Strong finish not enough to avoid down revenue year for New York State

New York State recorded $76.5 billion of tax receipts for the 2019 fiscal year, a 4.7% year-over-year drop, according to State Comptroller Thomas DiNapoli.

DiNapoli reported Friday that March tax receipts came in $811.7 million higher than estimated following steep drops in December and January that forced Gov. Andrew Cuomo to adjust his budget proposal. Even with the strong finish to the fiscal year that ended March 31, New York’s total revenues were down $3.7 billion from 2018.

Daniel Acker/Bloomberg

“After months of concern over lower-than-expected tax collections, the state ended the fiscal year on a positive note,” DiNapoli said in a statement. “The sharp revenue declines in December and January, however, remind us to take nothing for granted.”

New York’s tax receipts in December and January were a combined $3.2 billion below earlier projections primarily due to lagging personal income taxes, according to DiNapoli. Stronger-than expected March PIT receipts helped the state end 2019 $601.4 million higher than the Division of Budget’s February estimates, but were $2.3 billion lower than initially anticipated. PIT revenues totaled $48.1 billion, a decline of $3.4 billion, or 6.6% from the 2018 fiscal year.

DiNapoli and Cuomo attributed December and January’s large PIT shortfall during a joint Feb. 4 press conference to negative effects of federal tax changes capping deductions for state and local taxes at $10,000. The grim numbers prompted calls from DiNapoli and the Citizen Budget Commission for New York to build up reserves in preparation for the next economic downturn. A $250 million deposit was made into the state’s Rainy Day Fund at the end of the fiscal year bringing its total reserves up to $2 billion, according to DiNapoli.

“With expectations of a slowing economy and ongoing concerns regarding federal fiscal policies, a strong commitment to building robust reserves in preparation for the next economic slump is essential,” said DiNapoli.

Consumption and use taxes were up $645 million, or 3.9%, from the previous year while business tax receipts jumped 10.4%, according to DiNapoli’s cash report. Miscellaneous receipts totaled $31.2 billion, a $3.2 billion increase from what was initially planned in part because of unanticipated monetary settlements of more than $1 billion, according to DiNapoli.

New York State had $2.3 billion of outstanding bonded debt at the end of the 2019 fiscal year, according to DiNapoli. The Empire State’s general obligation bonds are rated Aa1 by Moody’s and AA-plus by S&P Global Ratings, Fitch Ratings and Kroll Bond Rating Agency.