The current recession will hurt the city more than the last one, the New York City Independent Budget Office projected in a report last week.
The recession is expected to last through calendar 2009 and the city will continue to shed jobs through 2010 for a projected loss of 243,000 jobs, compared to 228,100 lost after the dot-com crash and 2001 terrorist attacks.
The city’s financial sector will lose a projected 82,300 jobs, including 48,900 in the securities industry. Tax revenue will fall by $2.8 billion to $34.7 billion in the current fiscal year and then decline by another $380 million in fiscal 2010, the IBO projects.
“New York City has lagged the nation in its entry to this recession, but as the global center of the financial industry, the city’s economy is expected to turn down more sharply, stay down longer, and recover more gradually than the nation as a whole,” the report said.
Business taxes, which tripled to more than $6 billion from fiscal 2003 to fiscal 2007 are projected to drop a record 23.7% in the current fiscal year to $4.1 billion. The IBO projects personal income tax collections will decline two years in a row, falling by $1.4 billion in fiscal 2009 and by $1.1 billion in fiscal 2010, from $8.8 billion in fiscal 2008.
Real estate transfer taxes will also get hammered after hitting a record $3.3 billion in fiscal 2007. The IBO projects that revenue will drop by more than half in fiscal 2009 to $1.6 billion.
City spending will “substantially outpace revenue growth,” the report said, rising from $59.6 billion in fiscal 2009 to $71.8 billion in fiscal 2012, in part due to rising debt service and increased pension and fringe benefit expenditures.
In May, Mayor Michael Bloomberg announced the city would cut its four-year capital plan by $5.1 billion, a move he characterized as a stretching out of the plan into five years. However, the IBO reported, due to new spending commitments and the delay of certain projects from fiscal 2008, that reduction will only be $1.6 billion, totaling $41.4 billion from 2009 to 2012.
The IBO is a nonpartisan fiscal watchdog funded by the city government.