A better-than-projected economic recovery and a massive influx of federal aid have stuffed New York state’s once-bare coffers, a reversal of fortune that is leading some fiscal watchdogs to again question the state’s decision earlier this year to increase income taxes on high earners.
Gov. Andrew Cuomo and Democrats who control the state Assembly and Senate approved a $212 billion budget in April that included $4.3 billion of new, annualized revenue from increases in the personal income and corporate franchise taxes. The state also received $30 billion from the federal American Rescue Plan Act approved in March, including $12.7 billion of general aid that lawmakers plan to use over the next four fiscal years.
In late May, Mr. Cuomo’s budget office released a financial plan that increased the state’s income-tax projections by $4.1 billion from initial estimates in January—a revision that excluded the effect of the new, higher tax rates and reflected a better economic forecast.
And last week, Comptroller Tom DiNapoli issued a monthly cash report which found the state’s actual receipts were around $4 billion ahead of those rosier projections as a result of robust sales and income-tax collections.
“It’s just incredible,” said E.J. McMahon, research director for the Empire Center, a fiscally conservative think tank. “I picture the governor’s budget office as being like a drug dealer’s kitchen, with bricks of $100 bills hidden in the microwave, under the sink, in the back of the freezer.”