DiNapoli: N.Y. economic recovery on track due to $7.2B in unexpected tax revenue

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ALBANY — State Comptroller Thomas DiNapoli says better-than-expected tax receipts are a sign that New York is on the road to economic recovery from the COVID crisis.

DiNapoli’s monthly cash report, released on Friday, shows the state collected $7.2 billion more than expected in tax revenue through the end of September. The state’s fiscal watchdog encouraged officials to squirrel away the surplus for future emergencies.

“Strong tax collections halfway through the fiscal year are an encouraging sign of economic recovery,” DiNapoli said in a statement. “This provides an excellent opportunity to improve the state’s long-term fiscal standing by using surplus revenues to bolster rainy day fund reserves and fund critical infrastructure projects instead of issuing debt.”

Gov. Hochul announced last month that the state would be setting aside $1.1 billion in additional revenue and placing it in the state’s rainy day fund and another $650 million was designated to reduce borrowing for capital projects.

A combination of factors have led to the state’s positive fiscal situation, including federal COVID funds and tax increases for the wealthy passed as part of the state budget back in April, according to the report.

Spending through September totaled $91.8 billion, which was $4.7 billion, or 5.3%, higher than last year for the same period, primarily due to “higher pandemic-related costs including rental assistance and stabilization grants,” DiNapoli noted.

Still, spending was below projected levels thanks to federal funds that have flooded state coffers in the wake of the worst of the pandemic.

The state’s General Fund, which contains all income not earmarked for a specified program or activity, ended September with a balance of just under $20 billion, $4.5 billion higher than last year at the same time, in part due to higher than anticipated tax revenue and lower than anticipated spending.

Overall, tax collections were $1.8 billion higher than forecast by the state Division of the Budget in its first quarter update, released last month. Tax receipts through the end of September were $13.4 billion higher than they were through the same period last year when the COVID crisis shuttered businesses and the state’s economy ground to a halt.

Hochul announced last moth that the budget division also believes the state’s revenue is expected to be $2.1 billion higher in each of the next four years, reducing budget gaps for 2024-2025 fiscal year by nearly $2 billion.

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