New York City Losing Money Due To Coronavirus: See How Much

NEW YORK CITY - With the coronavirus pandemic continuing to cause problems, large American cities, including New York City, are in for revenue declines in 2021, according to a research paper by three university professors.

New York City is expected to see a revenue loss from between 12 percent to 16 percent in 2021, the study by Howard Chernick from the City University of New York, David Copeland from Georgia State University and Andrew Reschovsky from the University of Wisconsin shows.

The study, “The Fiscal Effects of the COVID-19 Pandemic on Cities: An Initial Assessment,” shows cities that rely mostly on sales and income taxes will be more hard hit, at least in the short term, than those whose income comes more steadily from property taxes. The full report is not yet available publicly, but will be included in the September issue of the National Tax Journal.

The study looks at data from the 150 American cities included in the “fiscally standardized cities” database compiled by the authors, Reschovsky said. At least two cities in every state, and all with populations of more than 200,000, are included.

“Most of our focus was on the next fiscal year, which is already the current fiscal year in some cities,” Reschovsky said. “What it would be if we didn’t have COVID-19, and what the cities’ pattern of revenue growth would show and then pinpoint what we would expect their revenue to be in 2021 based on projected pandemic losses.”

Four of the five cities expected to be the hardest hit among the 150 looked at in the project are in New York. Rochester, Buffalo and Syracuse are all expected to see a decline of more than 15 percent of their revenue from the previous year. Rochester, at 19.9 percent, is expected to see the greatest loss.

Reschovsky says that’s due to the amount of state aid cities in New York rely on.

The hardest hit three areas are “relatively poor cities” that rely on generous state aid that Reschovky said is expected to decline “fairly dramatically” in New York amid the first year of the pandemic.

It’s a projection of between 27 percent and 28 percent in state loss, and about half the revenue in Rochester, Buffalo and Syracuse comes from that source.

“New York state not only faces revenue shortfalls, but has a very small rainy day fund,” Reschovsky said.

Cities in a state with a larger rainy day fund, like Texas, tend to be in a better position, the study indicates. Dallas, Houston and Austin are all expected to see a decrease of less than 8 percent, below the 9 percent average across the nation.

The Lone Star State’s lack of reliance on income tax and low reliance on sales tax have also put them in a better position, Reschovsky said.

But cities facing larger dilemmas are already making cuts to offset their projected shortfalls.

In hardest-hit Rochester, the city has already delayed the next class of police recruits and canceled the next class of firefighters due to the pandemic, The New York Times reported.

Detroit, which also relies heavily on casino revenue, shows the fourth highest projected shortfall while New York City is fifth on this chart compiled by The New York Times.

In sixth-hardest hit Orlando,the losses are due to reduced revenue from the hospitality industry and tourism, which Reschevsky said has taken “a big hit.” Miami, looking at a 10.9 percent loss, was a “more balanced” case, Reschovsky said, noting the city is expected to be impacted by the loss of their own revenue and state aid.

Officials in Detroit had to close its recreation centers and mow the grass less often on vacant properties to save money, according to the Times report.

Anchorage, at 3.6 percent, is projected to see the smallest shortfall of the 150 cities included in the study.

The projected loss in Boston isn’t expected to be much higher, though. Reschovsky attributes that to the city relying on property taxes for more than half its revenue.

“Property tax revenues are hardly going to change at all,” Reschovsky said. “That would occur if people massively decided not to pay their property taxes, but that’s not happening.”