State revenue dramatically drops; could higher taxes follow?

Published: May. 19, 2023 at 4:29 PM EDT
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ALBANY, New York (WWNY) - Things aren’t off to a great start for the state budget. In its first month, April, some revenues are drastically down. Now a government watchdog group warns the state may have painted “too rosy” of a picture.

New York state’s revenue is reliant on personal income tax, which in turn works into the budget.

Here’s the problem: tax receipts from this April, the first month of the new fiscal year, are more than $4 billion less than the State Budget Division estimated.

“That could be a hiccup, but it’s more likely an indicator that they have radically overestimated how much the state is going to have to be able to pay for this increased spending,” said Ken Girardin, fellow, Empire Center for Public Policy.

According to an article written by Girardin, budget officials expected personal income tax receipts to fall by 17 percent from April 2022 to April 2023. But they actually fell by about 49 percent. Less revenue equals a larger budget gap.

“Instead of seeing another big year like we saw in April 2022, we’re seeing a more modest return, closer to what we saw before the pandemic,” said Girardin.

To balance the gap, Girardin says eventually the state will have to make some tough choices.

“Either to reduce those spending increases, if not eliminate them altogether, or to raise taxes,” he said.

Assemblyman Scott Gray (R. - 116th District) says he’s not surprised about Girardin’s findings. He says there’s a faction of the Assembly that would have no issue raising taxes.

“They would not think twice about raising taxes on wealthy New Yorkers. They would not think twice about raising taxes on the average New Yorker,” said Gray.

Both Girardin and Gray say if taxes do get raised, especially for the rich, it’ll drive more people out of the state.

“The concern with doing that is you risk pushing more of those taxpayers, who are already living extremely mobile lifestyles, out of state,” said Girardin.

Before the spending plan was passed, budget officials indicated a $5.1 billion budget gap for fiscal year 2025.