Brace Yourselves. New York’s Financial Winter Is Coming

Bill de Blasio has never raised taxes, at least not in any substantive way. That’s right, the Mayor who has demanded them, proposed them, opined on them, and even lamented their unpopularity has never actually imposed a tax increase upon the good citizens of New York City. 

So how did Mayor de Blasio balloon the city budget by more than $20 billion from the $69.9 billion plan he inherited to the $92.7 billion mammoth he passed in 2019? How did he have more new money to spend than the entire budgets of L.A. and Chicago combined? 

This budget increase was made possible thanks to a decade-long boom of New York City job and real estate growth. The economic explosion since the 2008 financial crisis led to massive revenues, and big-government boosters like de Blasio and Governor Andrew Cuomo have capitalized. 

But now, the party is over. The keg is kicked. Some Big Tech figures are lingering near the door on their way out, but the popular kids from Wall Street are looking for the next scene. Others are just tired and going (to their second) home.  

Such movement is far from a new phenomenon, of course. Over the past decade, over 1.4 million New Yorkers have fled, taking their progressivism, pizza penchants and pocket books with them. COVID-19 may very well be the final straw.

Last week, the city council’s financial team released a pessimistic outlook for fiscal year 2021. They project a net revenue loss of 6% next year, which will only recover halfway in 2022. By 2025, the divide between planned revenue and expected revenue will be approximately $5 billion. This is unsurprising when you imagine a future New York City with fewer employers, fewer employees, fewer restaurants, fewer small businesses, fewer hotel guests, and fewer overpriced real estate transactions. 

That $5 billion only relates to the impact on city finances. The state, believe it or not, is going to fare much worse. In total, New York State and its operating authorities (Cuomo’s preferred vehicle of budget growth trickery) like the M.T.A. and Thruway Authority, are facing a whopping $59 billion in lost income. To provide some context, that amounts to more than the sum of the country’s ten smallest state budgets.

This is the direct result not just of the pandemic itself, but of New York’s slow — and sometimes nonexistent — reopening strategy. For example, few states kept their small businesses locked down as long as New York. The state’s curve was flattened by June, though it was hard to tell because the city’s restaurants weren’t able to reopen for indoor dining until the last day of September.

Unfortunately for them, the liberation and libations were short lived. Just days after Cuomo released his book describing his “success” in combatting COVID-19, cases skyrocketed, leading to another round of lockdowns and closures. As of Monday, all indoor dining in New York City has ended, despite Cuomo’s data dump on Friday proving restaurants have almost nothing (1.4%) to do with the state’s new case spike.  

While every state is facing a budget shortfall, New York’s longstanding tax exodus and pandemic mismanagement have left us in worse shape than almost any other. In fact, according to the Center on Budget and Policy Priorities, only Wyoming and Hawaii have projected revenue shortfalls greater than New York’s. It should be noted, however, that their shortfalls amount to less than the Empire State spent to build one bridge named Cuomo

So what does the Governor offer for the future of New York? Blood, toil, tears and sweat? No, of course not. He is promising taxes. That’s it, and he has made it clear that tax hikes will happen with or without a federal bailout. 

The long-term effect on New York is that it is likely heading into a financial winter, the kind that will come from lingering debts, ballooned expenses, a slow rebound of the economy, and people simply packing up to leave. Anyone not willing to prepare for the long cold might want to get out while they can. 

The views expressed in this opinion piece are the author’s own and do not necessarily represent those of The Daily Wire.

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