ALBANY — Statewide sales tax revenue for the six-month period ending Sept. 30 plunged 17.2% when compared to the same period a year ago, the latest state data shows.
Meanwhile, overall tax receipts for the first half of the state fiscal year are running $2.8 billion behind where they stood a year earlier, state Comptroller Thomas DiNapoli said.
“The pandemic has created a profound degree of uncertainty,” DiNapoli said in releasing a report on the state’s fiscal health. “But one thing is clear: Washington must get its act together and help states and local governments weather this economic storm.
The latest fiscal snapshot comes less than a month before representatives of Gov. Andrew Cuomo, legislative leaders and the comptroller are required by state law to begin the process of assembling a proposed state budget.
The state is facing a crisis not only because of the shortfall in revenue triggered by the pandemic but also because it remains uncertain whether the federal government will help states and local governments patch budget holes with a second round of stimulus funding.
Cuomo has said he will make no decisions on how to deal with the state’s deficit until after the Nov. 3 election, signaling he is hoping New York gets a federal bailout for the health crisis he contends was mismanaged by President Donald Trump’s administration.
The uncertainty over the potential for further cuts in state spending has left school districts and local and county governments anxious.
In addition to coping with a slide in revenue, New York’s county governments are also experiencing a crunch from the state’s decision to withhold 20% of the state reimbursements they are due for administering state programs.
“Now is not the time to pull back funds to the public health and human services for those who need them most,” said Stephen Acquario, director of the New York State Association of Counties.
One dose of positive news in the state’s latest cash report was it showed revenues rebounding last month.
“If revenues remain this far above projections, they will help erase at least some of the current state budget gap—which, allowing for other actions, appears to be in the neighborhood of $8 billion,” said E.J. McMahon, senior fellow at the Empire Center for Policy, an Albany think tank.
But if broad-based business restrictions are again imposed from a feared rebound of COVID-19 transmission, “the tax numbers could still easily fall below even the reduced projections for the year,” McMahon added.
The decline in sales tax revenue in the first half of the fiscal year is even greater than what the state experienced during the Great Recession from 2008 to 2009, he noted.
School districts run on a fiscal year beginning July 1, meaning, at this point, they have already entered the second quarter of the calendar. As a result, reductions in state aid in the coming months will knock their financial planning off-kilter and result in deeper cuts than what would have been necessary if the state had made its decisions on funding earlier, said David Little, director of the Rural Schools Association of New York State.
“If you have to make cuts now it is beyond disruptive,” Little said. “Your most impoverished districts that don’t have the reserves are least able to deal with it in the present, let alone in the future.”
Local governments would benefit if the state would at least clarify the potential steps it is considering to deal with the budget hole, said David Friedfel, director of state studies for the Citizens Budget Commission, a watchdog group.
“The feds should provide additional aid to the states give the size and scope of the calamity,” he said. “But in the meantime the state should outline a plan for what they will do if there is no additional federal aid so the school districts, the municipalities and the state employees will know what is possible.”
Even if another stimulus package is approved in Washington, Friedfel added, “It is very unlikely the quantity and duration will completely alleviate the state’s gaps over the next four years.”
Cuomo, in a conference call with reporters, said he expects New York will experience “flare-ups” of infections within neighborhoods, noting the state is poised to respond rapidly to “micro clusters” of the contagion.
And targeting the “micro-clusters” will be the strategy going forward as people head indoors for the colder months, he said.
“The flare-ups will be different across the state,” Cuomo predicted. “They’ll come and they’ll go. Flare-up — suffocate it. Another flare-up somewhere else. That’s what we expect for the fall.”
Joe Mahoney covers the New York Statehouse for CNHI’s newspapers and websites. Reach him at email@example.com