Without a doubt, the Coronavirus pandemic ushered in a new normal, characterized by the 'work at home syndrome.' As a result, by the close of 2020, the value of hotel properties and office buildings in many of the world’s largest cities (like New York) fell sharply. This caused seismic rumbles and impacted stock prices. US economic experts now predict that the value of property taxes in New York City will decline sharply by as much as $2.5 billion. Not surprisingly, this represents the most significant decline since the 1990s.
Interestingly, analysts expect the post Covid- 19 situation to remain mostly the same- many people will (likely) continue to work at home. This also means that (after 2021) most office buildings in large cities like New York will remain unoccupied for a long time. According to a recent statement by New York City Mayor, Bill De Blasio, the sharp drop in the city's property value is directly attributed to the Covid- 19 pandemic effects. Clearly, most of the city’s buildings, hotels, and offices have remained empty since 2020; New York became a ghost city.
Further, according to the New York City Hall officials, the tax class market value (including hotels, office, and retail properties) has significantly fallen- by about 15.8%. Since real estate accounts for 50% of the city’s tax revenue, these figures will likely jeopardize City Hall’s budgetary prospects in the immediate future. Just like other US cities, New York has suffered unprecedented devastation since the Covid-19 pandemic arrived.
Some 26,000 people have died, the city lost billions of dollars (in expected tax revenue), and thousands of jobs. Moreover, unemployment rates exceeded 20% -at the worst point of the pandemic in 2020 and early 2021. Even though some businesses remained open, more than 500,000 residents of New York are unemployed. The city’s transport sector is adversely affected since most workers stay at home rather than travel to work.
Fortunately, it’s certainly not all doom and gloom; as the sages say, 'Behind every cloud is a silver lining'- analysts noted strange happenings throughout the Covid-19 pandemic months- the rich became more prosperous. Overall, this portends good news to the city- it means a higher prospect for increased income tax revenues.
Notably, New York Governor Andrew Cuomo and Mayor De Blasio consistently fought the Trump administration for 4 years, seeking federal aid. Both are optimistic that the newly installed Biden administration will change matters substantially. To brighten matters, the new US Senate Majority Leader, Chuck Schumer, recently announced that the incoming government would take over all Covid 19 disaster-related costs in the City and State.
The expected government intervention will let City Hall off the hook with regards to 25% of the federal emergency reimbursement costs. This also means New York State and city will save a whopping $2 billion. According to Mr. Schumer’s office, 'These savings will help plug the gaping Covid 19 related budget holes.' He says that this is 'a mere taste of better days ahead- coming out of Washington straight to New York.
Soon after Mr. Schumer’s encouraging revelation, US President Joe Biden announced a $1.9 trillion proposal to alleviate the ravages of the Covid-19 pandemic. Out of this, his administration sought to set aside $ 350 billion to assist state and local governments.
Significantly, according to Mr. Schumer, New York City’s exciting deal with the incoming government to cover 100% of the Covid-19 related emergency expense means that the city will receive approximately $1 billion (both for the state and city. The deal strikingly resembles the Obama administration's pact- where the current president served as Vice-President. While the Trump administration had severally committed to boosting this kind of arrangement, his government never acted effectively to implement it. As a result, this compelled New York City and State to cover 25% of such costs.
Thanks to the new aid, the New York City Hall can now put on hold its plans to cut nearly $200 million in the education budget. Moreover, it can halt a plan to cut $ 44 million in the mayor’s favorite pre-school program (this is popularly known as the '3-K for All.'). On his part, Mr. Cuomo, the Governor, expressed optimism that the federal government would help backfill the $ 15 billion shortfall. This is the largest shortfall in the entire history of New York State.