How to keep NYC from going bankrupt

How to keep NYC from going bankrupt

With the city’s tax base decimated by the pandemic and a high-income-earner exodus, will Mayor Bill de Blasio tighten the fiscal belt? The dire need for it is laid out in a new Manhattan Institute study.

In it, New York City government vet Eric Kober looks at the two-decade growth of the city payroll and suggests ways to achieve savings and reduce costs in light of the pandemic’s toll on city revenues.

Since de Blasio became mayor in 2014, the city payroll and overall spending have mushroomed. At the end of fiscal year 2012, the city headcount was 293,550; by the end of FY 2019, it reached an all-time high of 326,739.

Kober gives de Blasio credit for managing the immediate fiscal challenge, but warns that budget gaps will explode soon if, as is all too likely, the real-estate market buckles and property-tax revenues crater.

He explains that the city’s structural dependence on ever-rising property-tax revenues leaves it vulnerable to dramatic shifts in the real-estate market — such as the likely coming space cutbacks by Manhattan office-based industries. “If real-estate tax revenue no longer grows well above the rate of inflation,” he warns, “the city’s expenditure patterns will not be sustainable.”

If the new work-from-home reality proves permanent for many workers, he recommends trimming the city’s headcount down to the levels of 2008 — 311,018 — in order to reduce the high tax burden and to leave more money in the hands of residents and businesses. Plus, it will trim the high-cost of future retirement benefits.

De Blasio has so far resisted any real cutbacks or layoffs, pinning all his hopes on a huge windfall that Washington probably will never send. But even that wouldn’t fix the long-term problem: New York City is spending far too much for its post-pandemic tax base.

The crows won’t really come home to roost until this mayor is out of office — but the city desperately needs his successor to be a leader willing to face harsh reality.

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