The record $212 billion budget New York lawmakers passed earlier this month includes an estimated $26.7 billion in revenues from new resources. That’s according to an analysis released Thursday by Comptroller Thomas DiNapoli.
The new resources include federal aid tied to COVID-19 legislation, tax increases and the creation of new initiatives – including the legalization of recreational marijuana and the authorization of mobile sports betting.
While the budget increases spending for several programs and provides billions in relief funds for homeowners, renters and small businesses, DiNapoli in a statement said lawmakers failed to capitalize on an opportunity to safeguard the state’s long-term financial health.
“The American Rescue Plan provided fiscal relief to the state and local governments, school districts and transit systems at a critical time,” DiNapoli said. “While the Enacted Budget makes important investments in education, health care and other important areas, it’s critical to maintain a long-term view and ensure the state’s spending does not grow to unsustainable levels. Federal support is finite and there were missed opportunities in this budget to ensure the state is well-positioned to weather future emergencies and recessions.”
Among those missed opportunities were lawmakers continuing to defer up to $3.5 billion in Medicaid payments and providing no new funding in the state’s rainy day fund, which currently sits at $2.5 billion. The Legislature also chose to again allow short-term borrowing.
All that took place even as the state raised taxes on wealthier New Yorkers. The income tax increases are expected to create $3.7 billion in new funding this year and grow to as much as $4.5 billion in 2024-25.
Of the $12.6 billion in direct aid the state received from the American Rescue Plan, lawmakers chose to spend $5.5 billion in this budget cycle. The remaining funds must be spent by 2024.
Of the new programs, state budget officials expect recreational marijuana products to create S20 million in revenue for New York this fiscal year, $115 million next year, $158 million in 2023-24 and $245 million in 2024-25.
Budget officials are more bullish on mobile sports betting. It’s projected to generate $99 million this year, $357 million next year, $474 million in 2023-24 and $493 million in 2024-25.
However, unlike marijuana, where the tax rate is already set, mobile sports betting’s tax rate hinges on the outcome of a rather complex solicitation the state plans to release by July 1. That request-for-applications process led by the New York State Gaming Commission will determine the platform providers, sports betting operators and the tax rate that will be paid to the state.
DiNapoli’s report had a word of warning to the state on their hopes for gaming revenues.
“Actual revenues may differ significantly once the tax rates are finalized through the process of licensing the platform providers,” the report stated. “As detailed in a 2020 Comptroller’s report, the last major expansion of State gambling through the licensing of casinos failed to generate the level of revenues initially projected by casino developers in licensing applications.”
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