At this time last year, New York State estimated that tax receipts would fall short of pre-pandemic estimates by $15 billion annually on average, totaling $60 billion over four years. Receipts, however, have been much stronger than expected. By April 2021, the State reduced its four-year tax receipt shortfall estimate by 80 percent, to $11.8 billion. Over the four-year period, the State also will receive at least $21.1 billion of targeted and general federal fiscal relief and $12.1 billion from tax increases, leaving it $21.4 billion ahead of the pre-pandemic four-year receipt estimate.  

The State’s fiscal picture continues to brighten; receipts through the first four months of the year exceed projections by $5.3 billion. Normally, this would be presented in the State’s first quarter update, which by law should have been released by July 30th. However, at the time of this writing the State has not yet released the update to its financial plan.  

The presentation provides an overview of the State’s fiscal condition over the past 18 months, and identify priority issues going forward. The key points are: 

• Through April, the State had reduced its original four-year projected pandemic-driven tax receipt shortfall from $60 billion to $12 billion, an 80 percent reduction. (Slide 3.)  

• Federal aid from the American Rescue Plan and other sources totals more than $21 billion which, when combined with the updated tax receipts, more than offsets the tax receipts shortfall and provides $9 billion more than projected pre-pandemic. (Slide 3.) 

• Despite higher tax receipts and federal aid, the State budget raised taxes - principally personal income and business taxes - roughly $4 billion annually in the fiscal year 2022 enacted budget. (Slides 3 and 5.) 

• The State used the additional funds to support recovery programs (disbursing $3.2 billion in State funds in fiscal year 2022) in the short-term, and significantly increase school aid into the out-years. (Slide 6.) 

• Over two years (from fiscal year 2020 to fiscal year 2022) the All Funds budget grows $36 billion, or $26 billion without the COVID response aid. (Slide 7.) 

• The additional receipts are sufficient to support the additional spending in the near and mid-term--balancing the budget in fiscal years 2022 and 2023--and reduce previously projected gaps of roughly $10.0 billion annually to $1.4 billion and $2.0 billion in fiscal years 2024 and 2025, respectively. Cumulative four-year gaps were reduced from $38.7 billion to $3.4 billion. (Slide 4.) 

• The State uses federal aid partly to support recurring programs, creating a potential fiscal cliff of roughly $3.5 billion after federal aid is exhausted after fiscal year 2025. (Slide 8.) 

• As continued fiscal and economic recovery unfolds, it is important to pay particular attention to actual tax receipts (which have continued to exceed projections) and the pace of recovery of jobs in service and hospitality sectors (especially in New York City). The federal government also appears poised to pass an infrastructure package, which may supplement or supplant planned capital spending.