New York City Comptroller Scott Stringer said analysis by his office projects 22% unemployment in the city for the third quarter of the year because of the novel coronavirus pandemic. (AP)
"We need to be clear-eyed about our present to make smart decisions about the future," Stringer said in his presentation. "Whenever the economy faces a paradigm shift, forecasting the future is especially hard."
Stringer said the analysis assumes 900,000 additional job losses in the city for the remainder of 2020, representing about 20% of the city's working residents. City unemployment is expected to reach 22% for the third quarter and 12% for the year, with the steepest losses hitting hotels, restaurants and health care services, Stringer said.
"This is something we've never seen in our lifetime," Stringer said in response to reporters' questions. "We have an economy that has literally shut down."
To fill the budget gap, Stringer recommended that city agencies cut spending and reduce inefficiencies to produce continuing 4% savings while warning about the risks of relying on ever-dwindling reserves.
When asked about possible taxing measures to offset the shortfall, Stringer said he was urging state and federal authorities to provide further funds to the city.
"Right now, I think the focus of the city has got to be a robust revenue raising on the state and local level by the federal government," Stringer said. "Today, I don't have a specific revenue raiser except to show that through history, we've used a combination of strategies."
The comptroller's office previously estimated the city could lose at least $3.2 billion in tax revenue over the next six months because of COVID-19, the respiratory disease caused by the virus, and public health measures. The office's latest figures differ from those released in April by the city's Independent Budget Office, which projected a combined tax revenue shortfall of $9.7 billion from previous projections for 2020 and 2021.
Laura Feyer, a spokeswoman for New York City Mayor Bill de Blasio, said the administration balanced the budget in April amid revenue losses by maintaining reserves and achieving savings.
The state, meanwhile, is facing its own $13.3 billion revenue shortfall that the state Division of the Budget will propose offsetting with a $10.1 billion spending cut in a plan set for release in mid-May, Freeman Klopott, a spokesman for the division, told Law360.
"Limiting spending reductions in one funding category will simply require deeper cuts in other categories," Klopott said in a statement.
Jacob Tugendrajch, a spokesman for the City Council, told Law360 that the council will begin its executive budget hearings Wednesday. He referred a request for comment to council statements issued in April that recognized decreasing revenues while calling for safety net program protections and additional investments.
The offices of the comptroller and state Senate and Assembly leaders did not immediately respond to requests for comment.
--Additional reporting by James Nani. Editing by Neil Cohen.
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