ALBANY - Weak tax revenues in May and June, coupled with increasing indicators of softening in the economy, indicate a need for heightened caution through the remainder of New York State’s 2012-13 fiscal year, State Comptroller Thomas P. DiNapoli said today.
While overall tax collections are higher than projected through the first quarter of the year, a report released by DiNapoli today found unexpected strength in collections was limited to April, when personal-income tax (PIT) collections surpassed expectations due to the settlement of prior tax year liabilities. Combined General Fund PIT revenues for May and June were below projections by $244.5 million. The largest component of income-tax receipts, withholding from current wages and salaries, is projected to rise by 5 percent or $1.5 billion this year, but so far is virtually flat compared to SFY 2011-12.
“Revenue collections in the first quarter were unpredictable and growth appears to have slowed,” DiNapoli said. “As has happened repeatedly in recent years, unexpected changes in the economy are creating a drag on forecasted revenues. The state must remain vigilant about managing our budget given the challenge of an uncertain economy.”
Results from the first quarter do not determine the outcome for the entire fiscal year but reveal trends that could impact remaining quarters.
Key findings in the first-quarter revenues report include:
- Higher than Expected Revenues for the Quarter. General Fund tax collections were $11.4 billion, or $83.1 million higher than projected in the Enacted Budget Financial Plan in the first quarter, but $347.7 million lower than last year for the same period.
- Personal Income Taxes above Plan, for Now. General Fund PIT collections were $7.6 billion through the month of June, a decline of 3.3 percent, or $262.2 million, from last year. This is $92.3 million more than projected, primarily from the non-recurring settlement of the prior year’s tax liabilities in April. Other components of PIT revenue reflect weakening current conditions.
- Consumption Taxes Down. Consumption taxes totaled $2.2 billion, a decline of 0.7 percent, or $16.2 million. Collections through the first quarter were $77.2 million below projections and have not met monthly projections yet this year. To meet year-end projections, collections will have to increase 3.4 percent in the remaining nine months of the fiscal year.
- Business Taxes Down, but Above Plan. Business tax collections declined 5.2 percent or $71 million over the first three months compared to last year, but were $78.6 million over estimates for the same period. Collections will have to increase 7.9 percent over the next nine months to meet year-end projections.
DiNapoli also released the June Cash Report which found:
- The General Fund ended the month of June with a balance of $2.9 billion, $813.7 million higher than projected, primarily due to lower than anticipated spending.
- All Funds receipts totaled $30 billion, a decline of $3.3 billion, or 10 percent, and $2 billion below projections, primarily due to lower federal receipts.
- All Funds disbursements totaled $28.4 billion, which was $3.4 billion or 10.6 percent below the same period last year. All Funds spending ended the first quarter $2.6 billion below projections.