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State Comptroller Thomas DiNapoli has offered a mixed economic forecast for New York in his annual report, predicting lower tax collections than last year, a slowing economy in 2024, and a widening budget gap for the state in the years to come.
One positive note is that the tax collections throughout the state totaled $74 billion last year, which was $3.6 billion higher than the state’s projections through Dec. 31. However, personal income tax collections for 2023 fell by $5.8 billion compared to 2022, which the comptroller’s office blames on volatile financial markets.
Consumption and use taxes were up by $1.1 billion — from $15.5 billion to $16.6 billion — from the year prior because the state restored gas taxes in 2023 following a six-month gas tax holiday in the second half of 2022, according to the comptroller’s report.
Across the board, state spending is expected to total $236 billion for fiscal year 2024, an increase of $11 billion, or 5 percent, from fiscal year 2023, largely because of Medicaid and school spending.
Despite an expected budget surplus of $2.2 billion for this year, much of that will go toward repaying distressed health care providers and paying state pension costs and expenses for asylum seekers. The state Division of Budget and the state comptroller predict worsening budget gaps for New York over the coming years.
“New York state has taken positive steps to stabilize its finances with higher reserves and lower projected budget gaps,” DiNapoli said in a statement. “Still, the executive and the legislature face the difficult challenge of ensuring adequate funding for our schools, health care programs, and other critical needs while improving the state’s affordability.”
The report projects that tax receipts will grow by about 4 percent over the next four years, while spending is expected to grow nearly 18 percent, creating a budget gap of roughly $20 billion.
The state budget department also predicts that the national economy will “slow considerably” in the first half of 2024 compared to the same time last year, growing by less than 1 percent. It expects stronger growth in the latter half of 2024, but at rates below 2023 levels.
New York’s unemployment rate has exceeded the national average throughout the pandemic, hitting 4.5 percent in December 2023, compared to 3.7 percent nationally. The comptroller and budget department believe that will remain the case, with New York’s unemployment hovering around 4.6 percent for the next year or so.
Rebecca Baird-Remba can be reached at rbairdremba@commercialobserver.com.
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