[ad_1]
As New York City officials fight to control the coronavirus by this summer, it becomes clear that the economic fallout will last much longer: The city’s property tax revenues are expected to drop $ 2.5 billion dollars next year, the biggest such drop in at least three decades.
The expected shortfall, announced Thursday by Mayor Bill de Blasio, is largely due to a sharp drop in the value of office buildings and hotel properties, which have practically emptied since the start of the pandemic.
City hall officials said the market value of the tax class which includes hotels, shops and offices fell 15.8%, putting the city budget in a precarious position for the foreseeable future: around the half of the city’s tax revenue comes from real estate.
For now, the city will partially offset the loss with increased income from income tax: “The rich got richer,” according to a slide from the mayor’s presentation.
But the city will still have to cut spending significantly, although officials have not made it clear which services could be threatened. Mr. de Blasio said that since last January, the city had already cut 7,000 jobs through attrition and hiring freeze; he now plans to reduce the city’s workforce by 5,000 more.
“This is just a total economic dislocation for some industries,” said the mayor. “We have never seen anything like what has happened to the hospitality industry. We have never seen Midtown like it is.
New York has been devastated by the two destructive pathways of the pandemic: the virus has killed nearly 26,000 people in the city, while hundreds of thousands of jobs and billions of dollars in tax revenue have been lost.
At the height of the pandemic, unemployment exceeded 20 percent; today, half a million New Yorkers are still unemployed. And while some businesses remain open, many workers stay at home rather than using public transportation to get to the densely populated office buildings of Midtown and Lower Manhattan.
Mr. de Blasio and Governor Andrew M. Cuomo, who have fought with the Trump administration for increased federal aid, expressed optimism that President-elect Joseph R. Biden Jr., with a Congress led by the Democrats, will provide substantial assistance. .
Indeed, just before Mr de Blasio’s announcement, the new Senate Majority Leader Chuck Schumer said he and Mr Biden had reached an agreement for the federal government to cover the full cost of spending on state and city linked to a disaster declaration last March when the virus was first discovered in New York City. The city had assumed 25% of the expenses eligible for federal emergency reimbursement.
The move is expected to save the state and city around $ 2 billion, money which Mr Schumer’s office says can be used to “fill budget gaps related to Covid.”
On Thursday, Mr. Schumer promised more to come.
“This is just the prelude to better days ahead from Washington for New York,” he said. “With Biden as president and me as majority leader, it’s going to get better.”
A $ 1.9 trillion proposal unveiled by the president-elect on Thursday contains $ 350 billion to help state and local governments. Yet, few expect the federal government to be able to fully meet their fiscal needs, especially with an economy on the move.
In November, the city forecast that next year’s budget, which begins in July, would include $ 31.8 billion in property tax revenues. On Thursday, the city said it was recalibrating those expectations downward by $ 2.5 billion.
“This is an unprecedented drop,” said Thomas P. DiNapoli, the comptroller of New York State. “We have not seen property tax collections decline in over 20 years and never to these levels.”
Even if normal economic activity picks up in New York City, it won’t necessarily lead to the large-scale return of office workers to office buildings, now that many have become acclimated to working from home.
By early January, only 29% of Manhattan hotel rooms were occupied, up from 69% the year before. More than 230 Manhattan hotels have closed, at least temporarily, during the pandemic.
Manhattan’s retail sector, which was battered by e-commerce before the pandemic took hold, continues to suffer, with rents falling and vacant storefronts increasing.
In 2020, tenants rented just 20.5 million square feet of office space in Manhattan, the lowest level in at least 20 years, according to a recent report from Savills, a real estate services company.
“It will be several more quarters before workers return to the office for good and the full implication of changes in demand due to working from home or new location strategies can be seen,” notes the recent Savills report.
Homeowners have responded by embracing unconventional ideas, such as converting large swathes of underused Midtown offices into apartments, a notion Mr. Cuomo recently embraced.
The deal with the Biden administration to pay for 100% of emergency coronavirus-related spending – similar to the one New York had with the Obama administration in the wake of Storm Sandy – will mean around $ 1 billion for the ‘State and city each, Mr. Schumer said.
The Trump administration had previously committed to such an arrangement, the senator said, but never acted on it, leaving the city and state to cover 25% of those costs.
“I have personally asked Trump about this two or three times,” Mr. Schumer said. “He said yes, and he never did.
With the arrival of more aid, the city will be able to postpone nearly $ 200 million in education funding cuts, including a $ 44 million cut for the expansion of the “3-K” preschool program. for all ”from the mayor.
Earlier this week, Cuomo announced that the state government was facing a $ 15 billion deficit, which he called the largest in state history, which he said. also said they hoped the federal government would help fill it.
“We expect basic fairness from Washington,” he said Monday. “Finally.”
Mr Schumer said he spoke to President-elect and Speaker-elect Nancy Pelosi about the need for direct aid to states and local governments – something that was omitted from a draft December coronavirus relief law – and both leaders were. undertakes to provide it.
But as to whether that means a full bailout for New York, Mr Schumer was more wary.
“We are going to do whatever we can to get all the money the state needs,” he said.
[ad_2]
Source link