New York State Tax Collections $529 Million Less Than Foreseen in August
New York collected $529 million less in taxes during the past six months than the state budget office projected in August, according to a monthly report from Comptroller Thomas DiNapoli.
New York’s tax revenue grew 5 percent from a year earlier, mostly from personal-income taxes, though the increase wasn’t as great as forecast, the report said. To meet the targets set in the budget approved in August, tax collections in all accounts must grow 9 percent for the remainder of the year, according to the report.
“The economy is getting better, but the state’s fiscal condition isn’t,” DiNapoli said in a statement. “It is troubling that the updated financial plan was constructed only six weeks ago and tax revenues are already off target.”
New York faces an $8.2 billion deficit in the year beginning April 1, DiNapoli said last month. Lawmakers agreed in August on a $133.8 billion budget to close a $9.2 billion deficit for the year that ends March 31.
“This report is a signal that the budget gap is not going to get any smaller,” said E.J. McMahon, executive director of the Empire Center for New York State Policy, an Albany-based group that advocates less government spending.
Most of the weakness in tax revenue was in September, DiNapoli said. After five months of the fiscal year, tax collections were only $78 million below plan, according to his August report.
Crucial Surge
To reach its revenue targets, the state is counting on a surge in receipts from capital gains levies as taxpayers lock in profit before year-end and avoid a scheduled increase in the federal rate to 20 percent on Jan. 1, from 15 percent now, DiNapoli said.
After lawmakers from both major parties objected to plans to let the tax rate rise under law, Congress delayed action until after the November elections.
“The federal rate is probably not going up and the state’s revenues could be hundreds of millions lower as a result,” McMahon said.
New York expected a 12 percent, or $896 million, increase in estimated-tax payments in 2010, much of it from a 59 percent jump in receipts from capital gains levies because of the anticipated higher federal rate next year, according to the Economic and Revenue Outlook published by the Budget Division.
To contact the reporter on this story: Michael Quint in Albany, New York, at mquint@bloomberg.net.
To contact the editor responsible for this story: Mark Tannenbaum at mtannen@bloomberg.net
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