FY 2022 budget balanced despite first decline in property tax revenues in quarter century, due to stronger non-property tax revenues, and with over 40 percent of savings derived from debt refinancings
Urges strategic use of one-time federal stimulus funds to provide urgently needed assistance to individuals and businesses, and to make investments toward building a new City economy
Today New York City Comptroller Scott M. Stringer delivered his annual analysis of New York City’s Preliminary Budget for Fiscal Year 2022 (FY22). Comptroller Stringer noted that, despite ongoing challenges amid the COVID-19 pandemic — including a stalled job recovery, decreased small business revenue, slow vaccine rollout, and lower property tax revenues — the City was able to close a $5.5 billion gap for FY22 largely due to the strength of personal income and businesses tax revenues, and with over $800 million in debt service savings already realized this year and next, which contributed over 40 percent to the gap-closing program.
Comptroller Stringer urged strategic deployment of billions in anticipated federal aid to jumpstart the economy and help New Yorkers through the crisis. Specifically, Comptroller Stringer called for extending the social safety net to undocumented workers, supporting students and schools, relieving the crushing debt burden for taxi drivers, immediate aid for restaurants, support for performance industry businesses, and tax credits for retail in high-vacancy corridors. Funds from President Biden’s $1.9 trillion American Rescue Plan must be used to begin the process of rebuilding the city economy.
“The challenges of the pandemic and the economic crisis aren’t yet behind us. From a slowed economic recovery to a rocky vaccine rollout, our city still has a difficult road ahead. We need to strategically use our long-awaited federal stimulus funds to rebuild and recover, and the most vulnerable New Yorkers that have been hit hardest must be centered in our recovery,” said New York City Comptroller Scott M. Stringer. “We cannot reopen the same economy we closed. We have a moral and fiscal imperative to make immediate and longer-term investments to bring New Yorkers out of crisis, stabilize and strengthen the City’s finances, and create a more fair and equitable economy going forward.”
The Comptroller’s presentation covered several aspects of the City Preliminary Budget and the state of the city’s economy, including:
Current Economic Situation
The city’s economy has slowed, with job growth turning negative in the last couple of months.
Jobs at hotels, restaurants, arts, entertainment, and personal services were still down 37.1 percent in December 2020 compared to pre-pandemic levels; those jobs earn on average less than $50,000, compared to over $200,000 for jobs in the least impacted sectors such as finance, information, and professional and technical services, where jobs were down just 4.5 percent.
Small businesses are still struggling, with 30 percent fewer businesses open today than before the pandemic, and revenues down 50 percent.
The COVID-19 vaccine rollout has been rocky with unstable supply and inequitable, unorganized distribution.
The economic shutdown has taken its toll on property values — down for apartment buildings, office buildings, stores, and hotels most substantially. For the first time in 25 years, property tax revenues will decline for the coming year — down 4.3 percent.
Non-property taxes — especially the personal income tax and business tax — have held up better than the property tax with a projected gain of $0.9 billion in FY22 and subsequently increasing over the next three years.
These tax sources have increased above earlier projections in large part due to Wall Street raking in $38 billion in profits in the last three quarters — more than at any time since the bank bailout of 2009.
Income tax revenues have also performed better than expected because high-earners lost fewer jobs, with only a 4.5 percent decline in jobs.
The most vulnerable workers are being hurt the most by the economic crisis as the wealthiest continue to be employed and increase their earnings.
The FY22 Preliminary Budget
The Mayor’s $92.3 billion budget will grow with the addition of new federal stimulus funds, and is projected to grow over the next three fiscal years as expenditures outpace revenues.
The Preliminary Budget closes a $5.5 billion gap through a combination of $1 billion in savings, $1.15 billion dollars drawn down from next year’s contingency reserves — leaving just $100 million dollars in reserves for next year — $326 million in debt refinancing, lower pension contributions, and an additional surplus of $2.7 billion dollars from the current year due in large measure to income and business tax revenues performing better than expected.
Budget gaps are projected to remain substantial — $4.31 billion dollars in FY23, $4.19 billion in FY24, and $4.28 billion in FY25.
The State Budget has pushed $1.3 billion in costs to the City over the last five years including cost shifts, sales tax intercepts, and unfunded mandates.
This year’s State Budget would cut back $800 million in State education funds, substituting federal funds from December’s stimulus bill, along with another $220 million in other costs.
The State’s long-term budget outlook could leave the City with even larger shortfalls in the future.
Addressing Immediate Needs of New Yorkers
Higher FEMA reimbursements announced last month will yield $1 billion in funding and the American Rescue Plan is expected to yield approximately $5.6 billion for the City.
Noting that stimulus funds are one-time resources, Comptroller Stringer urged that they be used strategically to help vulnerable New Yorkers, and jump-start the City’s economy.
Help for individuals includes extending the social safety net; cancelling rent for those families ineligible for the federal emergency rental assistance program; funding a $25 million emergency food program to combat food insecurity; supporting undocumented immigrants; supporting students and schools through reopening costs for ventilation systems and other modifications, learning loss and emotional needs, and relieving crushing debt burdens for taxi drivers.
The Comptroller also called for immediate actions to jumpstart the economy, including tax credits or grants for struggling restaurants, support for performance industry businesses, and tax credits for retail in high-vacancy corridors.
Long-Term Economic Recovery
The Comptroller also called for new investments to build a more equitable economy for the future — funded by new revenue streams from the Invest in Our New York agenda:
Affordable housing for the lowest-income households and New Yorkers on the brink of eviction and homelessness.
Investments in rebuilding NYCHA and delivering on the promise of public housing.
Childcare so working families, and especially women, can rejoin the workforce.
Healthcare to correct longstanding inequities in access and outcomes laid bare and exacerbated by the COVID-19 pandemic.
Investments in public safety through the lens of public health to end mass incarceration and the criminalization of poverty.
Transit and streetscapes to enable all New Yorkers to move easily from home to work and school, regardless of their zip code.
Resiliency, sustainability and the green economy for the future of our city and planet.
Workforce development to give all New Yorkers the skills they need in the post-pandemic economy.
To view Comptroller Stringer’s full FY22 Preliminary Budget presentation, click here.