Many of New York’s cities begin their new fiscal year July 1, and they are struggling to balance their budgets after the effects of the COVID-19 pandemic. Recent protests in some cities are straining budgets even further.
Meanwhile, there’s a growing movement in the state Legislature to raise taxes on the wealthy to help balance the state’s budget and to help cities out.
Cities across the state are facing a severe budget crunch, much of it due to the 2½-month shutdown of the economy and the corresponding loss of revenue.
State Comptroller Tom DiNapoli found that sales tax revenue dropped by 32% in May and declined 24.4% in April.
Businesses were closed for weeks, and some were unable to pay their bills, and that’s likely to have an effect on property tax collections.
Binghamton Mayor Rich David, who is vice president of the New York State Conference of Mayors, said cities had new costs when first responders worked longer hours as the virus peaked. He said now more police and public safety officers are working overtime during the largely peaceful protests continuing since the death of George Floyd when a Minneapolis police officer placed him in a chokehold for nearly 9 minutes.
David said because of all of that, cities are facing a financial situation that he called a “nightmare scenario.”
“We are essential service providers. It’s police, it’s fire, it’s public works, it's water and sewer,” said David.
He said there’s no easy solution.
“The shortfalls are so enormous that you’re not simply going to be able to tax your way out or cut your way out or drain your reserves,” said David, who added a hiring freeze also would not go far enough.
New York state is facing its own budget crisis, with a $13 billion deficit due to the pandemic shutdown. Gov. Andrew Cuomo has been pressing Congress to pass a federal relief package that includes money for state and local governments harmed by the pandemic. He said without it, he’ll have to slash state aid to localities by one-fifth sometime this summer.
“You’d be cutting schools 20%, local governments 20% and hospitals 20%,” Cuomo said on April 20. “And this is the worst time to do this.”
In the past, Cuomo has not been in favor of raising taxes. But a growing number of state legislators favor increasing taxes on the wealthy or on Wall Street transactions if federal aid does not come through.
One hundred senators and Assembly members, all Democrats, whose party leads in both chambers, signed a letter that agrees, in principle, to raise taxes on the rich before making any budget cuts.
Assemblywoman Yuh-Line Niou is one of those lawmakers.
“Are we going to keep on hurting people, and be afraid of taxing the rich, that they might flee Manhattan or flee New York?” asked Niou, who represents Manhattan’s Lower East Side and Chinatown. “We need to make sure that the rich pay their fair share.”
Assembly Speaker Carl Heastie said he’s not ruling out raising taxes on the wealthy if it can help alleviate devastating cuts.
“Everything’s on the table,” Heastie said in an interview with public radio and television. “It’s just unacceptable and unimaginable for us to do 20% cuts to the lifeblood of communities.”
David said for now, cities are going to have to live with a lot of uncertainty.