FEBRUARY UPDATE SFY 2008-09 and SFY 2009-10 New York State Assembly - PowerPoint PPT Presentation

FEBRUARY UPDATE SFY 2008-09 and SFY 2009-10 New York State Assembly February 11, 2009 1

U.S. Economy in Deep Recession • Recession began in December 2007 • Unemployment: 7.6% in January 2009 (highest in more than 15 years) • Job losses in January: 598,000; 3.6 million jobs lost so far in this downturn – 1.8 million lost the last 3 months alone • Consumer Spending: 1.4% decline between last quarter of 2007 and last quarter of 2008, the worst 4 quarter decline since 1980 • Housing market: not expected to stabilize until the end of 2009 • Current forecast as of mid-February more pessimistic than December 2008 forecast • This forecast includes an estimated $827 Billion fiscal stimulus 2

2009 U.S . Forecas t Comparis ons (Percent Change) GDP CPI E mployment Assembly (1.9) (1.1) (2.7) Division of Budget (1.4) 0.1 (2.3) Macroeconomic Advisors (1.3) (0.9) (2.3) Moody's E conomy.com (1.7) 0.9 (2.5) IHS Global Insight (2.5) (2.2) (2.6) Blue Chip Consensus (1.9) (0.8) N/A Forecasters have included stimulus packages of varying sizes and allocations. The Assembly forecast includes January’s job loss, as well as benchmark employment revisions released on February 6, 2009 3 that were unavailable to the Division of the Budget.

2010 U.S. Forecast Comparisons (Percent Change) GDP CPI Employment Assembly 2.1 2.0 0.1 Division of Budget 2.2 2.4 0.6 Macroeconomic Advisors 3.7 0.9 0.6 Moody's Economy.com 2.0 2.6 0.3 IHS Global Insight 2.2 2.4 0.0 Blue Chip Consensus 2.1 1.8 N/A Forecasters have included stimulus packages of varying sizes and allocations. 4

Comparison to Other U.S. Recessions GDP: 2.9% decline • Worst decline since 1973-1974 recession Consumer Spending: 2.7% decline • The largest decline since WWII Employment: 3.8% decline or 5.3 million jobs lost • Worst level of decline of any post-war recession • Employment loss continues until the 1 st quarter of 2010 5

New York State Economy 6

New York State Employment Growth % 4 2.5 2.4 3 2.2 1.4 1.4 2 1.0 0.9 0.9 0.7 0.6 0.5 0.3 1 0.1 0 (0.1) (1) (0.4) (0.6) (0.6) (2) (1.8) (2.0) (1.9) (3) (4) (4.1) (5) 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Note: Data for 2008 is estimated; 2009 and 2010 are forecasts. Sources: NYS Department of Labor, QCEW; Bureau of Labor Statistics, CES; NYS Assembly Ways and Means Committee staff. 267,760 jobs will be lost in the current downturn Financial activities industry job loss: 64,200 7

New York State Wages 2007 - 2010 $ 517.6 520 $ 21.5 Billion Drop 508.8 508.1 510 Billion 500 496.1 490 480 2007 2008 2009 2010 Sources: NYS Department of Labor; NYS Assembly Ways and Means Committee staff. The percentage loss is more than double the percentage drop we had in 2002 8

Wall Street • Relative share of State employment and wages is forecast to decline – 24.4% of total New York State 2007 wages • Declines to 19.2% by 2010 – 8.5% of total New York State 2007 employment • Declines to 7.9% by 2010 9

New York State Securities Industry Percent Change in Bonuses and Stock Option Payments 136.8 % 140 120 100 76.9 71.8 80 60 41.4 40.9 33.2 36.3 30.4 40 18.4 12.9 13.0 8.6 20 0 (2.5) (20) (5.9) (9.0) (10.0) (11.3) (10.7) (40) (28.4) (44.9) (45.4) (60) 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Note: Total wage data for 2008 is estimated; 2009 and 2010 are forecasts. Base wages and variable wages are estimated by the NYS Assembly Ways and Means Committee staff and sum to total wages. Sources: NYS Department of Labor, QCEW; NYS Assembly Ways and Means Committee staff estimates. 3 consecutive years of decline 2009 decline = 45.4% or $15.4 billion 10

SFY 2008-09 and SFY 2009-10 Revenue Outlook 11

Summary of Tax Revenue Forecasts (Millions of Dollars) Category 2008-09 Change Growth 2009-10* Change Growth PIT $36,689 $124 0.3% $34,421 ($2,269) -6.2% User $14,163 $170 1.2% $16,206 $2,043 14.4% Business $7,742 ($489) -5.9% $7,941 $199 2.6% Other $2,015 ($68) -3.3% $1,583 ($432) -21.4% Total Taxes $60,609 ($263) -0.4% $60,151 ($458) -0.8% * Includes Executive revenue actions as proposed in the Executive Budget 12

Forecast Differences from Executive Budget (millions of dollars) Category 2008-09 2009-10 PIT $6 ($149) User ($208) ($573) Business $27 ($192) Other ($3) ($105) Total Taxes: ($178) ($1,018) 13 Note: Executive forecast reflects amendments to Executive Budget published in January.

Trends in Tax Revenue 13.4% 15% 10.4% 9.5% 10% 3.6% 5% 0% -0.4% -5% -5.5% -10% 2005 2006 2007 2008 2009 2010 State Fiscal Year • The growth in tax revenue has slowed dramatically • Revenues are forecasted to decline by $3.6 billion – not including the Executive’s revenue actions 14

FEBRUARY UPDATE SFY 2008-09 and SFY 2009-10 New York State Assembly February 11, 2009 15