What was only a rumor this morning is now confirmed. New York City is canceling its tax rebate checks for homeowners.
NEW YORK (Reuters) – New York City Mayor Michael Bloomberg said on Wednesday he has instructed the finance commissioner not to send out $400 property tax rebates to homeowners because the crisis on Wall Street has cost the city dearly in lost tax revenue.
Bloomberg, who hopes to win a third term by convincing voters he is best suited to guide the city through its fiscal crisis, told a news conference that Wall Street already has taken half a trillion dollars in write-downs.
Financial companies might not pay city or state taxes for three to five years as they struggle with losses, he said. The mayor estimates New York Stock Exchange member firms will have to earn a combined $10 billion a year for several years before the city can resume collecting taxes from them.
Wall Street, which could shed over 30,000 workers, represents about 35 percent of the city’s wage base. Adding to the gloom, the mayor is expecting a total of 140,000 job losses city-wide by July 1, 2009.
Even financial planning has its limits.
“If it turns out to be a meltdown, nobody can prepare for that,” the mayor said.
Should the economy fail to recover soon, sales or income taxes may have to be raised to plug the $1.3 billion deficit in next year’s budget — despite $1.5 billion of new cuts that begin now, Bloomberg said.
Emphasis added by me.
The State itself isn’t doing too well and that will probably cascade downward too.