The Great Recession's Impact on New York City's Budget
Daniel L. Smith, assistant professor of public budgeting and financial management at NYU Wagner, has co-authored a new paper for the Social Science Research Network (SSRN) Working Paper Series. According to the paper entitled "The Great Recession's Impact on New York City's Budget," New York City has effectively handled the effects of the recession on its budget, but asked lower income residents to "bear a substantial portion of the burden...."
According to the abstract, "Strong property tax growth and proactive policies - including beginning the recession with a substantial surplus of $5.3 billion (9 percent of revenues) - offset a severe contraction in income tax receipts, protecting the City's budget such that it never contracted in absolute terms during or immediately following the Great Recession. Policymakers increased property and sales tax rates, utilized fund balances, cut agency budgets repeatedly, and re-appropriated retiree health benefits in response to the fiscal challenges brought about by the Great Recession.
"Whether one attributes it to compliance with a strong, state-mandated, balanced budget rule or adept leadership, New York City certainly appears to be dealing effectively with the Great Recession's impact on its budget. However, City leaders have asked lower income residents to bear a substantial portion of the burden by favoring more regressive tax policies and by cutting the social service agency's budget substantially. With forecast budget gaps of $3 billion and $4 billion in FY 2012 and FY 2013, the long-term impact of the Great Recession on New York City's budget remains an open question."
The paper was co-authored by Lawrence J. Miller of the Rutgers University School of Public Affairs and Administration.