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While overall revenue was higher than expected in the first quarter of the state’s fiscal year due to an influx of federal funds, total tax collections were $195 million below projections. Anticipated business tax collections fell below estimates by $453 million in the General Fund, according to a report released today by State Comptroller Thomas P. DiNapoli.

The report examines revenue collections in the first quarter of 2008-09 and is the first of a series of reports that will highlight key aspects of the state’s financial situation as actual revenue and spending information is made available through DiNapoli’s Monthly Cash Report.

“This looks like a strong start to the fiscal year, but looks can be deceiving,” DiNapoli said. “The growth in revenue probably won’t continue. The drop in business tax collections is a more realistic reflection of the current economic climate and is a strong signal that the state must spend with caution. Last year was a roller coaster and the ride isn’t over yet.”

Key findings:

• Higher Than Expected Revenues. All governmental fund receipts were $30.6 billion, or $644 million higher than projected in the Enacted Budget Financial Plan in the first quarter, primarily due to federal funds which were $8.7 billion, or $740 million higher than projected. These federal funds are largely reimbursements for spending that has already taken place.
• Business Taxes Down. General Fund business tax revenues were $1 billion, or $453 million below projections and $273 million lower than last year. Collections from bank taxes were down 54 percent, or $152 million, in this period. DiNapoli’s analysis found that business tax collections would have to grow by nearly 14 percent for the remainder of the year to meet the state’s Financial Plan projection that business tax collections will grow 9 percent in the General Fund during fiscal year 2008-09.
• Personal Income Taxes Up. General Fund personal income tax revenues were $8.8 billion through the month of June, an increase of 23.2 percent, or $1.7 billion, over last year. This is $323 million more than projected, but DiNapoli cautions that the growth is primarily the settlement of the prior year’s tax liabilities and is not indicative of future collections.

Click here for the report examining first quarter state revenues or visit http://www.osc.state.ny.us/reports/budget/2008/specqrtstfinanplan.pdf.

Click here for a copy of the June 2008 Cash Report, which includes a full breakdown of all revenue and spending for the first quarter, or visit http://www.osc.state.ny.us/finance/finreports/cash/monthly/june08.pdf.