Tax revenues in New York City are projected to fall by $5 billion over a two year period as the economy falters, the New York State comptroller’s office said in a report last week.
While the city will end its current fiscal year in balance, Mayor Michael Bloomberg’s proposed fiscal 2010 budget relies on measures worth $2.1 billion that require action by the state Legislature and municipal unions.
“New York City faces its greatest fiscal challenge in decades,” Comptroller Thomas P. DiNapoli said. “The mayor and the City Council have been proactive in reducing spending and revising expectations, but difficult decisions remain. Conditions are likely to get worse before they get better, and the city will need to bridge looming gaps in future years.”
The downturn could cost the city 294,000 jobs by the second quarter of 2010, a 7.8% loss, according to the report. The city lost 86,200 jobs between August 2008 and January 2009 alone.
Wall Street, which accounts for 20% of state tax revenue and 12% of city tax revenue, lost an estimated $47 billion in 2008 and is projected to lose $10.4 billion in 2009. The comptroller’s office expects Wall Street compensation will be lower in future years “as the industry has been fundamentally changed.” Bonuses in 2008 are projected to fall to the lowest level since 2003, with a 44% decline to $18.4 billion.
The city’s pension funds have been hit hard by losses on investments, pushing city contributions higher. Annual pension contributions are expected to reach $7.7 billion in 2013, compared to an annual average of $1.5 billion in the 1990s
The bleak economy has driven projected budget gaps wider by about $3.5 billion since the beginning of the fiscal year. The city must close a $7.7 billion gap in fiscal 2010 and a $10.6 billion in fiscal 2011.
