It would be nice to say that another year has ended on an upbeat note and we look forward to a prosperous new year.
But in New York state we can”™t say that.
We haven”™t been able to say that for a number of years.
The mess of 2010 continues into this year.
The state still sails on toward the precipice of insolvency.
Tax collections for the remaining four months of the state”™s fiscal year will have to grow ”“ and not just by a little bit ”“ but a lot.
That was the bad news that came out of the state comptroller”™s office just before Christmas. It didn”™t get much press or TV time.
Retail sales were the story du jour … every day and every hour leading up to and after Christmas. Judging by the headlines and TV reporters stationed in the malls, you would have thought the retail industry was going to end the Great Recession all by itself.
“Resilient shoppers ring in cheer for retailers.”
“Online holiday shopping jumps 15 percent.”
We didn”™t see “Happy days are here again” though.
In New York state, however, it”™s going to take a lot of sales tax to have a positive impact.
While state sales tax collections grew 7 percent for the first eight months of the fiscal year, they have to go up 11 percent over the next four months ”“ and that includes the just concluded month of December ”“ to meet year-end projections. That was the pronouncement of Comptroller Thomas DiNapoli in his November Cash Report.
“All governmental funds tax collections over the first eight months of the fiscal year have increased 4.2 percent over last year, but the pace of growth will need to double in the last four months to meet year-end projections. That”™s a tall order in this economy. There are already indications that certain revenues will not materialize,” Di Napoli said.
Here”™s all the bad news in short:
Ӣ To reach year-end projections General Fund tax collections will have to grow nearly 11 percent for the remaining four months of the fiscal year.
Ӣ Consumption and use tax collections will have to increase 10.5 percent throughout the rest of the fiscal year to meet year-end projections.
Ӣ All governmental funds tax collections will have to grow 9.9 percent for the rest of the year. Governmental funds include general, special revenue, debt service and capital projects funds.
And last, but not least, general fund business tax collections through Nov. 30 of $2.3 billion were $369.6 million, or 14.1 percent, below collections for the same period in fiscal year 2009-10.
So how far in the hole are we in that department?
Well, to meet year-end projections, business tax collections need to grow 28.5 percent.
That indeed is one tall order, especially when you consider that the state ranks dead last in the Tax Foundation”™s State Business Tax Climate Index.
States are ranked by assessing five areas of taxation that impact business: corporate taxes; individual income taxes; sales taxes; unemployment insurance taxes and taxes on property, including residential and commercial property.
New York”™s local tax burden is the second-highest in the nation. According to The Tax Foundation, the state has had the dubious first- or second-place ranking every year since 1977.
How do you clear out this anti-business climate? A property tax cap is needed, but cannot be implemented before unfunded state mandates are lifted for municipalities.
Our new governor needs to abide by his campaign promises and fix not just Albany, but the entire state.
Avoid the Greek chorus murmuring circuit-breaker in your ear, dear governor. Listen to the business community seeking a bit of relief.
