Anyone have $10.5B?
Blaz describes new hit to plague economy
Tax revenues that help fund basic city services like garbage pickup and the police are expected to plummet in the next budget year, creating what could be a $1.5 billion shortfall in the next budget cycle alone.
That would bring the city’s total budget hole to $10.5 billion since the beginning of the pandemic in March 2020.
City officials announced the preliminary budget projections Thursday afternoon, with Mayor de Blasio revealing that property tax revenue is expected to drop a precipitous $2.5 billion, a loss he said would be offset by gains the city expects to see through increased income tax revenue.
The overall fiscal nosedive is anticipated to be the worst financial hit New York has absorbed in modern history, but de Blasio (photo) appeared positive about the city’s long-term future given President-elect Biden’s coming inauguration and the increased likelihood of a federal stimulus package.
“It’ll be a tough transitional year in 2021, and there’s serious challenges we’ll have to deal with, but I don’t have a question in my mind about where we’re going,” he said. “I see tremendous energy that’s going to move us forward.”
De Blasio projected the next budget will total $92.3 billion, though the number is subject to change and is almost certain to be contingent on a federal stimulus package, the potential for an even bigger tax revenue hit and how much money the fiscally-strapped state government can provide to the city in aid.
The city’s gloomy property tax projections stem from real estate values plummeting after the coronavirus pandemic led employers to require workers to stay home, which left buildings mostly empty, city budget officials said.
“We have to build a foundation for recovery,” de Blasio said of his last preliminary budget Thursday. “What matters most? Unquestionably defeating COVID.”
To that end, the city plans to pour more money into vaccinations and testing, with the mayor predicting the $200 million already spent on those services during the current budget cycle would increase in the next one.
The city’s projections did not include aid it now expects to come from the federal government through a Biden stimulus, but de Blasio noted that at least $1 billion in savings is assured through the next administration.
De Blasio appeared buoyed by news Thursday that Biden intends to provide 100% reimbursements to local governments for COVID-related FEMA expenses. As it now stands, local governments are required to pick up 25% of that federal tab. Under Biden’s plan, the city would save an estimated $1 billion in much-needed relief.
President-elect Biden announced the “American Rescue Plan” on Thursday afternoon which injects $1.9 trillion in planned stimulus to help the economy and beat back the virus.
But fiscal hawks still questioned the hopeful patina de Blasio seemed to put on objectively stark budget predictions.
Andrew Rein, president of the Citizens’ Budget Commission, described the projected decline in taxes as “historic,” saying it “strongly signals the long-term risks and hard road to recovery faced by key sectors and industries.”