New York faces a $2.3 billion shortfall in revenue after December and January witnessed a steep drop in income tax collections, Gov. Andrew Cuomo (D.) and state Comptroller Tom DiNapoli announced on Monday. The announcement came after Cuomo announced a $175 billion spending proposal for 2020 last month.
Cuomo blamed the loss of revenue on the federal government, the Times Union reports. The governor suggested the rollback of the state and local tax deduction, known as SALT, contributed to the shortfall and was part of an effort to punish Democratic "high-tax" states.
"Everything we did economically is right," Cuomo said. "We tightened our belt, we cut taxes, we're creating jobs, and here's a penalty just because we are Democrats."
"It literally restructured the economy to help red states at the cost of blue states," Cuomo said of the SALT deduction rollback.
The federal rollback placed a $10,000 cap on SALT deductions and went into effect last year. According to Cuomo, most homeowners filed 2017 taxes early to take advantage of the SALT benefit prior to the changes being implemented.
"This is the most serious revenue shock New York has faced in many years," DiNapoli said. "And that $2.3 billion figure will frankly get worse before it gets better."
DiNapoli also pointed to reports of people leaving the state and volatility on Wall Street as factors contributing to the shortfall.
Long Island-based economic analyst Marty Cantor disagreed with Cuomo's explanation for the deficit.
"The problems here are caused by the governor and his administration," Cantor said. "It's too expensive to live on Long Island and in New York state. Taxes are too high, people are leaving. It has nothing to do with Trump."
New York has the second highest combined state and local tax rate for high-income earners, and nearly half of the state's income tax revenue comes from the top 1 percent.
DiNapoli and Cuomo did not say if they would increase taxes to address the shortfall.