Property tax revenue did not plunge with the city’s economy last year because assessments preceded the pandemic. This year, New York won’t be so lucky.
The travails of hotels, office buildings and other real estate will cause property tax revenue to fall by $2.5 billion next year, the largest drop in at least three decades, the New York Times reported. The market value of those commercial properties fell 15.8 percent.
“This is just a total economic dislocation for certain industries,” Mayor Bill de Blasio said Thursday. “We’ve never seen anything like what’s happened to the hotel industry. We’ve never seen Midtown in the situation it is now.”
In total, officials estimate that the pandemic has cost the city $10.5 billion in tax revenue, according to the New York Post.
The city is getting $1 billion more in income tax than it expected, thanks in part to Wall Street’s huge rally last year, and is also cutting some spending. But it has to close annual deficits in the neighborhood of $4 billion in the coming years.
A windfall from the Federal Emergency Management Agency announced Thursday afternoon will help. Sen. Charles Schumer, the incoming Senate majority leader, said President-elect Joe Biden had agreed to reimburse the remaining 25 percent of $8 billion that New York spent on Covid response last year. That will bring the city and state about $1 billion each.
FEMA had already covered the usual 75 percent of disaster expenditures, but Biden will grant a waiver to cover the rest of the cost, Schumer said.