My last two columns were devoted to scrutinizing the state’s unsustainable and irresponsible $237 billion tax-and-spend budget that projects a structural deficit of at least $16 billion.
On May 17, state Comptroller Tom DiNapoli released his analysis of New York’s Fiscal Year 2024-2025, which not only confirms some of my observations but raises additional concerns.
“At the state level,” DiNapoli explained, “certain revenue streams that have been critical to maintaining budget balance are either scheduled to expire or to be depleted in the years ahead, including temporary higher Personal Income Tax, Corporate Franchise Tax rates, and one-time COVID-19 financial assistance from the federal government.”
When these revenue streams dry up, the comptroller concluded, “Current spending levels will be difficult to sustain.”
No surprises there. However, it’s a sure bet leftists in Albany will extend the PIT and franchise taxes—they rarely let temporary taxes expire. But dried-up COVID money hurts. It will only pump up the structural deficit.
The next red flag: “All Funds” revenues are projected to decline by $7.3 billion. “This decrease is primarily attributable to projected reductions in investment and gaming receipts. In addition, receipts from the American Rescue Plan are expected to be depleted.
Growth in PIT, which is three-quarters of total tax revenue, is projected to grow a mere 1%.
DiNapoli goes on to warn that the state’s financial plan is too reliant on a “volatile PIT that depends on a small number of filers.”
Sound familiar? I have been preaching that for years in On the Right columns.
For taxpayer year 2021, DiNapoli noted, “Those with incomes over $1,000,000 comprised 1.6% of the PIT filers but paid 44.5% of the total PIT liability.”
And since 2021, a significant number of that 1.6% of PIT filers have moved to—a drum roll please—Florida. (A newly released Census Bureau report indicated that between 2020 and 2023, the Empire State lost 561,164 residents.)
As for “rainy day” reserve funds: “Despite greater revenues than originally anticipated by the Department of Budget, no additional deposits were made to the statutory reserves in 2023-2024,” the comptroller said. Instead, so-called “reserve” funds are being deposited in informal reserves, such as the “Economic Uncertainties Fund” that can be used by the executive for any appropriated purpose, without requirements for replenishment.”
In other words, the “Economic Uncertainties Fund” is the governor’s personal slush fund to spend at any time on favored projects.
To give the appearance of “containing costs” in Medicaid, the state is utilizing fiscal sleight of hand tactics that go back to the days when Nelson Rockefeller was governor. The state deferred Medicaid payments “across state fiscal years, pushing $1.4 billion that was due to be paid in March 2024 to April 2024,” according to the analysis.
The comptroller also pointed out that the governor’s budget continues to utilize “back door” borrowing to fund capital spending.
To avoid voter rejection of new borrowing on Election Day, billions of new debt will be issued by public authorities, “further adding to the state’s already high debt burden and utilizing limited remaining capacity under the state’s debt cap,” Di Napoli said.
Then there is the lack of transparency and oversight: “In the enacted budget, at least $367.6 million is exempt from the Office of Comptroller’s oversight and normal competitive procurement requirements. An additional $1.5 billion is exempt from normal competitive procurement requirements; and another $1.9 billion may allow funds to be distributed at the discretion of the Executive/DOB without following the normal competitive requirements,” the report said.
Apparently, the governor does not want the state comptroller’s independent pre-review of contracts, which “serves as an important deterrent to waste, fraud and abuse,” to reward cronies and contributors.
There’s more: “The budget continues to include problematic provisions with respect to accounting standards that have the potential to distort the appearance of reported receipts, disbursements, and liabilities, and obscure the picture of true spending growth,” according to the report.
Once again, the governor and her pals in the state Legislature are abusing power and are overspending. And the only people that will be punished for their shenanigans will be the taxpayers.
Hey George, That is one of the most spot-on detailed pieces that you penned. I have been saying that we are losing our most important population, the Millennials, GenZs, and Gen Xs to other lower-cost states, especially where jobs are plentiful and state taxes are “0”. In 1987,Tom, who was running as an Assembly person, walked up my driveway in Great Neck and thought I should run for the Town Supervisor. I did against John Kienan, Ben Zwirn, and the right-to-lifer and even was on New 12 with Melba Toliver (originally from ABC News). I also spoke in front of a, I believe a Methodist Congregation in Manhasset and warned about the brain drain that had been occurring, and that was 37 years ago! I had a landscape Design and Licensed tree shrub and lawn application company as well as a carpet cleaning division. My wife thought I was nuts. I didn’t expect to win but got my feet wet. I forgot how many votes I received but I am quite sure many of my clients voted for me.
