New York's Income-Tax Revenue Falls ‘Abruptly’ Under Forecast

(Bloomberg) -- New York state’s personal income-tax revenue through December was about $500 million below estimates in the current budget, a variance that appeared “abruptly" in the final weeks of December and has persisted this month, according to Governor Andrew Cuomo’s $175 billion proposed budget.

Financial market volatility in the second half of 2018, driven in part by rising interest rates, trade tensions and government instability in the U.S. and around the globe may have contributed to the weakness, according to his budget. Limits on the federal deduction of state and local taxes, which took effect last year, has made Dec. 31 a much less "meaningful collection point" for income taxes, the budget document states.

Officials had "anticipated year-over-year declines in both withholding and estimated payments, but not by the amounts observed in recent weeks," the budget states.

As a result, the Division of Budget had to reduce its forecast for tax receipts by about $400 million in the current fiscal and $1.6 billion in the fiscal year that begins April 1. The decline in tax receipts is “more than offset” by spending revisions, according to the budget document.

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