By Jon Dougherty
New York’s Democratic leadership is reeling after discovering a budget shortfall of some $2.3 billion for the coming fiscal year, which will force the state to spend less than it had anticipated.
“That’s a $2.3 billion drop in revenues. That’s as serious as a heart attack. This is worse than we had anticipated,” said Gov. Andrew Cuomo (D) in the capital of Albany on Monday. “This reduction must be addressed in this year’s budget.”
Cuomo had planned to spend some $173 billion in the coming fiscal year, about $100 billion of that in federal funding. Now, however, those plans will have to change.
“This is the most serious revenue shock the state has faced in many years,” state Comptroller Tom DiNapoli confirmed to reporters.
The new fiscal year begins April 1.
Cuomo is blaming the POTUS Trump and GOP-enacted tax reform bill passed in December 2017 for the loss in revenue.
The governor’s preliminary analysis claimed that a large part of the budget shortfall is the result of falling revenues from New York’s highest income earners who are being most impacted by a loss of write-offs of state and local tax deductions which are known as SALT.
That loss of revenue is putting budget planners and the governor’s office in a financial bind because New York Democrats have enacted a highly ‘progressive’ tax system which hits wealthy earners at a far higher rate.
As is the case for federal income tax, just a small percentage of New York earners — 1 percent — provide some 46 percent of the state’s personal income tax collections.
Cuomo did admit, however, that Democrats can’t enact even higher taxes on the rich because that will likely only worsen the revenue situation. He cited “anecdotal” evidence that the state’s high earners are already fleeing for cheaper income tax jurisdictions.
“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.”
But that’s what New York Democrats have done for years — level high taxes on the wealthy. The state has one of the top 10 highest income tax rates (8.82 percent) and the fourth-highest property tax rate at 1.578 percent.
As for Cuomo’s ‘anecdotal’ evidence that wealthy New Yorkers are leaving his state, a report published Jan. 3 said they are “leaving in droves.”
Citing a new study, Patch.com reported:
Money talks — and walks. Rich people led an exodus from New York last year as the state lost more residents than it gained.
That’s according to the 42nd annual “National Movers Study,” conducted by United Van Lines and published Wednesday. The study tracked the moving company’s customers’ state-to-state migration patterns in 2018.
Some 61.5 percent of New York’s movers left the state last year — a rate that ranked fourth in the nation for outbound moves — while just 38.5 percent were coming in, the study shows.
More than 41 percent of those who left earn $150,000 or more, the largest proportion among the five income brackets in the study. By contrast, just 8.4 percent of now-former New Yorkers earned less than $50,000, the study found.
The same study found that more than 45 percent of people moving into New York also earned more than $150,000, but again, that number was far lower than outbound wealthy New Yorkers.
- Follow Jon Dougherty on Twitter at @JonDougherty10
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