DiNapoli: Financial Plan Operating on Razor Thin Margin
Tax collections for the first five months of state fiscal year (SFY) 2011-12 were $3.3 billion higher than last year for the same period, but $75.7 million below updated Financial Plan projections, according to the August 2011 Cash Report released today by New York State Comptroller Thomas P. DiNapoli. The growth in tax collections was primarily associated with robust estimated tax settlements based on 2010 earnings that are unlikely to be repeated in the coming months.
"Revenue collections, as anticipated, have grown from last year," DiNapoli said. "Still, the Blue Chip consensus economic forecasts for growth continue to be revised downward, raising concerns for the remainder of the fiscal year. We should be prepared for the possibility that revenue growth may falter, requiring downward adjustments to the Financial Plan."
The General Fund ended August with a balance of $1.6 billion, $0.7 million lower than projected in the Financial Plan updated August 2. Receipts, including transfers, grew $3.1 billion over last year primarily because of higher personal income tax (PIT) collections in April and $500 million in delayed refunds that lowered last year's revenue. PIT collections ended the month $45.2 million lower than the latest projections. Spending, including transfers, increased $1.2 billion (5.5 percent) from the same period last year and was $77.4 million below projections, primarily because of local assistance and transfers to other funds.
Other findings from the August Cash Report include:
- General Fund receipts (including transfers from other funds) of $22.3 billion through August 31 were 16.4 percent, or $3.1 billion, higher than receipts from the same period last year. General Fund receipts were $78.2 million lower than projections in the first quarter update to the SFY 2011-12 Financial Plan.
- General Fund tax collections totaled $16.8 billion, reflecting an increase of $2.5 billion, or 17.5 percent, from last year for the same period. Tax collections were $67.5 million lower than projections.
- General Fund PIT collections through August 31 totaled $11.3 billion and grew 22.2 percent, or $2.1 billion, from last year. Year-to-date PIT collections were $45.2 million lower than updated Financial Plan projections. Withholding collections grew 3.2 percent through August 31. Reflecting gains in tax settlements from 2010, year-to-date estimated payments grew 34.4 percent, or $1.5 billion.
- Year-to-date PIT refunds were $624.8 million lower than last year primarily because for cash flow $500 million in refunds were moved from the final quarter of SFY 2009-10 into the first quarter of SFY 2010-11 which had the impact of making SFY 2010-11 refunds appear especially large.
- Consumption and use taxes increased 5.9 percent to $3.7 billion in the General Fund, which is $3.8 million lower than updated projections. General Fund sales tax collections grew 6.3 percent through the first five months of the fiscal year, compared to the same period last year.
- General Fund business tax collections were $1.4 billion through the first five months of SFY 2011-2012, were $290.7 million more than the same period a year earlier, but $38.5 million less than updated projections.
- All Funds receipts of $52.1 billion were 5.9 percent, or $2.9 billion, higher than last year, primarily because of PIT collections, which increased $2.6 billion, or 20.0 percent. All Funds receipts were $143.2 million higher than updated Financial Plan projections, primarily because of federal receipts, which were $561.8 million higher than updated projections, largely due to the timing of payments reimbursed with federal funds. Miscellaneous receipts increased $435 million or 5.5 percent, but were $342.9 million lower than updated Financial Plan projections.
- All Funds tax collections of $24.9 billion increased by 15.0 percent, or $3.3 billion, from last year, primarily from PIT collections (up $2.6 billion). Consumption and use taxes grew $322.9 million or 5.8 percent. Business tax collections grew $333.6 million and other taxes grew $1.6 million. All Funds Tax collections were $75.7 million less than updated Financial Plan projections.
- General Fund spending (including transfers to other funds) of $22.1 billion increased 5.5 percent, or $1.2 billion, from the same period last year. Local assistance increased $440.9 million, or 3.1 percent, primarily due to increased Medicaid spending from the General Fund, reflecting the end of federal stimulus funding that ended June 30. This increase was offset by lower spending for education, reflecting a non-recurring increase of spending in the first quarter of SFY 2010-11. General state charges grew $407.5 million from last year, primarily reflecting the effect of cash flow issues in the first quarter of SFY 2010-11 as well as increased health insurance premiums. Departmental operations increased $182.5 million. General Fund spending was $77.4 million below updated Financial Plan projections.
- All Governmental Funds spending increased 2.7 percent, or $1.3 billion, largely reflecting increased spending for Medicaid (up $851.4 million) as well as General State Charges (up $643.9 million), both of which are offset by reduced spending for education, also reflecting the non-recurring spending in SFY 2010-11. All Funds spending was $546.8 million higher than plan projections, primarily due to the timing of payments financed with federal funds. Debt service increased $57.2 million (4.2 percent) while capital spending increased 1.2 percent. Spending for Departmental Operations increased 4.1 percent or $302.5 million through the first five months 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.