Governor Kathy Hochul today announced that the first quarterly update of the Fiscal Year 2023 Budget Financial Plan has been made. released. The high deposits and reserve fund balances expected from October 2021 will continue even in the face of the changing economic outlook, an example of the Hochul Administration’s continued fiscal discipline.
“Like the rest of the country, New York State is facing major headwinds with a changing national economy, and our latest update to the Financial Plan in the approved budget reflects that.” Governor Hochul said. “While the Plan incorporates future budget gaps, our commitment to fiscal discipline and rainy day planning remains, and reserves and reserve fund balances will remain at the high levels we have anticipated.”
The update of the Plan reflects clear signs of economic difficulty in the national economy, which spills over into the state economy. Real gross domestic product (GDP) declined at an annual rate of 0.9 percent in the second quarter of calendar year 2022, which follows a 1.6 percent decline in the first quarter. Consumer prices through June 2022 rose 9.1 percent over 12 months, the biggest increase since the 12 months ending in November 1981. The performance of the financial sector, which is a major source of tax collection in New York State has continued to weaken in response to the unfavorable economic situation. data Through the end of July, all major stock indexes are down more than 10 percent, with the NASDAQ down more than 23 percent and the S&P 500 down 15.1 percent, since the start of the calendar year 2022.
Beginning in fiscal year 2024, annual personal income tax (IPT) estimates have been substantially reduced from the approved budget in recognition of the weaker economic outlook for both the United States and the state . The estimated payment component of the PIT, which includes capital gains activity, is reduced by $3.1 billion in FY2024, $5.1 billion in FY2025, $5.7 billion in FY2026 and $8.4 billion in fiscal year 2027. The reduction is partially offset by $1 billion. annual increase in the withholding component of the IRP, reflecting growth from a higher expected base in fiscal year 2023.
The updated Financial Plan reflects an additional General Fund surplus of $2.3 billion in FY 2023 and a gap of $310 million in FY 2024, after the projected use of the FY 2023 surplus ‘fiscal year 2024. $3.6 billion in fiscal year 2025, $3.5 billion in fiscal year 2026, and $6.2 billion in fiscal year 2027. The budget gaps are attributed almost exclusively to forecast reductions in tax receipts
The state has continued to strengthen reserve funds that serve as a bulwark against precipitous service cuts or tax increases during an economic downturn. At the end of fiscal year 2022, the main reserves of the State amounted to nearly 9 billion dollars. Over the next three years, the additional $10.4 billion in deposits will bring reserves to $19.4 billion, equal to 15 percent of State Operating Fund spending, the fiscal goal established by Governor Hochul in October of 2021. 6 billion dollars.
The plan update is available at website of the Budget Division.