State and city officials openly worried Tuesday that the coronavirus outbreak could wreak havoc on New York’s banking and tourism industries — blowing new holes into their budgets.
Gov. Andrew Cuomo was first to ring the alarm, requesting that state Comptroller Tom DiNaoli recompute tax projections as fears about the disease batter the stock market and tourism, two key sources of tax revenue for both the Big Apple and Empire State.
“We just did revenue projections. The world has changed since then,” Cuomo said.
Cuomo’s move comes just a week after Albany budget forecasters estimated the state would generate $700 million in additional revenues thanks to Wall Street’s windfall last year, potentially helping to offset New York’s $6 billion state budget deficit.
Then, the stock market tanked and Westchester County became a hot spot in the global coronavirus outbreak.
Mayor Bill de Blasio echoed Cuomo’s fears and said the stock market’s COVID-19 dive was “deeply troubling.”
“In terms of the finance sector, we’re very worried about our businesses and drop off sales for them,” Hizzoner said. “It’s very much in our mind, but it’s too early to have a number obviously. We will have to make adjustments.”
The coronavirus’ potential impact on the broader economy could evoke painful memories of the 2008 recession triggered by the Wall Street and mortgage meltdowns, or the aftermath of Sept. 11th terror attacks.
Then-Gov. David Paterson and the Democratic-run Legislature in 2009 boosted income taxes on people making more than $250,000 to close a multi-billion budget gap.
Simultaneously, then-Mayor Mike Bloomberg and the City Council raised the city sales tax and eliminated 2,000 jobs after more than 100,000 private sector jobs vanished and the unemployment rate exceeded 10 percent.
In 2002, Bloomberg and the Council walloped homeowners with an unheard of 18.5 percent property tax hike — the largest increase in city history — to help the reeling city dig out of the 9/11 catastrophe.
But former Mayor Rudy Giuliani, President Trump’s personal lawyer who governed Gotham during and immediately after 9/11, doesn’t believe the coronavirus will have that lasting an impact.
“Not as bad if you look at the cure rate,” Giuliani said, referring to the recovery rate for people infected with COVID-19.
The financial issue is more pressing now for Cuomo and the Legislature in Albany. They must craft a budget by April 1. The governor had proposed a $178 billion executive spending plan before the COVID-19 epidemic hit.
There’s less time pressure on City Hall, where Hizzoner and the City Council have until July 1 to approve a budget.
Budget watchdogs welcomed the new realism.
“The best course is fairly obvious: tell lawmakers they can’t bank on having $700 million more to spend, that revenues quite likely will be lower than the governor originally projected, and that Cuomo needs to retain added budgetary authority to reduce spending (allowing for legislative override) during the year if a deficit is developing,” E.J. McMahon, a budget analyst with the Empire Center for Public Policy said in a blog post.