Blas’ $92B wishful inking
New York City may face a long-term budget nightmare as the pandemic cuts into tax revenues, leaving City Hall scrambling to fill a $5.3 billion shortfall next year alone, Mayor de Blasio warned on Thursday. Hizzoner made the remarks as he unveiled a $92.3 billion city budget proposal for 2022, $5 billion below a projected $97.4 billion plan. However, de Blasio’s massive budget is banking on $1 billion in labor-cost concessions and Sen. Chuck Schumer — the soon-to-be Senate majority leader — delivering $1 billion in new aid for coronavirus expenses.
“This budget will start us on the road to recovery,” de Blasio told reporters, adding that the city faces years of “continued major budget challenges.” Officials estimated the city will lose $10.5 billion in expected tax revenue since the pandemic began in March 2020 through the 2022 budget, which ends next June.
Fiscal watchdog Andrew Rein, of the Citizens Budget Commission, said the savings plan is “too small and appears to disproportionately target program reductions instead of improving productivity or modifying employee benefits, both of which would minimize pain to New Yorkers at large.”
Mayor de Blasio dropped his preliminary budget for his last year as mayor on Thursday — with no notice, on the eve of a holiday weekend and with the documents providing key details landing even later.
In other words, he did his best to bury it, and with good reason.
The biggest bad news he shared: City property-tax collections are tanking, falling an estimated $2.5 billion next year. That’s more than the extra $2 billion in pandemic relief that Sen. Chuck Schumer just got Team Biden to promise.
Worse, that property-tax hit is likely to last for years, because companies now realize they don’t need as many workers in pricey Manhattan offices. Plus, the city may also see a fall in residential property taxes, given the damage the pandemic and legalized rent-nonpayment has done to that market.
Oh, and the loss of office workers is likely to mean a big drop in the state’s income-tax take — which will inevitably mean cuts in what Albany sends City Hall’s way. (New Jersey and New Hampshire are already suing over this year’s income taxes on remote workers, and more states will follow.)
Plus, the workers not commuting in won’t spend much in the city, depressing sales taxes, income and property taxes from the relevant businesses and so on.
Meanwhile, one of Gov. Cuomo’s big ideas is to convert Midtown office space to residential use — which is unneeded and can only further permanently depress the city economy.
In short, it’s time for major structural reforms to cut city government’s costs, because the feds won’t keep bailing us out year after year. It’s certainly not the time for any new giveaways, like the mayor’s plan to “protect” owners of 1- to 3-family homes.
Yet de Blasio intends to goose spending another 3.2 percent, even as he’s failed to achieve the labor savings he vowed to find this year. Oh, and he kicked lots of union payments into the coming year to balance this year’s books.
This mayor doesn’t want to face the city’s existential post-pandemic crisis, and he doesn’t want anyone else thinking about it, either. The next mayor is going to inherit a huge mess and a surging river of red ink.