Reports

The Annual Comprehensive Financial Report for the State of New York for the fiscal year ended March 31, 2022.

The Annual Comprehensive Financial Report for the New York State and Local Retirement System (the System or NYSLRS) for the fiscal year ended March 31, 2022.

The American Rescue Plan Act of 2021 provided $350 billion in additional fiscal relief to address the continued impact of COVID-19 on the economy, public health, and the finances of state and local governments, individuals and businesses. This report examines how New York City and other local governments across the country used the first of two partial payments of these funds, totaling nearly $224 billion.

This snapshot highlights the results for counties, cities, towns and villages that reported for local fiscal years ending (FYE) 2021. Overall, the influx of federal pandemic relief aid and rapid recovery of sales tax revenues were significant factors in lowering many municipalities’ fiscal stress scores in FYE 2021, especially for calendar year local governments.

New York City’s fiscal position has significantly improved since June 2021. However, this was mostly due to unanticipated resources generated from a combination of factors that is not likely to occur at the same level again, and some factors have already begun to reverse. Total revenues are expected to decline by 9.4 percent in FY 2023 due to lower tax revenues and federal aid for COVID-19 relief. In total, OSC calculated risks to the City’s budget that could exceed $2 billion annually by FY 2024. The risk assessment grows to $5.9 billion in FY 2026, which could raise the budget gap in that year to nearly $9.9 billion.

The pandemic caused a dramatic drop in riders and ridership revenue for transit systems across the country, and the MTA was hit particularly hard. The MTA must continue taking creative measures to boost ridership, but stakeholders may have to come to terms with enhancing or identifying new sources of revenue, cost savings and efficiencies if the agency is to achieve a balanced budget once federal aid runs out.

Certain New York State agencies experienced major spikes in overtime during 2020 and 2021, due to the COVID-19 pandemic, but most overtime was performed in agencies that have typically relied upon it. And while the pandemic does not appear to have prompted a ‘great resignation’ from the State workforce as of 2021, workforce reductions since 2012, and prior years covered by this report, have been accompanied by a notable boost in overtime.

After two years of extraordinary volatility in State finances, the State Fiscal Year 2022-23 Enacted Budget Financial Plan projects fiscal stability for the next five years and includes plans to bolster rainy day reserves significantly. However, this report identifies several revenue, spending, and sustainability risks that could disrupt the Financial Plan that should be monitored closely.

New York's local Industrial Development Agencies (IDAs) reported 4,262 active projects with a total value of $114 billion in 2020, an increase of $5.3 billion from the prior year, according to an annual report on IDAs.

The devastating job losses caused by the COVID-19 pandemic led to a record number of unemployment insurance (UI) claims in New York, necessitating borrowing from the federal government beginning in May 2020. Two years later, the State’s UI debt has remained stubbornly high despite steady employment gains and state tax rates that have already increased to maximum permissible levels. Absent federal or state significant action, interest costs will mount and employers federal taxes will also grow.

New York City lags the rest of the State and the nation in restoring pandemic job losses and in rebounding to pre-pandemic levels of unemployment. The recovery has also been uneven, with high-wage economic sectors generally faring better than low-wage sectors. This report aims to understand the main differences in labor force participation among the City’s workers and the reasons for the City’s slow recovery when compared to rest of the State and the nation.

New York City’s FY 2023 Budget and April Financial Plan shows the city has benefited from stronger-than-anticipated tax collections, outsized federal grant revenue from relief programs, savings in pension contributions from extraordinary asset gains in FY 2021, and announced additional savings programs, including significant vacancy reductions. However, better-than-projected fiscal performance may be short-lived amid inflation, geopolitical tension and supply chain issues.

The Comptroller is responsible for ensuring State and local governments use taxpayer money effectively and efficiently, including through the review of contracts. This year’s State budget allowed at least $11 billion in spending without a competitive process or the benefit of an OSC review. OSC’s oversight adds tremendous value, and contract review was completed in an average of just 5.3 days in 2021. A bill to statutorily restore certain OSC oversight authority for billions of dollars in contract spending should be enacted in this legislative session.

The personal income tax (PIT) is the single largest source of revenue for the State of New York, accounting for two out of every three tax dollars collected by the State. Accordingly, the State’s overall financial health and its ability to sustain investments in public services is linked to PIT collections. This report describes recent trends in personal income taxpayer filings between 2015 and 2019. 

Historic federal aid and better-than-expected revenues allowed for a steep increase in spending in the Enacted Budget. However, sustaining new recurring commitments over a longer time period may be difficult as new economic risks emerge, federal funding is spent down, and temporary tax revenues sunset. Bolstering reserve funds is essential for ensuring services New Yorkers rely on can be preserved through economic challenges and fiscal uncertainties.

Despite unprecedented federal aid, the MTA is still faced with determining how it will close its budget gaps in the future. If riders do not return faster than the MTA projects, or if new sources of revenue are not found, rising debt payments could force the MTA to close future budget gaps through service cuts, greater than planned fare hikes, or delays to critical capital projects.

The February Plan benefits from New York City’s continued economic resilience in 2021 and includes more proactive planning to fund budget risks and generate savings. The City is expecting to generate a surplus of $3.7 billion in fiscal year 2022 due to federal aid, better-than-projected tax revenues, and planned savings. The surplus could reach at least $4.5 billion if revenue and spending remain on their current tracks.

Historic relief funds from the federal government, provided in response to the COVID-19 pandemic, boosted New York’s per capita balance of payments from Washington from second-to-last in federal fiscal year 2019 to 40th in 2020. During this period, New York received $1.59 for every tax dollar paid to Washington, an increase from 91 cents from the prior year, but still below the national average of $1.92. 

Unrestricted State aid for cities, towns and villages has remained flat or declined over the last decade. When adjusted for inflation, unrestricted aid to local governments has actually declined by 24% since 2011, when the State’s real property tax cap was enacted.

Although the Division of the Budget forecasts in the State Fiscal Year 2022-23 Executive Budget that the budget will remain in balance for the next five years, the direction of the pandemic, inflation, and supply chain issues all remain risks to the state’s economic recovery and financial plan. The budget also proposes billions of dollars in spending that would bypass critical oversight if enacted.

Update: Supplemental Report on the State Fiscal Year 2022-23 Executive Budget (As Amended by the Governor)