Economic Overview

2. I. Economic Overview

3. 4.0
2.7
3.8
4.5 4.5
4.8
4.1
0.9
1.8
2.8
3.8
3.4
2.7
1.8
-0.3
-2.8
2.5
1.8
2.8
1.9
2.7 2.9 2.9 2.8 2.9
-4
-3
-2
-1
0
1
2
3
4
5
1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018
Percentchange
GDP CPI
Outlook for Real U.S. GDP Growth and Inflation
Note: Displayed values pertain to GDP growth.
Source: Moody’s Analytics; DOB staff estimates.
Forecast

4. 2013 2014 2015
Real Gross Domestic Product (GDP)
(2009 chained percent change)
DOB 1.9 2.7 2.9
Blue Chip Consensus NA 2.8 3.0
Global Insight 1.9 2.7 3.2
Macroeconomic Advisers 1.9 3.0 3.3
Consumer Price Index (CPI)
(percent change)
DOB 1.5 1.6 2.0
Blue Chip Consensus NA 1.6 2.0
Global Insight 1.5 1.4 1.8
Macroeconomic Advisers 1.5 1.5 1.6
Unemployment Rate
(percent)
DOB 7.4 6.8 6.3
Blue Chip Consensus NA 6.8 6.3
Global Insight 7.4 6.5 5.9
Macroeconomic Advisers 7.4 6.8 6.4
U.S. ECONOMIC FORECAST COMPARISON
Source: New York State Division of the Budget, January 2014; Blue Chip Economic Indicators , January
2014; Global Insight, US Forecast Summary , January 2014; and Macroeconomic Advisers, Economic
Outlook, January 2014.
U.S. Economic Forecast Comparison

5. 70
80
90
100
110
120
130
140
1970 1976 1982 1988 1994 2000 2006 2012
Millions
2
3
4
5
6
7
8
9
10
11
12
1970 1976 1982 1988 1994 2000 2006 2012
$T,SAAR
35
45
55
65
75
85
95
105
1970 1976 1982 1988 1994 2000 2006 2012
Index
350
450
550
650
750
850
950
1,050
1,150
1970 1976 1982 1988 1994 2000 2006 2012$B,SAAR
Real Personal Income Minus Transfers Total Employment
Industrial Production
Real Manufacturing and Trade Sales
Note: Shaded areas represent U.S. recessions.
Source: Moody’s Analytics.
Income and production have finally surpassed their pre-recession peaks.
Manufacturing and trade sales are on their way, leaving employment.

6. 40
50
60
70
80
90
100
110
120
40
50
60
70
80
90
100
110
120
1972 1975 1978 1981 1984 1987 1990 1993 1996 1999 2002 2005 2008 2011 2014
US
NewYork
NYS Recessions US Recessions
NY US (right scale)
New York State Index of Coincident Economic Indicators
Note: NYS recession dates are DOB staff estimates; NYS forecast (in red) is derived from the New York State Leading Index.
Source: Moody’s Analytics; DOB staff estimates.
F

7. 70
80
90
100
110
120
0
5
10
15
20
25
1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013
NetCreationIndex(%)
RatesofJobCreationandDestruction(%)
Net creation index (right scale)
Job creation index
Job destruction index
Source: NYS Department of Labor; DOB staff estimates.
NYS Private Sector Employment Dynamics

8. -2
-1
0
1
2
3
4
5
6
7
8
9
2010 2011 2012 2013 2014 2015
Year-agoPercentChange
Executive Budget Underlying Growth
Forecast
• Federal marginal tax rates were raised for the highest income earners in 2013, resulting in accelerated bonus payouts into late
2012, injecting additional volatility into State wages.
• For state fiscal year 2012-13, the contribution to wage growth of both the information sector and the professional, scientific and
technical services sector increased significantly.
NYS Quarterly Wage Forecast Comparison

9. 0
10
20
30
40
50
60
1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018
Outlook for NYS Finance and Insurance Sector Bonuses
Source: NYS Department of Labor; DOB staff estimates.
$Billions
Forecast
• Looking at wage and bonus growth on a fiscal year basis helps to smooth the volatility.
• Finance and insurance bonus growth of about 8 percent is estimated for 2013-14, with projected annual average
growth of about 7 percent going forward.

10. Capital Gains Realizations
($billions)
0
20
40
60
80
100
120
1985 1988 1991 1994 1997 2000 2003 2006 2009 2012 2015 2018
Executive Budget
"Underlying Growth"
$87.4
$78.4
Source: NYS Department of Taxation and Finance; DOB staff estimates.
Forecast$118.3
• Taxpayers also realized capital gains early to avoid higher tax rates at the end of 2010, but even more so in 2012 when the
low rates actually expired.
• The underlying growth smoothes the volatility, revealing a strong estimated performance of $87.4 billion in 2013.

