New York state tax revenues sharply underperformed expectations in the fiscal year ended March 31, but the estimated four-year cumulative deficit for 2012-16 was revised down to $8.5 billion from $9.8 billion a year ago, the state comptroller said on Monday.
The latest figure for the cumulative deficit is 87 percent lower than the $63.1 billion cumulative gap the state faced a year-ago before slicing costs, mainly by squeezing schools and Medicaid.
Tax collections at the end of the fiscal 2012 total led $64.3 billion, or $233 million less than expected in its February forecasts and $677 million below the initial forecasts.
The fiscal year 2012 is the fifth year in a row that New York state was forced to close a mid-year budget gap.
But sharp cost control, in particular for Medicaid and school spending, are the key elements that are helping to reduce the expected cumulative budget gap through 2016, the report said.
For the budget year just ended, the state was forced to close a $10 billion gap, and a new long-term remedy will cap increases in Medicaid and school spending, the biggest spending items, at 4 percent, Comptroller Thomas DiNapoli said.
The shortfall would have been even bigger if Governor Andrew Cuomo, a Democrat, the GOP-led Senate and the Democratic-controlled Assembly had not compromised on income tax cuts.
Rates would have fallen more steeply had a three-year surcharge for wealthy residents been allowed to expire. Instead, income tax rates in December were cut to their lowest level in 58 years for the middle-class, while the rate for those earning $300,000 to $2 million was reduced to 6.85 percent, down from a range of 7.85 percent to 8.97 percent.
Personal income taxes would have underperformed by $385 million if lawmakers had not compromised on income tax rates, the report said.
(Reporting by Joan Gralla; Editing by Theodore d'Afflisio)