Cuomo announces income tax revenues have dropped by $2.3B
Gov. Andrew Cuomo announced Monday that state income tax revenues plummeted by $2.3 billion since he introduced his new budget plan last month— a bombshell that will force him to curb spending.
Cuomo attributed the revenue drop in December and January largely to the new federal tax code, as well as volatility in the stock market and other uncertainties.
“That’s a $2.3 billion drop in revenues. That’s as serious as a heart attack. This is worse than we had anticipated,” the governor said in Albany.
“This reduction must be addressed in this year’s budget.”
In a rare joint appearance with Cuomo, state Comptroller Tom DiNapoli confirmed the deteriorating finances.
“This is the most serious revenue shock the state has faced in many years,” he said.
He urged Cuomo and the Legislature to sock more money away in the state’s rainy day fund to prepare for the worst.
Cuomo had planned to spend $176 billion — including about $100 billion in federal funds — in the new fiscal year that starts on April 1.
Cuomo’s preliminary analysis claims much of the impact is coming from a drop in revenues from the state’s highest income earners most impacted by the loss of write-offs of state and local tax deductions, known as SALT.
The federal law approved by President Trump and the then-GOP controlled Congress limited SALT deductions to $10,000.
The loss of revenue from New York’s wealthiest puts New York in a bind because the state relies on a progressive income tax system that taxes the rich at a higher rate.
One percent of the state’s top income earners provide 46 percent of the state’s personal income tax revenues, officials said.
Cuomo said Albany can’t go to the well and tax the wealthy again because that would only worsen the situation, citing “anecdotal” evidence that high-income New Yorkers are already fleeing the state to lower-tax jurisdictions.
He offered no figures to back up the claim.
“I don’t believe raising taxes on the rich. That would be the worst thing to do. You would just expand the shortfall,” he said. “God forbid if the rich leave.”
Aside from spending, Cuomo’s slide presentation also mentioned the state is phasing in tax cuts for middle-income New Yorkers — raising questions whether the state would have to postpone the reductions.
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