11. The Indicators of New York State’s Tax Base
-15
-10
-5
0
5
10
15
20
2002 2004 2006 2008 2010 2012 2014
Percentchange
Personal Income
NYSAGI
PIT Liability
Forecast
Note: Personal income tax (PIT) liability is computed based on 2002 NY State tax law; 2012 liability and NYSAGI data are
preliminary.
Source: NYS Department of Taxation and Finance; Moody's Economy.com; DOB staff estimates.

12. II. Financial Plan

13. For Decades Actual Spending
Outpaced Income and Inflation
$0
$10
$20
$30
$40
$50
$60
$70
$80
$90
1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010
Actual Spending
Spending at Income
Billions

14. Gap Closing/Surplus Plan
FY 2015 FY 2016 FY 2017 FY 2018
MID-YEAR BUDGET SURPLUS/(GAP) ESTIMATE (1,742) (2,889) (2,948) (3,887)
Spending Changes 1,942 4,247 5,348 6,723
Agency Operations 358 708 990 1,342
Local Assistance 1,624 1,976 2,267 2,104
Debt Management 116 110 118 158
Initiatives/Investments (156) (232) (394) (499)
Adherence to 2% State Operating Funds Spending Benchmark1
n/a 1,685 2,367 3,618
Resource Changes 286 31 (153) (129)
Resource Changes (24) 31 (153) (129)
Surplus Available from FY 2014 310 0 0 0
BUDGET SURPLUS/(GAP) BEFORE TAX CUTS 486 1,389 2,247 2,707

15. Financial Plan Impact of Tax Actions
FY 2015 FY 2016 FY 2017 FY 2018
Budget Surplus (Before Tax Actions) 486 1,389 2,247 2,707
Tax Actions (486) (1,234) (2,082) (2,534)
Budget Surplus/(Gaps) After Tax Actions - 155 165 173

16. Tax Reform Package
(For the Financial Plan Period)
Corporate Tax Cut and Reforms $900,000,000
Upstate Manufacturers Tax Cut $98,000,000
Manufacturers Property Tax Credit $408,000,000
18a Elimination/Phase Out $600,000,000
Total: $2 billion
Property Tax Freeze $1,850,000,000
Circuit Breaker $1,700,000,000
Renters’ Tax Credit $1,000,000,000
Estate Tax Relief $1,200,000,000
Total: $5.7 billion

17. III. Debt Overview

18. State Debt Outstanding
(Millions of Dollars)
56,372
55,692
55,572
55,000
55,200
55,400
55,600
55,800
56,000
56,200
56,400
56,600
SY 2012 SY 2013 SY 2014
State Debt is Projected to Decline for a Second
Consecutive Year, the First Time in Over 50 Years

19. Debt Burden is Steadily Declining
At Lowest Level Since the 1960s
0%
2%
4%
6%
8%
10%
12%
14%
1969 1974 1979 1984 1989 1994 1999 2004 2009 2014 2019
State debt as percent of NYS personal income
Projected

20. IV. Revenue Outlook

21. Actual and Base Tax Receipt Growth
(percentage)
Actual Base Adjusted Base
Change Change Change
Historical Average
(1990-91 to 2012-13) 4.0 3.4 0.6
Forecast Average
(2013-14 to 2017-18) 3.8 4.7 2.5
Forecast Average
(2014-15 to 2017-18) 3.5 4.6 2.2
Recessions (1.5) (5.1) (7.6)
Expansions 5.9 6.3 3.6

22. Actual and Estimated Tax Receipt Growth
(percentage)
Actual Estimated
FY 2011 FY2012 FY2013 FY 2014 FY2015 FY 2016 FY2017
Personal Income Tax 4.2 7.1 3.8 6.5 3.0 5.8 5.6
User Taxes 10.5 2.6 0.3 3.4 2.5 3.0 2.9
Business Taxes -2.4 8.2 7.4 -3.3 -4.1 3.6 0.6
Other Taxes* 31.8 -3 -2.8 9.4 1.7 -0.9 -2.3
Total 5.6 5.6 3.1 4.7 2.0 4.6 4.1

23. All Funds Revenue Growth
All Funds FY 2014 tax receipts growth of 4.7 percent and FY 2015
growth of 2 percent are heavily influenced by timing factors.
Growth in FY 2014 is inflated by:
• Superstorm Sandy recovery spending
• The movement of realized capital gains and other non-wage
income into Tax Year 2012 from future years in anticipation of
higher federal tax rates in 2013
• Higher revenue as the result of the tax credit deferral program

24. All Funds Revenue Growth
All Funds FY 2014 tax receipts growth of 4.7 percent and FY 2015
growth of 2 percent are heavily influenced by timing factors.
Slower FY 2015 growth is the result of:
• The first year of the tax credit deferral payback
• The non-recurring nature of Superstorm Sandy recovery
spending by consumers
• Tax cuts proposed with this Budget