensure we continue on a fiscally responsible path.”
The General Fund ended September with a balance of $4.9 billion, slightly lower than projected in the Financial Plan updated August 2. Receipts, including transfers, grew $3.4 billion from last year because of higher PIT collections in April and $500 million in delayed refunds that lowered last year’s revenue. PIT collections ended the month $16.5 million lower than the latest projections. Spending, including transfers, declined $110.6 million (0.4 percent) from the same period last year and was $328.2 million below projections, primarily because of local assistance payments.
General Fund Business tax revenue lagged projections by $338.1 million while consumption taxes, including sales tax, were $39.5 million below projections.
Other findings from the September Cash Report include:
- General Fund receipts (including transfers from other funds) of $28.9 billion through the first six months were 13.3 percent, or $3.4 billion, higher than receipts from the same period last year. General Fund receipts were $355.3 million lower than projections in the August update to the SFY 2011-12 Financial Plan.
- General Fund tax collections totaled $21.5 billion, reflecting an increase of $2.7 billion, or 14.2 percent, from last year for the same period. Tax collections were $343.2 million lower than the latest projections.
- General Fund PIT collections through Sept. 30 rose 18.3 percent, or $2.2 billion to $14 billion. Year-to-date PIT collections were $16.5 million lower than updated Financial Plan projections. Withholding collections grew 2.9 percent through September, compared to the same period last year. Reflecting gains in tax settlements from 2010, year-to-date estimated payments grew 29.7 percent, or $1.8 billion. Year-to-date PIT refunds were $635.7 million lower than last year primarily because $500 million in refunds were moved into the first quarter of SFY 2010-11 for cash flow assistance, artificially increasing refunds last year.
- General Fund Consumption taxes increased 5.2 percent from last year to $4.5 billion, which was $39.5 million lower than updated projections. General Fund sales tax collections grew 5.7 percent.
- General Fund business tax collections were $2.4 billion through the first six months of SFY 2011-12, which was $322.2 million more than the same period a year earlier, but $338.1 million less than updated projections. Collections in September, when quarterly payments are due, were nearly $300 million lower than anticipated.
- All Funds receipts of $65.2 billion were 2.5 percent, or $1.6 billion, higher than last year, primarily because of PIT collections, which increased $2.9 billion, or 17.2 percent. However, this was offset by $1.9 billion in lower federal receipts from the same period last year. All Funds receipts were $11.1 million lower than updated Financial Plan projections, primarily because of federal receipts, which were $617.4 million higher than updated projections, largely due to the timing of payments reimbursed with federal funds. Miscellaneous receipts declined $83 million or 0.8 percent, but were $236.6 million lower than updated Financial Plan projections, primarily in the capital projects fund.
- All Funds tax collections of $31.7 billion increased by 12.6 percent, or $3.6 billion, from last year, primarily from PIT collections (up $2.9 billion). Consumption taxes grew $328.2 million, or 4.7 percent. Business taxes grew $361 million and other taxes grew $13.2 million. All Funds Tax collections were $391.9 million less than Financial Plan projections.
- General Fund spending (including transfers to other funds) of $25.3 billion fell 0.4 percent, or $110.6 million, from the same period last year. General Fund spending was $328.2 million below updated Financial Plan projections primarily because of lower than anticipated local assistance spending primarily due to the timing of payments.
- Local assistance declined $272.7 million, or 1.6 percent, due to lower education spending, reflecting a non-recurring increase of spending in the first quarter of SFY 2010-11. This decline was offset by increased General Fund Medicaid spending, reflecting the June 30 end of federal stimulus funding. General state charges grew $357.6 million from last year, largely reflecting the effect of cash flow issues in the first quarter of SFY 2010-11 as well as increased health insurance premiums. Departmental operations declined $139.3 million.
- All Governmental Funds spending declined 2.2 percent, or $1.4 billion, largely reflecting $2.6 billion in reduced spending for education, reflecting the non-recurring spending in SFY 2010-11. All Funds spending was $255.6 million higher than plan projections, primarily due to the timing of payments financed with federal funds. Debt service increased $92.1 million (4.2 percent) while capital spending declined 2.9 percent. Departmental Operations spending declined 1.1 percent, or $102.7 million, compared to the same period last year.
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.