Business tax collections in New York dropped during the first four months of fiscal 2009, according to a cash report issued yesterday on the eve of a special legislative session to grapple with potential budget cuts.
Total business taxes fell during that time by $312 million to $1.09 billion, compared to the same period in fiscal 2008, according to the report issued yesterday by state Comptroller Thomas DiNapoli. At the same time, the state's income tax collections came in $153.3 million above projections at $10.56 billion.
"On the face of things, the numbers seem to be sending contradictory messages," DiNapoli said in a press release. "There's an undercurrent of economic distress that continues to cause volatility and will likely hit New York harder in the months to come. The growth in personal income tax collections probably won't continue."
As budget cut negotiations continued with the Legislature, Gov. David Paterson yesterday convened the first meeting of an 18-member council of economic advisors to offer recommendations to help the state through its fiscal difficulties. The council includes Nobel Prize winner Joseph Stiglitz and former U.S. Treasury Secretary Robert Rubin.
Paterson has asked the Legislature to cut $600 million from the current budget in anticipation of further economic distress after already cutting $630 million of state spending last month. The New York Post reported that over the weekend Legislators had come up with $200 million of cuts.
"Are we going to go back to Albany and fix the deficit after the October forecast?" Paterson said in a radio interview. "Why don't we do it now?"
The state projects deficits totaling $26.2 billion over the next three fiscal years.
"This is just the first round of our discussion," he said. "We are in for three or four years of difficult deficits."
Paterson said he didn't want to raise taxes but did not rule it out if economic conditions worsen.
Merrill Lynch & Co. sounded a cautionary note on the state's financial situation in a report yesterday.
"While we recognize the New York market to be on sound footing, we believe market conditions could deteriorate precipitously in the wake of budgetary indifference," the report said.
Spokespeople from both chambers of the Legislature said they were willing to work with the governor but did not specify cuts they were willing to make.
Paterson is also calling for a school property tax cap which has passed the Senate but has been received coolly in the Assembly.