New York State Comptroller Tom DiNapoli offers his remarks after taking the oath of office at the Empire State Plaza Convention Center during the 2023 inauguration ceremony on Jan. 1.
After warning state lawmakers to reign in spending during next year’s state budget process due to an expected budget deficit, the state’s monthly crash report shows further signs of a slowing economy ahead.
A report released Tuesday by state Comptroller Tom DiNapoli’s office showed state tax receipts totaled $51.5 billion through the first six months of fiscal year 2023-24, which was $1.7 billion higher than the original estimates released by the state Department of the Budget’s July update. Despite this, tax receipts were still $6.9 billion lower than the first half of the previous fiscal year.
“The economy exhibited resilience in the first half of the year,” DiNapoli said in a statement. “Continued job gains, wage growth, and easing inflation were all contributing factors to higher-than-expected tax receipts. However, global unrest, labor strikes, and a potential federal government shutdown could slow the economy, adding to existing budget challenges that include significant out-year budget gaps.”
The state’s Budget Director Blake Washington in September sent a letter to state agency commissioners warning them that their budget requests for the next fiscal year must not exceed last year’s funding levels under the state’s $229 billion budget, excluding one-time investments. The state’s budget is due April 1 of each year
DiNapoli in April first warned state lawmakers they would have to reign in spending in the next budget cycle due to a projected drop in revenues and expiration of temporary federal aid due to the COVID-19 pandemic.
In other financial news this week, the federal Internal Revenue Service (IRS) and Gov. Kathy Hochul also on Tuesday announced a plan to launch a new free tax filing program, called Direct File. New York is one of 13 states to pilot the new program starting in 2024, including Arizona, California and Massachusetts.
“Thanks to this first-of-its-kind partnership, New York is taking a major step toward modernizing our tax system and making it even easier for New Yorkers to access their tax benefits,” Hochul said in a statement. “No one should have to navigate complex processes or pay out of their own pocket to file their taxes, and starting next year, we’re equipping New Yorkers with a new, innovative, free tool to give taxpayers more choices to file.”
The program will allow eligible taxpayers to electronically file their taxes with the state’s Department of Taxation and Finance. The IRS expects eligibility will be limited to taxpayers reporting certain types of income and credits, including W-2 wage income, Social Security, railroad retirement income, unemployment compensation and interest of $1,500 or less. The credits will include the Earned Income Tax Credit, Child Tax Credit and credit for other dependents. Also under the pilot program, eligible taxpayers will be able to file for a standard deduction, student loan interest deduction and educator expenses.
The state’s tax department will coordinate with Code for America to develop the e-filing tool and taxpayers will have the option to share their federal return information with third-party state filing software after they finish filing their federal returns using Direct File. Code for America will then prepare most of the state return using the federal return data. It aims to allow taxpayers to answer fewer questions to complete their state tax return.
“While our low-income families are struggling to make ends meet, the last thing they should be worrying about is the intricacies of the tax filing process or access to tax refunds,” Senate Majority Leader Chuck Schumer said in a release. “With this new direct-filing tool, eligible New Yorker taxpayers can save millions in annual e-filing fees by filing with the government at no cost.”