We are in a losing position, as the big earners are leaving in droves. Luckily my kids and grandchildren are still around and I am fortunate that I am still running my Real Estate company and can afford to be here.
If you want to read a great book(s), by Ray Dalio “Principles” and “The New World Order” it provides some insight as to where our country is headed. More importantly, guess what the average existence of a Great Society, which is us or a Great Empire, like England is? Call me and I will tell you (516) 647-4289.
“We are in a losing position, as the big earners are leaving in droves. Luckily my kids and grandchildren are still around and I am fortunate that I am still running my Real Estate company and can afford to be here.”
The utter blindness in the article and this response speaks volumes of the Nassau County mindset (and where people’s bread is buttered.)
State taxation is not your problem. This patronage ridden sewer of a County is. State income taxes are quite tolerable, if you just stop looking at marginal rates and look the “gotchas” other states charge, like annual sales taxes on a car you already own. Small wonder people are out-migrating from Texas after seeing their property taxes and third world electrical grid, and getting a sampling of Florida’s Rube Goldberg insurance system.
Ever notice Mr. Marlin never goes after the County? Nothing to say about the dozens of water districts, the needless multiplicity of school districts, and the grotesque remuneration of law enforcement?
THAT’S where your money goes, Phil. IN the meantime you live in a state that isn’t run by Nazis. Yet.
You won’t get a better deal. Your property taxes are far more onerous than your state taxes, and the state only charges you a 4% sales tax. Your wonderful county tacks on another 4.25%. Where’s the outrage?
And the praise of DiNapoli? Here is a man who had no experience to run the second largest pension fund in America, was appointed by a convicted crook named Sheldon Silver, (of course, NO ONE in Albany KNEW he was a crook, right?) and was deemed unqualified for the job. His specialty in the Assembly was brownfield legislation. And Mr. Marlin can’t stop heaping praise on him, even as good Ol’ Tom is conspicuously silent as the MTA is systematically looted.
DiNapoli’s career is the arc of all politicians. Once a supporter of SANE-FREEZE, an anti-nuke organization that wanted unilateral disarmament during the Cold War, and as leftist as they came, once in power, he immediately sank in to the numbing conformity and anodyne patter of the career politician.
As Woody Allen said in “Sleeper,” “Look, don’t you understand? In six months, we’ll be stealing Erno’s nose. Political solutions don’t work. I told you that. It doesn’t matter who’s up there. They’re all terrible.”
DiNapoli was ahead of schedule. The fact that he sits in Arthur Levitt’s chair is an insult to every taxpaying New Yorker, but you go ahead and play along.
In the meantime, the suffering wealthy you have such concern for don’t even pay the State.
https://www.crainsnewyork.com/economy/how-avoid-state-taxes-new-yorks-rich-use-private-jets
The comedy never ends here. You two pixies keep scribbling. Watching this dystopian trainwreck and the pathologies of its inhabitants is too enjoyable.
Hey Donald, everyone is entitled to their opinion. We can agree to disagree. But criticizing is the easiest path that most take. So what are your solutions to our major issues of people leaving? How do you balance the necessary taxes that are needed to provide the services that we already have? I agree, that there are other taxes that the “supposed” more economical states have, but why do you think people are moving there? Are they that ignorant of the extra costs? Housing is much less money and so are the taxes. Do you believe Tom Dinapoli is doing a poor job? What do you believe he should be doing in addition to what he is already doing, auditing school, water and fire districts, etc.?
“So what are your solutions to our major issues of people leaving?”
Gee, Phil, could it be that people like Mr. Marlin have left them with no housing alternatives besides living with their parents or the street? They’ve been FORCED out, and this is the world you made for them.
“How do you balance the necessary taxes that are needed to provide the services that we already have?”
“Necessary taxes?” Better not let George Marlin hear you say that.
I guess it’s news to someone whose lived here for 50 years that half the police force earns over $200k a year, with severance packages that rival a CEO’s. Or that you pay gym teachers 80% of the remuneration level of a Harvard professor. And you fund 10% of the pensions of teaching staff and overcompensated School Superintendents. And you have over 130 School Districts. Or the school boards who don’t understand the concept of “compounding.”
I can’t believe you’re this uninformed about the mechanics of governance here, but this has seemed to be your M.O. for some time. Nothing here is normal, and the competency of governance is extremely low and very corrupt. Some of the evidence for this is presented in this very newspaper, and you seem to have missed it.
Ignorance is truly bliss.