New York City could lose up to $6 billion in tax revenue thanks to the coronavirus pandemic, according to a new report from the comptroller’s office.
The losses in fiscal years 2020 and 2021 will be between $4.8 billion and $6 billion, depending on the length and severity of the pandemic and subsequent economic shutdown, New York City Comptroller Scott Stringer’s office estimated.
The comptroller’s office previously estimated that the city could see a $3.2 billion budget shortfall, but increased the estimate citing the likelihood of a broader economic downturn.
The analysis forecasts a particularly strong decline from March through the end of June in the city’s hotel, restaurant, retail and cultural sectors as earnings collapse and unemployment surges. Revenues from personal-income, sales, hotel, property-transfer, business-income and other taxes will all drop.
The report outlines two scenarios. Under the more moderate one, the coronavirus containment measures are largely successful, and the economy is mostly back to normal at the end of May, limiting tax revenue losses to about $4.8 billion, mostly from hotels, restaurants and retail.
In a more pessimistic scenario, the state of emergency lasts through midsummer and leads to tax revenue losses of closer to $6 billion.
The city could use its current projected budget surplus of $2.7 billion and other reserves to offset a revenue shortfall of between $1.3 and $1.5 billion for the fiscal year ending June 30, according to the comptroller’s office. However, this would lead to a larger budget gap next year. Stringer is renewing his call for an immediate mandatory city agency savings program to help combat the problem.
Stringer is also calling for several measures to be included in a federal stimulus package, including direct cash assistance, increased unemployment insurance and unlimited paid sick leave.
New York State Comptroller Thomas DiNapoli has estimated that the pandemic will cost the state $4 billion to $7 billion.
Such revenue losses would normally increase pressure on legislators to raise taxes, but businesses are likely to be spared because the coronavirus pandemic is having such a negative impact on them. Albany’s legislative session is scheduled to end in early June.
The state budget is due by April 1 and the city budget by July 1. Unlike the federal budget, both are required to be balanced.
“We are staring down a fiscal emergency and need the federal government to step up by injecting as much funding into our city’s economy as possible,” Stringer said in a statement. “Our healthcare system, infrastructure, transit network, and so much more depend on it.”