DiNapoli: NYC Budget Gap Could Reach $8B

ALBANY-State comptroller Thomas DiNapoli says New York City’s budget gap could reach $8 billion by fiscal year 2011, and warns that the state won’t be able to provide much assistance in balancing the city’s books.

“The mayor and the City Council have taken a proactive approach to the city’s budget problems,” DiNapoli says in a release. “But the economic outlook continues to deteriorate with every new forecast. We don’t know how long the recession will last, or how deep it will be, but it’s clear that New Yorkers should brace themselves for possibly the worst fiscal crisis since the 1970s. And the city cannot look to Albany for much help. The state faces its own fiscal crisis. Balancing the state budget will require sacrifices that could hinder the city’s efforts to balance next year’s budget.”

While the city has enough cash to balance this year’s budget, a report issued late Monday afternoon by DiNapoli forecasts a gap of $3.5 billion for fiscal year 2010 and $8 billion the following year. The report says the weakening real estate market could cause real property tax collections to fall $425 million short of the city’s forecasts by fiscal 2012– although the decline in commercial and residential prices has lagged the rest of the nation–while taxes from Wall Street-related activities could plummet by 40% over the next two years. Overall, DiNapoli projects that tax collections could be lower by $575 million in the current fiscal year, $450 million in FY ’10 and as much as $950 million by FY ’12.