New York City Revenue Outlook Improving
But State Budget Crisis Could Widen City Budget Gaps
New York City’s budget gap for next year will be smaller than projected last June because the impact of the recession has not been as severe as first feared and Wall Street has recovered much faster than expected. The City still faces large budget gaps over the next three years and the State budget crisis could result in less State aid than anticipated, making it more difficult to preserve gains in education, according to a report State Comptroller Thomas P. DiNapoli released today.
“The impact of the recession on the city’s revenue has not been as severe as earlier forecasts indicated,” DiNapoli said. “But the City may still end up losing more than 200,000 jobs. And while the City has done a good job of managing its finances, the State’s budget crisis could ripple down to the City, particularly city schools. The large anticipated increase in State education aid next year may not materialize, and the City faces the loss of $1 billion of federal stimulus dollars for education in two years. The Mayor has also proposed another round of budget cuts, including education.”
According to the DiNapoli report, the City assumes that the State will increase education aid by $428 million next year and by $2.6 billion cumulatively over the next three years. Additionally, the report noted the potential budgetary impact of federal health care reform and that the loss of federal stimulus education funds in 2012 could result in 14,190 layoffs.
DiNapoli’s report also noted:
- Job losses are now expected to total 220,000 by the end of the recession, which is 108,000 jobs less than forecast in June 2009;
- Wall Street profits totaled $50 billion through the first nine months of 2009;
- Non-property tax revenues dropped by $4 billion in fiscal year 2009 and are projected to drop by $1.7 billion in fiscal year 2010;
- The City’s unemployment rate in October was 10.3 percent, more than twice the rate in 2007;
- Continued weakness in the commercial real estate market could increase the vacancy rate for primary Manhattan office space to nearly 14 percent in 2010, a level not seen since 1994; and,
- The number of large commercial real estate transactions has fallen to 17 through September 2009 from 107 in 2007, and the value of all transactions has plummeted to $7.6 billion from $41 billion during the same period.
Click here to view the report.