Real estate rebound may net NYC extra US$3b tax revenue

New York

NEW York City may collect US$3 billion more in tax revenue this fiscal year than it projected in November, or US$1.4 billion more than Mayor Eric Adams projected last month, bolstered by a rebound in property values and strong residential real estate sales, City Comptroller Brad Lander said.

Lander, the city's fiscal watchdog, urged the Adam's administration to boost reserves given economic uncertainty spurred by Russia's invasion of Ukraine and the likelihood that the Federal Reserve will start raising interest rates this month.

"Ensuring our reserves are in good shape must be a high priority," Lander said at the Bond Buyer's National Outlook conference in New York City on Tuesday (Mar 1).

Last month, Adams proposed a US$98.5 billion budget that used US$2 billion of savings from reducing the city workforce without firings and streamlining some services to support spending.

Adams also estimated the city would collect US$1.6 billion more in tax revenue. It only adds US$55 million to reserves.

Lander praised Adams' savings plan but said the reserve boost was insufficient because plenty of risks remain on the spending side of the ledger, including under-budgeting of overtime, spending on homelessness, and the creation of long-term programs with time-limited federal funds.

Adams' proposed budget, which must be approved by Jun 30, also doesn't account for likely wage increases in a period of inflation, Lander said.

Labour contracts for three of the largest unions representing police officers, firefighters and civilians have expired, and the teachers' contract expires next year.

The city hasn't set aside cash for the first two years of raises, and each 1 per cent increase could boost labour costs by an estimated US$460 million when fully annualised, according to the state comptroller. BLOOMBERG