E.J. Mc Mahon, founder and research director for the Empire Center describes Gov. Cuomo’s budget as “largely a stay-the-course affair—for better and worse.”
The official financial plan numbers call for a fiscal year 2020 State Operating Fund budget of slightly more than $102 billion—within the governor’s self-imposed 2 percent spending cap over the current year’s projected $100 billion.
Adjusting for various planned and proposed accounting changes, the apples-to-apples spending increase appears at first glance to be more like 3 percent (see explanation below). However, even with adjustments, it is more restrained than some members of the new Democratic legislative majorities would prefer.
The budget includes a striking new fiscal yellow flag: a sharp decline in personal income tax receipts, now expected to fall $500 million below mid-year projections. The budget narrative says the drop-off “appeared abruptly” at the end of December and has continued through early January, “a period that is typically marked by a relatively heavy flow of PIT receipts compared to the rest of the fiscal year.”
So what’s going on? The governor’s financial plan narrative cited “increasing [financial market] volatility in the second half of 2018 [during which major stock indexes dropped 10 percent], driven in part by rising interest rates, trade tensions, and instability in government institutions at home and abroad.” It also pointed to “behavioral changes by individual taxpayers and firms” in response to the new federal tax law and its cap on state and local tax (SALT) deductions.
Read more in the article by EJ McMahon, from The NY Torch, a public policy blog, (to read full article click here) McMahon was the keynote speaker at The Council of Industry’s Annual Luncheon and touched on some of the points discussed here in his address to our members.