State Controller Thomas DiNapoli issued a mixed economic forecast for New York in its report Annual reportpredicts lower tax revenues than last year, a slowing economy in 2024 and a growing budget gap for the state in the coming years.
On the positive side, statewide tax revenues totaled $74 billion last year, which was $3.6 billion above the state's projections through Dec. 31. However, personal income tax revenue for 2023 fell $5.8 billion compared to 2022, as indicated by the comptroller's office. The office blames volatile financial markets.
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According to the comptroller's report, excise and use taxes increased by $1.1 billion from a year ago – from $15.5 billion to $16.6 billion – as the state moved in after a six-month gas tax holiday the second half of 2022 reintroduced gas taxes in 2023.
Overall, state spending for fiscal year 2024 is expected to total $236 billion, an increase of $11 billion, or 5 percent, over fiscal year 2023, driven primarily by Medicaid and school spending.
Despite an expected budget surplus of $2.2 billion this year, much of it will be used to repay struggling health care providers, as well as to pay state pension costs and expenses for asylum seekers. The State Household division and the state auditor predict that New York's budget gaps will worsen in the coming years.
“New York State has taken positive steps to stabilize its finances with increased reserves and smaller projected budget shortfalls,” DiNapoli said in a statement. “Yet the executive and legislative branches face the difficult challenge of ensuring adequate funding for our schools, health programs and other critical needs while improving the state’s affordability.”
The report predicts tax revenue will rise about 4 percent over the next four years, while spending is expected to rise nearly 18 percent, resulting in a budget gap of about $20 billion.
The state budget ministry also predicts that the national economy will “slow significantly” in the first half of 2024 compared to the same period last year, growing by less than 1 percent. Stronger growth is expected for the second half of 2024, although at rates below 2023 levels.
New York's unemployment rate has been above the national average throughout the pandemic, reaching 4.5 percent in December 2023, compared to 3.7 percent nationally. The Comptroller and Budget Department expects that to remain the case, as unemployment in New York will be about 4.6 percent next year.
Rebecca Baird-Remba can be reached at [email protected].
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