New York’s budget woes are worsening, according to an official report. Chicago-area property owners are in line for a tax payment extension, and New Jersey got a sobering look at how its revenue is suffering. Here’s the latest on shifting state tax guidelines, deadlines, and policy to deal with the coronavirus pandemic. For Tuesday’s coverage click here. Here’s a state-by-state roadmap.
New York faces a three-year budget gap of $25.6 billion as it struggles to meet the fiscal and public health challenges associated with the pandemic, Comptroller Thomas P. DiNapoli said in an analysis released Wednesday.
DiNapoli painted a dire picture of New York’s fiscal condition under the enacted budget for the fiscal year that began April 1, saying it would create a cascade of troubles that will be felt through 2024. The budget assumes no deficit financing and no use of rainy day reserves to avoid a deficit. DiNapoli said the state intended to address problems such as a $7.3 billion drop in tax revenues, with significant cuts to state services, including an $8.2 billion cut in aid to local governments—reductions “that could affect school districts, local governments, nonprofits and other recipients of state funding, with the possibility of additional impacts in later years.”
The state also plans to employ short-term solutions leading to long-term headaches, he said. Such strategies include a delayed payment of $667 million in Social Security taxes and deferral of $700 million in the state’s share of Medicaid payments, pushing such expenses to future years.
The revenue losses, cuts, and deferred payments will have significant recurring impacts on the state, generating out-year budget gaps totaling $25.6 billion through 2024.
DiNapoli said the federal government “must do more” to support the states during the public health crisis. “Aid that flexibly addresses extraordinary needs and extends through the course of the economic devastation from COVID-19 would represent a full and appropriate response,” he wrote. “New Yorkers deserve no less.”
In a separate report relating to New York City’s fiscal condition, he forecast the city’s economy this year would contract by 12.9% and lose a net 350,000 jobs. He noted New York City has cut its revenue forecast by $2.5 billion for the current year and $5.4 billion for fiscal year 2021. The revenue losses and new demands on city services means New York City will have to bridge an $8.7 billion budget gap over two years, he said.
Chicago-Area Property Tax Relief
Homeowners in Chicago and several surrounding suburbs will have two extra months to pay their property taxes because of the health crisis, Cook County Board President Toni Preckwinkle said Wednesday.
Preckwinkle said in a statement that Cook County would waive late fees on property tax payments typically due on Aug. 3, as long as taxpayers made them by Oct. 1. Under state law, late property tax payments are charged 1.5% of the total property taxes owed per month, which is collected by the county treasurer.
Cook County, Illinois’s most-populous county, collects more than $12 billion in property taxes annually on behalf of 2,200 municipalities, school districts, park districts, and libraries. The county board is to take up the property tax relief plan at meeting scheduled for May 21.
Utah Anticipates Revenue Delay
A state budget stress test in Utah assumed the state would shift about $840 million that would have been collected in fiscal year 2020 to 2021 because of the delay in the income tax filing and payment deadline.
Utah, which regularly stress-tests its budget and has done so since 2015 to prepare for economic disruptions, acted in light of the pandemic. The latest test also showed the effect of the pandemic on state revenues is likely to be about $1.2 billion in the first year and $1.6 billion over the course of three years, according to a presentation Wednesday to the state Legislature’s Executive Appropriations Committee.
The purpose of the analysis was to project potential revenue declines and potential cost increases, add them together, and compare them to an inventory of available budget buffers, according to the report by the Office of the Legislative Fiscal Analyst.
New Jersey Revenue Tumbles
New Jersey on Wednesday said that April revenue plummeted 60% from a year ago, as the state’s finances were hammered by the pandemic.
The state lost an unprecedented $3.5 billion of revenue in April, according to Treasury Department data. It was the first full monthly tally since Gov. Phil Murphy (D) closed businesses, workplaces, and government services on March 21.
The news came as Murphy announced that businesses would be allowed to offer curbside pickup starting May 18, and that he was lifting restrictions on nonessential construction work. Still, customers won’t be permitted inside nonessential stores, he said at a news briefing. “They will have to continue placing orders in advance,” Murphy said.