New York State faces a looming $4 billion budget deficit that combined with lower-than-expected tax revenues and federal funding cuts create a “triple threat” to its overall finances, according to the state’s top fiscal watchdog.
State Comptroller Thomas DiNapoli released a report Tuesday saying tax collections for the first half of the 2018 fiscal year that began April 1 down nearly $768 million, or 2.1%, compared to a year earlier and $386.6 million below the latest projections. The drop was attributed largely to a $1.3 billion, or 5.6%, year-over-year decrease in personal income tax collections that are $371.3 million below projections from August and $1.1 billion lower than estimates in the enacted budget.
“New York faces serious fiscal challenges,” said DiNapoli in a statement. “Projected budget gaps, weaker than expected personal income tax collections and cuts to federal programs combine for a triple threat of budgetary risks.”
DiNapoli noted that the state’s most recent financial plan projects a budget gap of $4.1 billion for the 2019 fiscal year before any budgetary adjustments and may grow if tax receipts continue to fall below projections. The state’s $6.5 billion general fund balance as of Sept. 30 is $3 billion down from a year ago and $21.8 million lower than the latest budget projections stemming from bank settlement funds the state utilized in the last two years. He added that uncertainty in Washington also could also force difficult funding decisions for some programs and services.
“This administration has held spending growth to two percent – lower than any prior administration – which helps the financial plan to weather volatility,” said Morris Peters, a spokesman for Gov. Andrew Cuomo’s budget office. “But with significant risks stemming from Washington, we are closely monitoring the situation as we prepare the state’s midyear update to the financial plan.”
DiNapoli’s analysis said that bond proceeds from capital projects totaled just under $1.3 billion for the first half of the year, a jump of $59.2 million, or 4.9%, from a year ago. The state’s enacted financial plan estimates collections from bond proceeds will increase $1.7 billion, or 46.6% for the full 2017-2018 fiscal year.
New York State has general obligation bond ratings of Aa1 by Moody’s Investors Service and AA-plus by S&P Global Ratings, Fitch Ratings and Kroll Bond Rating Agency.