A Matter of $urvival
With the COVID crisis entering its ninth month, the city’s economy and municipal finances face an existential threat, and Gotham’s need for real leadership grows ever more dire.
As The New York Times reported last week, the city is now grappling with “a bigger challenge in recovering from the pandemic than almost any other major city in the country. More than one million residents are out of work, and the unemployment rate is nearly double the national average.” City joblessness topped 14 percent in September, as the national rate fell to 7.9 percent.
And the picture might be even worse for New York: As state Comptroller Tom DiNapoli reported, the statewide drop in unemployment, to 9.7 percent, wasn’t driven by more workers getting jobs — but by the unemployed not being counted after giving up on finding jobs and dropping out of the labor force altogether.
Losses are concentrated in five industries: restaurants, hotels, the arts, transportation and building services. Much of that stems from tourists and office workers staying home — but blame some of it, at least, on Gov. Cuomo’s harsh business restrictions, such as his limiting indoor dining to just 25 percent of a restaurant’s capacity.
Anew Citizens Budget Commission report paints another grim picture. Taxable sales in the tourism and business-travel sector from June to August were off a stunning 90 percent, or $2.2 billion, from the same time last year. The recreation and entertainment sector also fell 90 percent. Total sales: down 23 percent, or $10.2 billion (on top of a $16.2 billion plunge in the prior three months).
The pandemic is “an event that struck right at the heart of New York’s comparative advantages,” explains Moody’s Analytics chief economist Mark Zandi. The city’s recovery will be “a long slog,” lasting through 2025, Moody’s warns, even as the rest of the nation gets back on track by 2023.
That means city tax revenue (projected to nosedive by $10 billion over just two years) won’t soon rebound. Cuomo (facing his own $14.5 billion gap this year alone) and Mayor de Blasio might have scant concern for the 1 million jobless New Yorkers and waves of dying businesses, but they should at least worry about their own budgets.
Alas, Cuomo keeps threatening new lockdowns whenever anyone sneezes, figuring he can just blame President Trump for not offsetting the resulting economic pain with federal aid. De Blasio simply papers over problems and kicks the can down the road.
He pushed a half-billion-dollar hole, for instance, into 2022 in a deal with the teachers union. Worse, that bargain also guarantees no layoffs — a commitment he repeated in a similar deal with the DC 37 union. In short, he’s locking in current (unaffordable) expenditures in exchange for permission to dig next year’s $4 billion-plus budget hole even deeper.
De Blasio and Cuomo are pinning all their hopes on a massive bailout from a Biden presidency — a bailout far larger than anything Joe Biden has actually suggested.
If New York is to survive, economically and fiscally, it needs leaders who can make tough budget-trimming decisions and rev up the economy. Cross your fingers that it doesn’t completely crash in the meantime.