By Staff Reporter
ALBANY, N.Y. — Halfway through the fiscal year, New York has collected $7.3 billion more in taxes than the Hochul administration expected. That gives whoever wins next month’s race for governor more room to work with, and sharpens a familiar argument in Albany over whether to save the money or spend it.
State tax receipts reached $68.5 billion through September, the midpoint of the 2027 fiscal year, State Comptroller Thomas P. DiNapoli reported Friday in his monthly cash report. That was $7.3 billion above the Division of the Budget’s projections and $8.6 billion more than the state collected in the same period last year.
“Higher state tax collections, particularly personal income and business tax receipts, are partially a result of financial market growth,” Mr. DiNapoli said in a statement. “However, consumer costs keep rising and many families are still struggling. While strong financial market growth bodes well for some, we must ensure the economy works for all New Yorkers.”
Where the money came from
The comptroller’s figures show the surplus came mostly from a few sources:
• Personal income tax receipts were $36.4 billion, $2.5 billion above plan and $2.9 billion higher than a year earlier.
• Business taxes were $17.6 billion, $4.1 billion above plan and $4.6 billion higher than last year. That category includes the Pass-Through Entity Tax, the optional levy many partnerships and S corporations pay to get around the federal cap on state and local tax deductions. Owners later claim credits for PTET payments against their personal income tax, so part of this money is effectively paid in advance and may be offset later.
• Sales and use taxes grew 7.8 percent, and total consumption taxes reached $12.7 billion, $421.8 million above plan.
Wall Street is a big reason. Earlier this month the comptroller reported that securities industry profits reached $45.9 billion in the first half of 2026, the highest two-quarter total on record.
Spending is also rising quickly. All Funds spending through September was $130.1 billion, up 8.5 percent from a year earlier, mostly because of higher Medicaid costs. State Operating Funds spending rose 11.2 percent. Both were slightly below the budget division’s projections. The General Fund ended September with $63.9 billion, about $9.7 billion more than projected.
Save it or spend it
Those figures follow a warning. When the $277 billion budget was enacted this year, the budget division projected gaps totaling about $31.7 billion from fiscal 2028 through 2030. That includes $6.4 billion in 2028, $10.5 billion in 2029 and $14.7 billion in 2030. Mr. DiNapoli’s July review found that the state planned to draw down $1.3 billion of General Fund balance this year, while total reserves stayed flat at about $15 billion.
Two prominent fiscal watchdogs read the numbers very differently.
“The continued Wall Street run is great news for our revenues; the issue is we have to be smart and put some money away and not just build up a spending base that comes crashing down when the economy turns,” Andrew Rein, president of the Citizens Budget Commission, told Spectrum News 1 this month.
Emily Eisner, acting executive director of the left-leaning Fiscal Policy Institute, said the money should help replace federal aid that is going away, and argued for higher taxes on top earners. “The state is going to be looking for ways to not only plug some of the gaps that the federal funding leaves behind but to build more resilient institutions and infrastructure; to do that we need revenue,” she told the outlet.
Mr. DiNapoli has urged caution. “It might lull us into a sense that it’s going to continue forever; we just don’t know that’s the case,” he told Spectrum. He pointed to further federal cuts in health care and nutrition aid: “Make hard choices as far as spending because there are still pressures coming from Washington, the cutbacks that we saw this year as far as healthcare, we’re going to see more of that, you’re going to see more cutbacks in terms of nutrition programs and SNAP programs.”
Why it matters upstate
For Western New York, the way Albany uses this money affects school aid, Medicaid, which is now the main driver of state spending growth, and aid to local governments. Counties, school districts and hospitals in the region depend on all three.
The windfall also depends on one industry concentrated far from Buffalo. When Wall Street has a strong year, every region benefits through the state budget. When it has a bad year, the cuts reach every region too. Nexstar’s Capitol bureau reported that Mr. DiNapoli’s July review projected state debt would climb 64 percent over five years, from $60.3 billion to $98.8 billion, much of it issued through public authorities without voter approval.
Several things are worth watching between now and spring. One is whether the budget division’s mid-year financial plan update raises its revenue forecast and how much of the gain it puts toward the out-year gaps. Another is whether any of the extra cash goes into the rainy day reserves, which have not grown. A third is how the next governor plans for federal Medicaid changes. The Fiscal Policy Institute says those include work requirements and six-month eligibility rechecks starting Jan. 1, 2027.
Because this is an election year, the governor has until Feb. 1 to present the executive budget, rather than the usual date in the third week of January. Gov. Kathy Hochul and her Republican challenger, Nassau County Executive Bruce Blakeman, face voters on Nov. 3.
The comptroller’s next monthly cash report, covering October, is due next month.
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