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“[T]he massive slowdown of our City’s economy is going to result in substantial losses of the tax revenue that keep this city running,” Comptroller Stringer said.
By Michael V. Cusenza
The City could lose between $4.8 and $6 billion in fiscal years 2020 and 2021 due to the ripple effects of the coronavirus pandemic on Gotham’s economy, according to updated economic analysis released Monday by City Comptroller Scott Stringer.
The range of the estimate depends on the severity and duration of the pandemic, and the duration and extent of the resulting economic shutdown, Stringer noted. His analysis forecasts a very sharp decline in specific sectors from March through the end of June, particularly in hotels, restaurants, retail and the cultural sector, as earnings collapse and unemployment soars.
The comptroller’s analysis outlines two economic scenarios for New York City in FY2020 and FY2021 and estimates lost tax revenue from personal incomes, sales, hotels, real property transfers, businesses’ incomes, and other taxes.
In a more moderate scenario, the measures taken to contain the spread of the COVID-19 virus are successful and the shutdown of the economy would essentially end by May. There would be relatively limited impacts on sectors outside hotels, restaurants and retail. This scenario predicts a tax revenue loss of $1.28 billion in FY2020 and $3.5 billion in FY2021 totaling $4.8 billion, which would be a 2-percent decline in FY2020 and 5.4-percent decline in FY2021.
The higher-range scenario presumes the state of emergency lasting at least into June or July, with a slower recovery to normal economic activity, and larger impacts on other sectors of the economy. This scenario envisions a tax revenue loss of $1.5 billion in FY2020 and $4.6 billion in FY2021 totaling $6 billion, which would be a 2.3-percent decline in FY2020 and a 7-percent decline in FY2021.
“The COVID-19 pandemic is already putting enormous financial strain on our City’s workers as millions of New Yorkers grapple with the uncertainty of their next paycheck, paying rent, and taking care of their families. At the same time, the massive slowdown of our City’s economy is going to result in substantial losses of the tax revenue that keep this city running,” the comptroller said. “Our economic forecast highlights the significant financial pressure on our City’s coffers. 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—our healthcare system, infrastructure, transit network, and so much more depend on it. And our City government must act immediately to protect our fiscal position so that we can continue to provide vital services for our most vulnerable New Yorkers in the face of this emergency.”
In order to weather the coming economic downturn, Stringer has urged City Hall to immediately identify savings in agency budgets.
“I commend the mayor for taking this step to mandate finding savings across agencies. The vital services for our most vulnerable populations and institutions during the economic fallout of COVID-19 will depend on responsibly saving today, as will the level of relief our City can deliver to the hotel, restaurant, entertainment, social service, and retail workers who are bearing the brunt of this crisis,” the comptroller added.
