The New York City Council last week passed a new hotel tax and a 7% property tax hike to take effect next month in a compromise with Mayor Michael Bloomberg to allow a $400 property tax rebate to go to homeowners.
Bloomberg had argued that the city couldn’t afford the rebate but the City Council pushed back, saying he didn’t have the legal authority to withhold it. The rescinding the rebate would have saved the city an estimated $256 million annually.
Without action, the property tax hike would have gone into effect automatically in July as a previously enacted tax cut expired.
The city budget office projects the property tax increase will generate an additional $576 million in the second half of the current fiscal year and $1.22 billion in fiscal 2010. The City Council said the 0.875% hotel tax increase will generate a projected $80 million over the next two fiscal years. The additional hotel tax will sunset in 2011 and is on top of an existing 5% per night tax.
Last week Comptroller William Thompson Jr. said the city faces a $1.9 billion deficit in the current fiscal year and a $1.5 billion deficit in fiscal 2010, which begins on July 1.
