State comptroller discusses 2018 budget challenges
ALBANY — Revenues from the ongoing Wall Street rally will be a “bright spot” heading into potentially difficult state budget talks complicated by the federal tax overhaul, but New York government leaders shouldn’t count on stock market gains to cover a deficit projected to be in the billions of dollars, the state’s top fiscal officer said Tuesday.
State Comptroller Thomas DiNapoli spoke Tuesday morning at a forum held at the Times Union newspaper building in suburban Albany. DiNapoli discussed the challenges facing lawmakers and fellow Democrat Gov. Andrew Cuomo as state leaders negotiate a state budget.
Those challenges include a budget deficit estimated at more than $4 billion and the recent federal tax overhaul, which caps a deduction for state and local taxes at $10,000. Such a change will mean significantly higher taxes for many residents in high-tax states such as New York.
Those are just two of the major issues Cuomo and the Legislature will wrangle over as they formulate a spending plan due by April 1, the start of the state’s new fiscal year.
The overall impact the new tax laws will have on the state budget is still uncertain, DiNapoli said. Cuomo has hinted he might propose a payroll tax to replace or build on the state’s income tax, a move that would require the employer to also pay a portion.
“Frankly, we’re waiting to see what the governor puts on the table” when Cuomo releases his spending plan next week, DiNapoli said.
The Senate’s Republican leaders have their own proposals to cut taxes or cap state spending. Senate Leader John Flanagan, R-Long Island, on Tuesday dismissed talk of a new payroll tax.
“I don’t like the payroll tax at all,” he said. “People pay enough taxes already.”
Falling state revenues over the past few months mostly can be pinned on two factors, the comptroller said.
“Part of it is that we do have some parts of the state that haven’t been doing well economically,” he said. The other major factor was wealthier New Yorkers putting off certain financial transactions until the federal tax changes were approved in December, he said.
“Folks were holding back,” he said.
Wall Street bonuses earned in a robust 2017 could help the state’s bottom line in the upcoming fiscal year, but Albany leaders still face difficult decisions while coming up with a spending plan, DiNapoli said.
“Maybe we’ll get a little more revenue from that, but I think the longer-term picture is a much tighter budget, fiscal picture for New York as well as we go through not only 2018 but the next few years.”