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NYC May Lose 475,000 Jobs and $10 Billion in Taxes, Budget Office Says

Losses will be spread across industries, but the most severe hit will be in sectors with low-and moderate-paying jobs.

NYC May Lose 475,000 Jobs and $10 Billion in Taxes, Budget Office Says
A person wears a protective mask while walking a dog at Brooklyn Bridge Park in the Brooklyn Borough of New York, U.S. (Photographer: Stephanie Keith/Bloomberg)

(Bloomberg) -- New York City may lose a half-million jobs and run about $10 billion short on tax revenue through mid-2021 because of the coronavirus outbreak, the city’s Independent Budget Office estimated.

Retail employment will take the biggest hit, the IBO said. The sector is expected to shed 100,000 jobs in all, starting with 60,000 from April through June. Another 86,000 jobs in hotels and restaurants, and 26,000 in the arts, entertainment and recreation industries will be lost, according to the report released Wednesday by the nonpartisan fiscal monitor.

Although finance and professional services will also experience declines, the most severe losses will be concentrated in sectors with low-and moderate-paying jobs. Losses will be spread across nearly all of the city’s industries, and the only economic sector likely to avoid losses will be health care, the IBO said.

The projected drop of 475,000 jobs would represent almost half the 996,500 jobs the city has gained since November 2009, when it hit its low point just after the Great Recession, according to state Labor Department statistics. The city held a record 4.7 million jobs in February, according to the Labor Department’s most recent report.

“Given the staggering job losses, IBO assumes that the U.S. economy has entered a recession, even if not yet captured in the official statistics,” the IBO report said. “As the economy contracts, tax revenues will follow suit.”

The IBO reported that a combined tax-revenue shortfall of $9.7 billion will result from declines in the city’s major tax sources. About $2.9 billion of that shortfall will come in fiscal 2020 and another $6.7 billion in fiscal 2021, the office said. The city’s fiscal year runs from July 1 to June 30.

The IBO’s estimates are consistent with city projections, which show revenue losses running as high as $10 billion, Mayor Bill de Blasio said Wednesday. The mayor, who intends to propose a budget for the 2021 fiscal year this month, has presided over the city during six years of robust economic growth. Its budget has increased by about 20% to about $93 billion in that time, and the municipal workforce has grown about 10%, to 330,000.

Although de Blasio has increased city budget reserves by billions of dollars over the years, he’s rebuffed City Council leaders who have pressed him to stash away more. Late last month, he asked agencies to cut spending by $1.3 billion.

The Citizens Budget Commission, a nonpartisan fiscal watchdog group financed by businesses, said that wasn’t enough. The group’s president, Andrew Rein, called the mayor’s imminent budget proposal “the greatest test the mayor will face.”

“I understand the need to protect the vulnerable, but you must also look for cuts big and small throughout city operations,” Rein said in an interview. “He should find more efficiencies in sanitation routes, absentee teacher reserves, procurement reforms -- areas all over the city where there are programs that can be cut or dropped entirely.”

Borrowing to pay for operating expenses, a practice that precipitated the city’s crippling fiscal crisis of the 1970s, “should be at the bottom of the list,” Rein said.

De Blasio said Wednesday that he intends to spend whatever it takes to provide for New Yorkers’ health and safety, and he announced a $170 million food-security program for unemployed New Yorkers. He called on the federal government to bail out cities and states hit hard by the pandemic.

“Job one is to protect people.” the mayor said during his daily virus briefing. “This budget will be about keeping people healthy, protecting their health, protecting their safety, making sure there’s a roof over their head. There’s a lot of things we just can’t cut so we have to keep fighting for the support we deserve from Washington.”

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