N.Y. Tax Revenue Plummeted 68% in April, State Comptroller Says
(Bloomberg) -- New York state’s tax revenue plummeted 68.4% in April, as the coronavirus lockdowns and the extension of tax return filings to July 15 took a toll on state coffers.
The Empire State collected $3.7 billion, or $7.9 billion less than the previous April. Personal income-tax revenue fell more than $7 billion from last April, a drop that was primarily due to the delayed tax filing deadline.
“New York is facing economic devastation not seen since the Great Depression,” New York Comptroller Thomas DiNapoli said in a news release. “New York and other hard-hit states need the federal government to step up and provide assistance, or the state will have to take draconian actions to balance its budget.”
Government-ordered lockdowns to prevent the spread of the virus have cratered the U.S. economy, decimating state tax revenue. April sales and income tax receipts in 24 states declined sharply, Fitch Ratings said in a report this week. New Jersey reported a 60% drop in April revenue on May 13.
The evaporation of revenue, combined with increased spending for health care and unemployment benefits, is upending state budgets. California Governor Gavin Newsom on Thursday proposed slashing spending about 9%, cutting state workers’ pay by 10% and tapping reserves to balance a budget in the fiscal year beginning July 1.
Lawmakers gave Governor Andrew Cuomo sweeping powers to close an estimated budget gap of $13.3 billion. Local governments could face as much as $8.2 billion in cuts, according to the state’s financial plan. To address cash shortfalls in May and June, the budget authorized as much as $8 billion in short-term borrowing. The state ended April with a $10.1 billion balance in its general fund.
New York’s budget gap could narrow when it gets more guidance from the federal government on how it can spend the $5.1 billion allocated to the state under the CARES Act. The current budget only allocates $133 million of that money to pay interest on planned cash flow borrowing.
The U.S. Treasury released updated information on May 4 regarding use of the relief money that may allow the state to use most of its $5.1 billion allotment, although specific estimates aren’t possible because the Treasury guidance was limited, DiNapoli said in a report Thursday on the state’s financial plan.
“The last go-around from Treasury indicated more flexibility,” on eligible spending, DiNapoli said in a phone interview Thursday. “It’s fair to say there will be significantly more than 133 million.”
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