The state’s fiscal year (SFY) 2019-20 Enacted Budget Financial Plan projects healthy growth in tax receipts and federal aid for the current fiscal year, but raises concerns about long-term balance, increasing debt and the impacts of federal policies, according to a report released today by State Comptroller Thomas P. DiNapoli. The $177 billion spending plan for SFY 2019-20 is up $6.2 billion from SFY 2018-19.

“While New York’s economy continues to expand, gains in jobs, personal income and wages are projected to slow,” DiNapoli said. “The Enacted Budget plan addresses risks such as downturns in tax receipts and federal aid, but other, more unpredictable impacts on state revenues may require more action. While rainy day funds were increased, building more robust reserves should be a top priority.”

DiNapoli’s report shows this year’s budget relies on more than $8.3 billion in temporary resources. The Enacted Budget Financial Plan anticipates holding spending billions of dollars below baseline growth levels in coming years, but it is unclear how necessary savings might be achieved.

PIT receipts, which account for 64 percent of all taxes anticipated to be received this year, are subject to volatility. During each of the past three fiscal years, PIT receipts have varied significantly from projections, due in part to taxpayer responses to federal tax changes. Such changes may continue to have unpredictable impacts on state revenues, according to DiNapoli’s report.

The Division of the Budget (DOB) projects tax receipts in the Enacted Budget Plan will grow by $5.7 billion, or 7.6 percent, this year. After disappointing collections in December and January led to multibillion-dollar reductions in this year’s Executive Budget tax projections, DOB added back nearly $500 million to its estimate of total tax receipts in the current fiscal year.

DOB added $250 million to rainy day reserves at the end of SFY 2018-19, the first deposit since 2015, and projects a $428 million deposit in SFY 2019-20, fiscal conditions permitting. Though this is a positive step, DiNapoli believes more robust reserves will help the state avoid spending reductions or tax increases when it inevitably faces the next economic downturn.

DiNapoli’s report also notes:

• Federal funding: Federal receipts are projected to increase nearly $3.5 billion, or 5.6 percent, in SFY 2019-20. Two-thirds of federally funded disbursements is for local assistance payments for Medicaid programs.
• Structural imbalance: DOB estimates that the state’s General Fund budget gap would total $3.9 billion in SFY 2020-21 and rise to $4.7 billion in SFY 2022-23 before actions to limit spending.
• Capital spending: The Capital Plan projects capital spending of $66.8 billion over the current and next four fiscal years, including increases in housing, transportation and education. The total represents an increase of $327.9 million from the previous Capital Plan.
• State-supported debt: State-supported debt outstanding is anticipated to increase by $13.6 billion, or 25.6 percent, over the five-year Capital Plan, with capacity under the state’s debt cap projected to decline to $107 million in SFY 2023-24.

For a copy of the report, go to: https://osc.state.ny.us/sites/default/files/reports/documents/pdf/2019-07/budget-enacted-financial-plan-2019-20.pdf

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