By Andrew Perry, Senior Policy AnalystSeptember 21, 2023 Key FindingsAll economies go through cyclical upswings and downturns.State treasuries should deposit money into reserve accounts during economic upswings, and spend their reserves during downturns, in order to stabilize public spending.Reserves can allow state expenditures to align with longer-run revenue trends, rather than overspending during growth periods and cutting spending during slowdowns.New York has a large population of high earners who receive substantial income in the form of bonuses, capital gains, and business [...]
By Andrew Perry, Senior Policy Analyst September 5, 2023 New York’s fiscal year 2024 Enacted Budget Financial Plan, released June 2023, projected budget shortfalls for fiscal years 2025 through 2027. While future budget gaps are a perennial feature of New York’s budget forecasts, the most recent projected gaps exceed those generally projected in times of greater economic stability, aligning instead with gaps projected during economic downturns. These projections must be interpreted, however, in light of an improving economic outlook as well [...]
Recent revisions to economic forecasts have significantly lowered expectations of a recession. This has positive implications for the State’s fiscal outlook, as improved economic performance should translate into higher tax receipts.
New outyear budget gaps in the fiscal year 2024 Enacted Budget Financial Plan reflect heightened pessimism about the state’s economic trajectory by the State’s Division of Budget (DOB). While all economic projections are highly uncertain, the State is well-equipped to weather economic turbulence if these projections do materialize.
The Fiscal Policy Institute today released a new report, "Low Expectations: Understanding the NYC Budget Gap." Through an analysis of the past ten years of New York City outyear budget gaps, the report illustrates how the City uses conservative budget forecasting to protect against economic downturns, and outlines why lawmakers should not misinterpret outyear budget gaps as large impending deficits.
As the legislature currently contemplates a Payroll Mobility Tax (PMT) increase from 0.34 percent to 0.5 percent to fund the MTA, the Fiscal Policy Institute today released a new report, Who Should Pay the Payroll Mobility Tax? The Case Against Excluding Suburban Counties.
New York State has been reported to be one of the states most at risk of incurring a shortage of healthcare workers over the next decade. With a quickly growing population of adults over the age of 65 (“older adults”) and a movement towards “aging in place,” the demand for home care workers will rise dramatically over the next decade.
The fiscal year 2024 Executive Budget limits spending growth to 2.0 percent, with new spending concentrated in Medicaid and School Aid. In contrast, the Assembly proposes budget growth of 5.9 percent, reflecting additional investments in the MTA, SUNY and CUNY, and assistance for low-income renters, paid for through increased taxes on multimillionaires and corporations.
The Governor’s executive budget for fiscal year 2024 aims to increase funding for New York State’s public university system, in part through sharp tuition increases. For the State University of New York’s (SUNY) four university centers, the tuition increases could result in a 51 percent tuition increase over five years. Tuition hikes of this size would represent a generational shift in New York State’s higher education landscape, moving its public universities from among the most accessible in the U.S. to among the most expensive. In doing so, these hikes could jeopardize the universities’ role as engines of upward economic mobility.
Tackling New York State’s housing crisis is a central priority of the fiscal year 2024 executive budget. The budget proposes a suite of policy responses designed to create 800,000 new housing units, especially in the New York metropolitan area. Many of these measures, including required changes to local land use policy, are appropriately ambitious, given the urgency of the state’s housing shortfall.
The typical family that moves out of New York State saves 15 times more from lower housing costs than they do from lower taxes. Of the top twenty largest county-to-county moves out of New York State, annual mortgage costs are on average $18,300, or 34 percent, lower outside New York.
If New York cuts its corporate tax rate this year, returning the rate to 6.5 percent, the impact on state revenue will be significant: The state will lose $1.2 billion in fiscal year 2025. Revenue losses will begin in the last quarter of fiscal year 2024, costing the state nearly $300 million for that quarter.
The New York State Comptroller this week released its November 2022 cash basis report, which documents recent trends in state spending and revenue.
In its Mid-Year Financial Plan Update, the New York State Division of the Budget (DOB) reported that tax revenues continue to exceed previous projections. Personal Income Tax (PIT) receipts continue to outperform expectations — bringing in $48.95 billion — nearly $2 billion more than projected in the enacted budget financial plan and $500 million more than projected in the first quarterly update to the financial plan. Through the first half of the fiscal year, PIT receipts exceeded enacted and first quarter projections by 17 percent and 8 percent, respectively.
Nathan Gusdorf, Executive Director of the Fiscal Policy Institute, today released the following statement: “Recent data released by the Bureau of Labor Statistics today reveal New York State added 456,000 jobs from June 2021 to June 2022, which represents a 5.1% annual increase — making New York the fifth fastest growing job market in the United States."