An Alarming Report from State Comptroller Thomas DiNapoli

Wednesday, November 8th, 2017 at 6:58 pm by

Last week, State Comptroller Thomas DiNapoli released a report warning that state finances face “a triple threat of fiscal risks” from the combination of “projected budget gaps, weaker than expected personal income tax collections and cuts to federal programs.”

Yesterday, the Comptroller issued a new report amplifying that warning. The report projects that current year state revenues will fall $1.848 billion below the total projected by the Division of the Budget (DOB) in August. Revenues for 2018-19 are projected to fall $2.828 billion short of the August DOB projections. DOB is the office which leads the development of the Governor’s budget proposals and the implementation of enacted state budgets.

In August, DOB forecast a structural deficit of $4 billion for state fiscal year 2018-19. As I noted in an earlier blog post, a $4 billion deficit equates to about 4 percent of projected expenditures supported by state taxes, fees, the Lottery and other state sources. The Comptroller’s additional projected revenue shortfall for 2018-19 would raise next year’s structural deficit to $6.8 billion. Adding the current year shortfall would increase the gap for next year to $8.6 billion.

Again, for perspective, a year ago, the projected structural deficit for the year ahead was 2.7 percent and, upon becoming Governor in 2011, Andrew Cuomo inherited the task of closing a gap exceeding 10 percent of projected expenditures.

The Comptroller’s report notes that the revenue shortfalls could be due in part to taxpayers delaying in taking income in response to the possibility of federal tax cuts. It also warns of additional risks not addressed in its forecast, mostly due to possible federal actions, including continued inaction on reauthorizing two health care funding streams which expired in October – the Children’s Health Insurance Program and Disproportionate Share Hospital payments for care uncovered by private insurance.

The report from Comptroller DiNapoli is part of the state’s “quick start” budget process, requiring DOB, the Comptroller, and legislative fiscal committees to issue projections of revenues and major expenditures by November 5. So far, only the Comptroller has reported. Under the quick start law, by November 15, the Governor, Assembly and Senate are to jointly prepare and publish a report on projected revenues and expenditures for the prior, current, and ensuing fiscal year.

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