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.
Cities across the state are facing a severe budget crunch, much of it due to the two-and-a-half-month shutdown of the economy and the corresponding loss of revenue. Sales tax revenue dropped by 32% in May after declining 24.4% in April, according to state Comptroller Tom DiNapoli. 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. 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 nine minutes.
David said all of that costs even more money and cities are facing a “nightmare scenario.”
“We are essential service providers. It’s police, it’s fire, it’s public works, it’s water and sewer,” David said. “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.”
He added that a hiring freeze also would not go far enough.
New York State is facing its own budget crisis with a $13 billion deficit due in part 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 says 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. “This is the worst time to do this.”
In the past, Cuomo has not been in favor of raising taxes. 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 Assemblymembers, all Democrats, whose party leads in both chambers, signed on to a letter that agrees, in principle, to raising taxes on the wealthy before making any budget cuts.
Assemblymember Yuh-Line Niou is one of those lawmakers.
“How long are we going to keep on hurting people and be afraid of taxing the rich, that they might flee Manhattan or flee New York?” said 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 rich, 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.”
Mayor David said for now, cities are going to have to live with a lot of uncertainty.