DiNapoli: State Tax Revenue Short of Targets
Tax revenue through the first six months of the state's fiscal year was 0.2 percent lower than last year and $213 million short of projections, according to a mid-year state revenue analysis released today by State Comptroller Thomas P. DiNapoli. Collections would have to grow 6.4 percent for the remainder of the year to make up for the lower-than-expected revenue thus far.
"Tax collections continue to lag behind expectations. We are not seeing the level of growth in tax revenues that is needed to meet year-end projections even though targets were lowered," DiNapoli said. "The economic recovery continues to be weak and financial risks remain. The state must proceed with caution and carefully monitor revenue and spending."
All Funds tax collections of $31.6 billion through Sept. 30 were $213 million below Financial Plan projections revised downward in June and $436 million below initial projections from the Enacted Budget Financial Plan. Collections were 0.2 percent, or $72.1 million, lower than last year for the same period.
All Funds Miscellaneous receipts totaled $11.7 billion through September, which is $837.7 million higher than last year for the same period and $508.1 million higher than updated Financial Plan projections. This includes a $340 million civil-penalty settlement from Standard Chartered Bank.
The General Fund ended the first half of the year with a balance of $4.3 billion, or $184.3 million higher than projected in the Financial Plan updated in July.
Key findings in the Mid-Year revenue report include:
- Tax Revenues are not Meeting Projections. General Fund tax collections through Sept. 30 were $21.5 billion, or $116.4 million lower than projected in the First Quarter Update to the Enacted Budget Financial Plan and $315.4 million lower than initial projections from the Enacted Budget.
- Personal Income Tax (PIT) Collections are Slightly Below Plan. General Fund PIT collections were $13.9 billion through the month of September, a decline of 0.5 percent, or $64.5 million, from last year for the same period. This is $6 million less than projected, although collections in the month of September exceeded projections by $15.7 million. Withholding collections (the state's largest single source of revenue outside of federal receipts) declined $31.4 million in the April-September period, or 0.2 percent, from the first half of last year. To meet current year-end projections, General Fund PIT will have to grow 9.6 percent and withholding will have to increase 5.7 percent in the second half of the fiscal year.
- Consumption Taxes Show Small Growth. General Fund Consumption taxes totaled $4.5 billion, an increase of 0.3 percent, or $14.3 million, from the same period last year. Collections through the first half of the fiscal year were $24.8 million above updated projections through Sept. 30, but $107.2 million below initial projections from the Enacted Budget Financial Plan. General Fund Sales tax collections increased $26 million, or 0.6 percent, from the first half of last year. To meet year-end projections, General Fund consumption and use tax collections will have to increase 2.8 percent and sales tax 2.7 percent in the remaining six months of the fiscal year.
- Business Taxes Up, but Below Plan. General Fund business tax collections increased 2.8 percent, or $67.4 million, over the first six months compared to last year for the same period, but were $106.7 million below estimates for the same period. Collections will have to increase 6.2 percent over the next six months to meet year-end projections.
- Risks. Volatile economic conditions and uncertainty in the financial sector threaten current revenue projections. The Financial Plan anticipates other revenues that may not materialize, including $250 million in health insurance plan privatization proceeds and $129 million from Native American casinos. The state also faces the potential loss of federal funds because of automatic sequestration under current law enacted by Congress in 2011. Unanticipated settlement revenue will offset some risk, but for the sixth consecutive year, the state is unlikely to reach the tax collection projections in the Enacted Budget Financial Plan.
DiNapoli also released the September Cash Report which found:
- The General Fund ended the month of September with a balance of $4.3 billion, $184.3 million higher than projected, primarily due to miscellaneous receipts, including the settlement from Standard Chartered Bank. General Fund disbursements were over projections by $152.5 million, primarily due to the timing of payments of General State Charges.
- All Funds receipts totaled $62.6 billion, a decline of $2.6 billion, or 4 percent, and $338.8 million above projections, primarily due to miscellaneous receipts, which were over Plan by $508.1 million. All Funds disbursements totaled $59.9 billion, which was $2.1 billion or 3.4 percent below the same period last year and $704.5 million below projections, primarily due to the timing of education and Medicaid payments.
Click here for the report examining first two quarters of state revenues: http://www.osc.state.ny.us/reports/budget/2012/2012_midyear_revenue.pdf.
Click here for a copy of the September 2012 Cash Report, which includes a full breakdown of all revenue and spending for the month and year-to-date: http://www.osc.state.ny.us/finance/finreports/cash/monthly/september12.pdf
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.