Comptroller Stringer: City Must Take Immediate Action to Prepare For Economic Impacts of COVID-19 and Protect Vital Services for Most Vulnerable New Yorkers

(New York, NY) — Today, New York City Comptroller Scott M. Stringer released a new analysis of the economic impact of COVID-19 on New York City, including significant projected losses in the entertainment, hotel, restaurant, travel, and tourism sectors. The Comptroller’s analysis estimates that downturns in these key, revenue-generating sectors could conservatively cost the City $3.2 billion in lost tax revenues over the next six months. To preserve the social safety net and protect vital services for our most vulnerable New Yorkers, Comptroller Stringer is calling for the City to immediately identify potential savings, suggesting a target of 4 percent of City tax levy-funded agency spending with exceptions for social service agencies, DOHMH, and NYC H+H — adding up to approximat​ely $1.4 billion. The savings should be included in the Mayor’s Executive Budget due later next month if economic conditions continue to warrant action. Comptroller Stringer also proposed additional City, State and Federal measures to assist businesses most impacted by the loss of economic activity.

“As we brace for the economic fallout of the COVID-19 pandemic, we must protect our children, our seniors, our small businesses, and the arts and cultural organizations that are core to our economy and our identity as a city,” said Comptroller Stringer. “We’re facing the possibility of a prolonged recession — we need to save now, before it’s too late, if we’re going to weather the downturn ahead. Once again, I’m urging the City to immediately instruct all City agencies to identify savings in their City tax levy-funded budgets, with certain exceptions for vital public health and social services, to be included in the Mayor’s Executive Budget.The vital services for our most vulnerable populations and institutions during lean times will depend on prudent, responsible budgeting today, as will the level of relief we as a City can help to deliver to the hotel, restaurant, entertainment, social service and retail workers who are bearing the brunt of this crisis. I stand ready to facilitate and assist our City’s response to this emergency with any powers within my authority.”

Overview of COVID-19 Economic Impact
The forecast of tax revenue losses is based on the following assumptions:

• Hotels are projected at 20 percent occupancy for the rest of this Fiscal Year (June 30th), with gradual recovery through the first quarter of FY 2021.
• Restaurant sales are projected to decline by 80 pe​rcent; real estate sales by 20 percent; and retail sales by 20 percent.​
• The Comptroller’s analysis estimates that downturns in these key, revenue-generating sectors will cost the City $3.2 billion in lost tax revenues before Q2 FY 2021.

Most private economic forecasters believe the possibility of a recession is growing daily and currently stands at a 50 percent likelihood. The Office of the Comptroller will continue to monitor economic activity and tax receipts daily and revise our forecasts as circumstances dictate.

The City Must Manage the Budget More Aggressively to Address the Growing Risks
The Comptroller is recommending that:

• City agencies should immediately identify savings equivalent to 4 percent of City tax levy-funded spending as of the FY 2021 Preliminary Budget. Social services agencies, including the Human Resources Administration, the Department of Homeless Services, and the Administration for Children’s Services, should be subject to a 2 percent savings target.
• The Department of Health and Mental Hygiene and NYC Health + Hospitals should be exempted due to their role in the COVID-19 relief efforts.
• These potential savings, which add up to an estimated $1.43 billion on an annual basis, should be included in the Executive Budget next month.

Additional City, State and Federal Measures To Assist Businesses Most Impacted By the Loss of Economic Activity:

• The State should defer sales tax payments due March 20th for hotels, restaurants, and small storefront retail.
• The City Department of Small Business Services (SBS) should extend the assistance program announced last week to non-profits, particularly in the arts and culture sectors.
• SBS may need to expand the scope and scale of the assistance if the evolving economic situation warrants it.
• The City should waive all small business fines and fees starting immediately.
• The Federal government should include an emergency small business grant program like that created after 9/11 for Lower Manhattan in the next emergency legislative package.
• Other measures, such as deferring other tax payments, should be reviewed and implemented as justified by developments.

On March 15th, Comptroller Stringer also called on the City to provide contractual relief to social services providers and non-profit organizations experiencing depressed client participation rates and decreased attendance due to COVID-19, experiencing difficulty paying their staff, rent, and utility bills, and realizing they will not meet the unit of service requirements established in their contracts with the City.

To stabilize the sector and ensure non-profits will remain able to serve New Yorkers through this crisis, Comptroller Stringer urged the Administration to hold providers harmless for missed contract deliverables that are directly attributable to COVID-19.

To read Comptroller Stringer’s letter to the Administration on supporting non-profit organizations, click here.

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