Tax receipts for the first nine months of State Fiscal Year (SFY) 2021-22 continue to exceed projections, totaling $84.4 billion. This amount is significantly higher than the most recent forecast by the Division of the Budget contained in the Mid-Year Update to the Financial Plan. While tax collections have exceeded forecast throughout the current fiscal year, December results are also affected by a newly established tax structure, the Pass Through Entity Tax (PTET). The PTET allows certain taxpayers to make state business tax payments that are deductible from federal taxes, rather than making state income tax payments that are not deductible from federal taxes.
Tax receipts exceeded the latest Financial Plan forecast by $12.9 billion over the first nine months of SFY 2021-22, according to the monthly state Cash Report released by New York State Comptroller Thomas P. DiNapoli. This includes the $10.2 billion collected from the PTET. However, taxpayers that remit PTET payments are expected to reduce their Personal Income Tax (PIT) payments by similar amounts. Since December results may not yet reflect these offsetting reductions to PIT receipts, they should be considered with a significant measure of caution during this transition period.
“Tax collections performed well in December, and the state’s economy and finances continue their recovery,” DiNapoli said. “But there is continuing uncertainty about the impact of the ongoing COVID-19 surge, economic risks, and the need for continuing financial support for those still struggling to find their footing. Also, December tax receipts were heavily influenced by the new tax structure created to mitigate the damaging impact of the 2017 federal cap on State and Local Taxes, which clouds our revenue picture during this transition period. As we begin the new budget season, I urge the Executive and the Legislature to proceed with caution.”
PIT receipts totaled $49 billion and continued to exceed Financial Plan expectations ($1.9 billion over most recent projections and $7.1 billion over initial projections) and to show year-over-year growth ($12.2 billion year to date). Withholding collections totaled $34.7 billion, 18.8% higher than last year, benefitting from an extra withholding day, as well as the continued benefit of increased tax rates.
Year-to-date, consumption and use tax collections totaled $14.8 billion, 23.1% or $2.8 billion higher than the same period last year, and $386.2 million higher than anticipated in the latest projections but $1.1 billion higher than initially anticipated.
Business taxes totaled $18.3 billion, including $10.2 billion from the PTET. Excluding this new revenue source, business taxes were just under $2 billion higher than last year for the same period and $217.7 million higher than latest projections and nearly $1.5 billion higher than initially projected.
All Funds spending through December 31 totaled just under $141.5 billion, which was $14.3 billion, or 11.2%, higher than last year for the same period, primarily due to higher Medicaid and education costs. All Funds spending through the first three quarters was nearly $4.5 billion lower than the latest projections, and $5.9 billion lower than enacted projections, primarily due to lower than anticipated spending from the General Fund and federal funds. State Operating Funds spending totaled $73.9 billion, $10 billion, or 15.7%, higher than last year and $1.7 billion lower than the latest projections.
The state’s General Fund ended the third quarter with a balance of $30.7 billion, $15.2 billion higher than the latest projections and $14.1 billion higher than last year at the same time primarily due to the PTET, as well as higher than anticipated tax collections and lower than anticipated spending.
December Cash Report
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