The virus drains $2.5 billion from N.Y.C.’s property tax revenue.
As New York City officials strive to control the coronavirus by this summer, it is becoming clear that the economic fallout will last far longer: The city’s property tax revenues are projected to decline by $2.5 billion next year, the largest such drop in at least three decades.
The anticipated shortfall, which Mayor Bill de Blasio announced on Thursday, is largely driven by a projected drop in the value of office buildings and hotel properties, which have all but emptied out since the pandemic began.
Roughly half of the city’s tax revenue comes from real estate, and the economic projections suggest that the city’s budget will remain in a precarious position for the foreseeable future.
For now, the city will partly offset the loss with increased revenues from income taxes: The “rich got richer,” according to a slide from the mayor’s presentation.
But the city will still likely have to substantially cut spending elsewhere.
“This is just a total economic dislocation for certain industries,” the mayor said. “We’ve never seen anything like what’s happened to the hotel industry. We’ve never seen Midtown in the situation it is now.”
Mr. de Blasio and Gov. Andrew M. Cuomo, who have battled with the Trump administration for more federal aid, have expressed optimism that President-elect Joseph R. Biden Jr., together with a Democratic-led Congress, will bring substantial assistance.
Indeed, just before Mr. de Blasio’s expected announcement, the incoming Senate majority leader, Chuck Schumer, said that he and Mr. Biden had reached a deal for the federal government to cover the full costs of state and city expenses related to a disaster declaration from last March, when the virus was first discovered in New York.
The move is expected to save the state and city about $2 billion, money that Mr. Schumer’s office said could be used to “tackle Covid-related budget gaps.”
Still, few expect the federal government to be able to fully meet the budgetary needs of state and local governments.
Source: Read Full Article