State Comptroller Nancy Wyman today said the state’s budget deficit has inched upward to $518.4 million, as most major tax categories continue to sputter. The deficit has hovered around $500 million since last October, driven mainly by declining payroll-tax revenue tied to the loss of jobs. Overall, the income tax is expected to fall about $200 million short of the $6.6 billion it was targeted to generate by the end of the fiscal year June 30.
Job losses and weak personal income growth also means the state will pay out about $65 million more in tax refunds than was anticipated, Wyman said. The second-largest tax category, the sales tax, is down by 8.5% from last year, or about $90 million below expectations.
Wyman noted that one modestly positive economic sign is the recent growth in collections of the tax that corporations pay on profits, indicating some improvement in corporate earnings.
“Corporations are doing somewhat better but that is still not translating into a lot of hiring,” Wyman said, noting the state’s 8.9 percent unemployment rate. “This indicates that businesses are increasing production and profitability by investing in technology, not new workers.”
Collections of the corporation tax are up 18 percent over last year, but still are below budget targets by about $15 million.
Wyman’s $518.4 million deficit estimate, an increase of $3.4 million since last month, is based on an overall budget of $18.6 billion.
