Mark Johnson, 518-474-4015
February 25, 2013
DiNapoli: Federal Actions Boost State Tax Revenue Collections
Temporary Spike in Tax Receipts Not Expected to Continue
Tax collections from April through January totaled $55.9 billion, a growth of 3.3 percent from the same period last year, according to the January cash report released by State Comptroller Thomas P. DiNapoli. Tax collections to date are $538.2 million more than projections updated in the Executive Budget last month.
“The good news is that for the second month in a row Personal Income Tax collections were higher than anticipated,” DiNapoli said. “The state received a boost in receipts because high-income taxpayers shifted income into 2012 in response to changes in federal tax law occurring in 2013. With continuing challenges, including cuts in federal Medicaid reimbursement, we should use caution in forecasting revenue for next year’s budget.”
Federal tax actions implemented in January led many employers to move salary and bonus payments for high income individuals to the end of December to avoid federal tax increases. Many high income taxpayers also sold assets in December to avoid federal tax increases.
Through January 31, PIT collections were up 4.7 percent or $1.6 billion from a year earlier. Withholding collections increased $160.4 million in the month of December and $658 million in January, compared to year-ago figures. The two-month increase represents 94 percent of year-to-date growth in withholding collections. Current-year estimated collections increased $195.4 million in December and $565.9 million in January; that two-month increase represents 86 percent of growth so far this fiscal year. Total growth for the two components in December and January makes up virtually all of the year-to-date growth in PIT collections.
The General Fund closing balance of $7.1 billion on January 31 was $1 billion higher than the latest projections. This reflects $411.1 million in higher than anticipated receipts and $621.3 million in lower than anticipated spending. The variance in spending is not expected to be sustained through the end of the fiscal year. The Division of the Budget’s latest General Fund spending projections anticipate the state will disburse $286 million more than initial projections from the Enacted Budget, reflecting the expectation of significantly higher spending in February and March.
Other findings from the January Cash Report include:
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.