It has been known for some time that New York City faces a bleak fiscal future in the wake of the Covid-19 pandemic but a new report from the New York City Independent Budget Office (IBO) really paints the picture.
- New York City will lose around 564,000 jobs in 2020 of which around 197,000 will be in leisure and hospitality.
- IBO projects a $981 million surplus in the fiscal year 2021 but a $4.5 billion shortfall in 2022.
- New York City tax revenue is expected to fall about $3.7 percent in the fiscal year 2021.
- IBO has lowered its projection for tax collections in fiscal years 2020 and 2021 by a combined $8.5 billion. The 2022 prediction has dropped by almost $5 billion.
- New York City-funded spending is expected to increase by 5.5% in 2022 from 2021.
- IBO estimates police spending on overtime will be $400 million more than budgeted.
- IBO forecasts that real gross domestic product will contract by 5.3 percent in 2020, more than twice the reduction in 2009 during the Great Recession.
- IBO expects the growth in property tax revenue will slow in each year of the forecast period, though it will remain the city’s largest source of revenue. Collections of business and personal income, sales, real estate-related, and hotel taxes are all expected to decline sharply in 2021 before growth returns in 2022.
In addition, there are critical services that New Yorkers rely on that are not a part of the budgeting process such as the MTA, Housing Authority, and Health and Hospitals. None of these entities were particularly well managed or in strong financial standing before Covid-19 and have been reeling since. Though the federal government has provided some help, much more is needed. Without further assistance, the city faces painful choices of increasing contributions or cutting services.