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Is New York Headed Toward Another Budget Gap?


After several years of budget surpluses, New York State tax revenue is coming in at a lower than expected rate. That could impact big ticket programs like school aid and health care as well as a multi-year tax cut planned by Governor Cuomo and legislators.  

Collections of income taxes are down nearly three quarters of a billion dollars from what was projected by Governor Cuomo’s division of the budget back in April, at the start of the state’s fiscal year.

The budget division did revise its figures in August, and lowered expected tax collections by $600 million, but State Comptroller Tom DiNapoli, who issued the monthly state cash report for September, finds personal income tax collections dropped by $300 million more since then, although some other tax collections actually increased for a net loss of $91 million. DiNapoli says he doesn’t think it’s the start of another recession, but it is a “cautionary signal”, though not a “crisis”.

We’ve had a number of pretty good years, the next year probably is going to be a leaner time,” DiNapoli said, in an interview with public radio and television.

Credit twitter@nyscomptroller
State Comptroller Tom DiNapoli.

DiNapoli says the slowdown is a concern because Governor Cuomo and lawmakers agreed to spend record amounts of money on school aid. They also committed to a phased in middle class income tax cut. It does not begin until 2018, but when fully phased in, in nine years, would result in over $4 billion less in state revenue each year.  DiNapoli, in a report issued back in July, predicted that the  state could face potential gaps as high as $5 billion before the present decade ends.   

It looks like that prediction, or possible projection, seems to be coming true,” DiNapoli said.

September is a key month for divining future economic trends because September 15 is one of four quarterly filing periods for estimated tax payments for wealthy investors paying capital gains taxes, as well as businesses  owners and the self-employed.

EJ McMahon, with the fiscal watchdog think tank the Empire Center, agrees that there are some “yellow lights” in the tax collection numbers.

It would point to weakness in the economy, continued volatility and weakness of stock prices,” McMahon said. “And a fairly uncertain, verging on pessimistic, outlook by business owners.”

Credit Citizens Budget Commission /

He says when  business owners file quarterly payments, they are also projecting out expected future profits, so that they won’t underpay their taxes and end up owing more money.

He says consumption taxes, like sales taxes, have also been growing at a very slow rate, another sign the economy is not strong.

McMahon says there is a way that Cuomo and lawmakers could still afford the middle class tax cuts. He says they could get rid of a rebate check to homeowners that is tied to school property tax cuts. It ended some years ago, but has recently been revived. The rebate comes in the form of a check, right around election time. And will cost around a billion dollars a year from the state’s general fund.  But McMahon says voters don’t really make the intended connection between the money they receive and their incumbent Senator or Assemblymember.

I question the psychology,” McMahon said. “I think many of see the check in our mailbox and scratch our heads and say ‘what’s this? I thought I got my tax refund’.”

A spokesman for Cuomo’s budget division, Morris Peters, says budget makers have taken a number of steps to ensure that New York is prepared for any potential drop in revenue. He says the state has had a self imposed two percent  spending cap , so budget growth has been kept in check, and the rainy day reserves now contain $600 million.

This record of fiscal discipline will help, no matter what the market brings,” Peters said.
He says more details on the state’s finances will be coming out in a couple of weeks in the mid year update to the financial plan , and that the  budget office is conducting it’s “quarterly re-estimation process.”

Scott Willis covers politics, local government, transportation, and arts and culture for WAER. He came to Syracuse from Detroit in 2001, where he began his career in radio as an intern and freelance reporter. Scott is honored and privileged to bring the day’s news and in-depth feature reporting to WAER’s dedicated and generous listeners. You can find him on twitter @swillisWAER and email him at