Commentary: Summary of Comptroller's Mid Year Report
The State Comptroller’s recent cash flow report for the first six months of the State Fiscal Year (SFY) 2024 is available, and the results may not be as bad as expected. However, they illustrate concerning trends, with the budget still reliant on elevated levels of federal funds and with significant increases in major categories of state spending.
Overall receipts are up slightly, year over year, by $800 million or 0.7%, but that figure is buoyed by a $5.9 billion increase in federal funds and $1.7 billion increase in “miscellaneous” receipts (largest gains based on receipts from medical services and interest payments.) It's important to note that both income tax and corporate franchise tax receipts include several billion related to temporary rate increases.
However, total disbursements are up $14 billion or 14.7%, on a year-to-year basis, with major spending increases for Medicaid (+$8.6 billion or 22.2%), public safety (+$2.1 billion, 212%), other public health (+$2.0 billion, 34%), and education (+ $1.9 billion, 10.6%).
The report shows personal income tax receipts are down $7.2 billion or 21.7%, but that reduction is at least partially offset by a shift of tax payments through the “pass-thru entity tax” (total PTET payments for six months are $5.9 billion, slightly down from FY 2023; the PTET provides the option for unincorporated businesses to pay tax on their business earnings thru the PTET rather than PIT). Income tax receipts will also be impacted by final refunds, which should be complete by November, providing more complete indications of likely final PIT receipts.
Overall, business tax payments are down slightly ($0.1 billion or 1%), while the corporate franchise tax is up by $234 million or 5.1%. State sales tax collections are up $0.7 billion or 6.8%.