NEW YORK CITY-The drop in commercial property sales that occurred when the economy took a turn for the worse in the latter part of the last decade had a hidden consequence: less money for New York City and Metropolitan Transportation Authority budgets.

That drop caused revenue from property transfer taxes to dip from a high of $3.3 billion in 2007 to just $982 million in 2010. This data comes from a January 2012 study from the New York City Independent Budget Office, which charts the precipitous drop in the revenue and the slow recovery that has taken place of late.

Alan Treffeisen, a senior Budget and Policy Analyst at the NYC IBO who worked on the study, tells GlobeSt.com that the drop of in revenue generated from taxes on the sale of commercial properties—which includes multifamily properties—coincided with the downturn.

“One of the biggest drops in the real property transfer tax would have been in third quarter of fiscal 2008,” he says. “Even bigger was October through December 2008—so that’s the affect of the financial meltdown.” The fourth quarter of 2008 saw a drop of almost half from the previous quarter in revenue generated. “That drop was from $337 million to $180 million,” Treffeisen says.

The result of the drop off affected MTA and City budgets, the report says, as surpluses generated during the peak years turned into deficits. Even during those peak years, though, there were potential signs of trouble. “A rapidly increasingly revenue source like this—you can see how it might mask other underlying problems with the City’s budget and the MTA’s budget,” Treffeisen says. “It might postpone the day of actually dealing with some underlying imbalances.”

One bright spot—and a possible gauge of New York City’s improving real estate market—is that the property tax revenue numbers are slowly turning around. In fiscal year 2011, for example, there were 43 taxable sales valued at $100 million or more—double the number seen the year before. However, the IBO predicts the numbers to improve, but to remain below levels seen at the peak.

Property transfer tax numbers are received monthly by the NYC IBO from the Mayor’s Office of Management and Budget.