New York’s fiscal landscape has been hit with a substantial decrease in tax revenue, posing potential challenges for the state’s 2024 budget negotiations.
As reported by State Comptroller Tom DiNapoli’s office on Monday, the state’s tax revenue for the first quarter of the fiscal year dropped by nearly $7 billion, despite bringing in $450.8 million more than the governor’s Division of Budget had initially projected.
The state’s revenue intake for the first fiscal quarter, which begins on April 1, was $27.6 billion, marking a $6.8 billion reduction compared to the same period last year. Despite the slowing of inflation and an improvement in unemployment rates following the COVID-19 pandemic, the growth of tax revenue remains a question. “State revenue collections performed better than the Division of the Budget’s current estimates for the first quarter, but the economy is sending mixed signals that cloud the state’s fiscal outlook,” DiNapoli stated, highlighting a recent slowdown in consumer spending and signs of weakening tax collections.
Personal income tax, the primary revenue source for New York, fell to $14.5 billion in the first three months of the fiscal year, representing a $7.1 billion drop. The comptroller’s office attributes this partly to slowing income growth and market volatility on Wall Street. Meanwhile, state spending reached $58.6 billion, marking a $9 billion increase due primarily to rising Medicaid costs. As spending continues to rise and tax revenue is expected to soften further, New York is projected to face multi-billion dollar budget gaps in the coming years. However, state officials have accumulated more than $19 billion in a rainy day fund to bridge these gaps.
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