by Joseph Coletti
Senior Fellow, Fiscal Studies, John Locke Foundation
New York has received the “greatest revenue shock in recent years,” Gov. Andrew Cuomo announced earlier this week. Cuomo said income taxes will be $2.3 billion lower than expected when he introduced a $178 billion budget last month. “That’s as serious as a heart attack. This is worse than we had anticipated.”
Federal funds provide $100 billion of that total, which adds a touch of irony to Cuomo’s complaint that federal tax reform helped cause the shortfall.
“This is the most serious revenue shock New York has faced in many years,” state Comptroller Tom DiNapoli added. “And that $2.3 billion figure will frankly get worse before it gets better.”
“I don’t believe raising taxes on the rich. That would be the worst thing to do. You would just expand the shortfall,” Cuomo acknowledged. “God forbid if the rich leave.”
Dave Friedfel, director of state studies at the Citizens Budget Commission, provides another lesson for North Carolina lawmakers: keep reserves healthy and spending low. The Albany Times Union quoted him
While true that the governor has increased reserves since taking office, the projected balance of $2.3 billion is not enough to weather the extreme volatility caused by our dependence on high-income New Yorkers with extremely volatile incomes. Even a mild recession would be expected to create a $20 billion deficit over four years – and that’s if spending remains flat.