New York by the Numbers
Weekly Economic and Fiscal Outlook

A Message from the Comptroller

We are living through extraordinary times – as a nation, as a City, and as individuals and communities.  A pandemic is raging that has no parallel in the past century. And in an unprecedented move, our economy has been put on hold in order to protect lives and “flatten the curve.” The shutdown has resulted in mass layoffs and lost income for hundreds of thousands of New Yorkers, and a dramatic drop in tax revenues that blew a hole in the Fiscal Year 2021 budget proposed by Mayor de Blasio in January.  In these difficult and uncertain times, I offer this weekly update on the state of our City’s economy and finances in order to provide the public, elected officials, advocates and experts with a clear-eyed, sober assessment of the challenges.

Make no mistake – New York City will recover. Together we have overcome many challenges, and I know we will rise to the one ahead.

Read the Comptroller’s testimony and report on the FY 21 Executive Budget.

Sincerely,

Scott M. Stringer

The Economy

National Indicators

• Initial claims for unemployment insurance were 2.4 million for the week ending May 16 (Chart 1). The number of Americans applying for unemployment benefits continues to rise but at a declining rate.
• As of the week ending May 9, over 25 million Americans were collecting unemployment insurance.

Chart 1

New York City

Private employers in New York City shed 823,500 jobs in April – one in every 5 private sector jobs (Table 1).

• Dine-in restaurants were the hardest hit, dropping by 119,000 jobs – an 85% decline in a single month.
• The arts, entertainment and recreation sector saw the largest decline after restaurants, losing 67,200 jobs, or 78%.
• Personal services businesses fell by 59%, or 34,100 jobs, while hotels (accommodation) shed over half of March jobs – down 26,100.
• Most non-grocery retail stores also saw very large declines – a 33% decline overall, or 82,400 jobs – with clothing and furniture stores especially hard hit (down 60% and 65% respectively).
• The construction and manufacturing sectors also declined substantially – 39% and 32.5% respectively.
• Child day care services declined by 24% as parents stayed home with their children.
• Businesses that allowed for remote operation, including information services and financial services, were much less severely impacted, decline 2.8% and 1.6%, respectively.

Table 1: New York City Employment, April 2020

SOURCE: NYS Department of Labor

• Since the COVID-19 pandemic led to the shutdown of nonessential businesses, over 1 million New York City residents have applied for unemployment (Chart 2).

Chart 2

SOURCE: NYS Department of Labor

City Finances

Tax Revenues

• New York City Sales Tax collections, which had been growing robustly through the first half of FY 2020, were down 23.1% for the month of April compared to the same month last year (Chart 3).

Chart 3

• Personal income tax withholding growth is slowing (Chart 4). Because relatively high-paying sectors of the economy have seen fewer job losses, year-over-year withholding growth remains positive, but growth is slowing.

Chart 4

• Property transaction taxes (the real property transfer and mortgage recording taxes) fell off substantially in April, reflecting the decline in real estate transactions activity (Chart 5).

Chart 5

COVID Spending and Federal Funding

The authorized budget for COVID-related spending is $2.623 billion for FY 2020 as of May 22 (Table 2). More than half of this spending, $1.42 billion is for medical, surgical and lab supplies. Other significant COVID-related spending includes $246 million for NYC Health+Hospitals, $379 million for COVID-19 response in the Department of Emergency Management, and $250 million for uniformed agencies overtime.

Of this total, $2.15 billion has been committed – that is, the City has incurred contractual obligations for that amount – and $499 million has been expended.  Medical, surgical and lab supplies account for $1.12 billion of the commitments.

Table 2: COVID19 Budget and Expenditures, FY 2020

SOURCE: Office of the Comptroller from FMS.

Cash Position

The City’s central treasury balance (funds available for expenditure) stood at $4.841 billion as of Thursday, May 21 (Chart 6).  At the same time last year, the City had $6.603 billion.

Chart 6

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State Developments

On May 15, the New York State Comptroller released data on the State’s fiscal performance in the month of April.  The combination of economic turmoil caused by COVID-19 and the 3-month filing extension for income taxes led to a $7.9 billion drop in state tax collections in the month of April, a decline of 68 percent (Table 3). The drop was most pronounced in the personal income tax, which fell from $9.2 billion last year to $2.1 billion this April. Consumption and use taxes contracted by 24 percent, as all other taxes, such as the real estate transfer tax, fell by 20 percent.

Table 3. New York State All Funds Tax Receipts in April 2020

Source: New York State Comptroller, April 2020 Monthly Cash Basis Report.

The results are critical to triggering broad executive authority to adopt cuts to local aid and state agency operations. Language in the adopted state budget enables the Governor and the Division of Budget to present a plan for across-the-board cuts to maintain budget balance if tax receipts are more than 1 percent below forecast or disbursements are more than 1 percent above forecast, on a state operating funds basis, following three defined measurement periods. The legislature would have 10 days to adopt an alternative plan or cuts would automatically take effect. As outlined in the State’s adopted budget financial plan, budget balance in state fiscal year 2020-21 was premised on the ability to implement $8.2 billion in local aid cuts and $1.6 billion in agency cuts, unless additional aid arrives from the federal government.  The first measurement period was the month of April, and the baseline forecast was the State’s amended Executive Budget, which was issued in February. Compared to the pre-pandemic February plan, April state tax receipts were 69 percent below forecast.

The DOB’s plan for budget cuts based on the April results is expected by the end of this month.

Spotlight of the Week

Capital Program

Comptroller Stringer sent a letter to Mayor Bill de Blasio urging the City to re-start the capital program with a focus on priority projects – such schools, hospitals, museums, theaters, courts, affordable housing and other public projects – that will enhance the state of good repair of City buildings, infrastructure, and equipment. As our city faces the steepest economic downturn in modern times, the Comptroller outlines how the capital program’s long-term benefits – including job creation, economic opportunity, and continued capital investment – would help jumpstart our economic recovery.

Construction creates jobs. Every $100 million in construction spending creates 484 direct construction jobs – and 181 others, including suppliers, and induced jobs from the additional spending those direct and supplier jobs support. With one out of every five construction workers out of work statewide, we need to get construction going again as part of our path to economic recovery.

The City’s construction program is also a major source of contracts for minority- and women-owned businesses. Construction contracts would an economic lifeline to our city’s MWBEs, generating well-paid, much-needed opportunities for small businesses and laying a solid financial foundation upon which to rebuild.