Report: Drop in New York's Tax Receipts Show Recession's Effects

New York's year-over-year personal income tax receipts nearly halved last month in a sign of how the dismal economy has affected revenue, according to a report released yesterday by the state comptroller.

April personal income tax receipts were $3.82 billion, a 48.9% decline from the $7.48 billion collected in April 2008.

Total general fund revenue last month was down 44% year-over-year at $4.8 billion, which represented a $239.1 million decline below projections for the first month of fiscal 2010.

"This was a poor start to the fiscal year," Comptroller Thomas DiNapoli said in a press release. "It's been less than a month since the state's financial plan was released, and general fund revenues are already off nearly a quarter of a billion dollars."

The dramatic year-over-year April decrease is more indicative of changes in the economy over the past two years than what's happening this year, according to the comptroller's office. With taxes due on April 15, taxpayers settle their liabilities for the previous year that month.

Collections got a big boost in April 2008 due to the booming economy in 2007, but with a dreary 2008 there was no similar boost in April 2009. The enacted budget assumes that annual personal income tax collections in fiscal 2010 will remain essentially flat compared to last year, with a temporary tax increase offsetting declines from the weak economy.

Total tax receipts last month were down compared to April 2008 but miscellaneous receipts and federal receipts were up. A $191.8 million increase in miscellaneous receipts - which rose to $1.46 billion - was primarily due to timing, according to the comptroller's office, with the general fund getting reimbursements for capital spending from bond proceeds. Native American casinos, which can choose in which month to pay taxes, didn't make payments in April 2008. Those casinos paid $58.2 million last month.

One declining miscellaneous receipt was interest earnings. The state invests its fund balances in short-term investments. In April 2008, those investments earned $51.8 million, but last month those earnings plummeted to $6 million, a sign of both the decline in the size of the fund balances and of low yields on those investments, the comptroller's office said.

General fund spending increased by $138.6 million compared to April 2008, rising to $4 billion. The increase was primarily due to increased education spending but was offset in part by new federal stimulus funding.

"The economy continues to be shaky, which is significantly hurting state finances," DiNapoli said. "We've already tapped nearly all of our unreserved funds so there is very little cushion if revenues continue to fall. We need to watch revenues and spending very closely, because the state may be forced to readjust priorities."

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