The impact of the U.S. housing market’s meltdown on New York City’s financial services industry will push the city’s budget gap in 2009 to $3.1 billion and create a massive slowdown in job growth in the current year, according to a New York City Independent Budget Office report released yesterday. The estimated budget gap is about $360 million more than the city budget office projected in October.

“Weakening U.S. and local economic growth is taking a toll on the city’s revenues, and if Wall Street’s mortgage- and credit-related woes worsen, it will further depress city tax revenues and deepen our projected budget gaps for the coming years,” the report states. “Rising labor costs, which already play a significant role in growing budget shortfalls in the out-years of the financial plan, could become a larger factor as well.”

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