NYC real estate revenue down, yet city surplus remains
NEW YORK |
NEW YORK (Reuters) - Revenues from two New York City real estate taxes fell sharply in the first nine months of the budget year, the city comptroller said on Tuesday, offering fresh evidence of the impact of Wall Street's troubles on the local economy.
But the city's total tax collections still are running about $800 million more than Mayor Michael Bloomberg projected in January, according to a source familiar with the data.
This surplus makes it tougher for the independent mayor to clamp spending.
Bloomberg, expected to release his revised budget on Thursday, has been slashing spending since last year. He has said the city cannot evade the downturn gripping much of the nation.
Wall Street could lose over 36,000 jobs due to the financial credit crisis, a New York state labor market analyst warned last week. So far this year, investment banks and other financial firms have cut thousands of jobs as they coped with write-downs on assets related to subprime mortgages and a rising tide of U.S. home foreclosures.
Both of New York City's underpeforming real estate tax revenues are based on sales of offices, warehouses, apartments and single-family homes. The number of deals has slowed, though with some properties, such as Manhattan apartments, prices still rose substantially in the last quarter.
Real property transfer taxes fell 12.7 percent, or nearly $162 million, from the same period a year ago, according to Democratic Comptroller William Thompson. At the same time, mortgage recording tax collections were down 20.1 percent, or $234 million. The city's budget year begins on July 1.
For months, the mayor has been warning that the still strong performance of some taxes does not mean New York will elude the national downturn. On Monday, he said payments by some taxpayers could "fall off a cliff."
That is because corporations often rely on so-called safe-harbor rules that let them avoid penalties as long as they pay 110 percent of their previous year's taxes. But when they overpay, they get credits on future tax bills, Deputy Comptroller Marcia van Wagner said in a telephone interview.
A spokesman for the mayor did not respond to an e-mail seeking comment on the city budget and the latest drop in tax revenues.
CUSHIONED BY HEDGE FUNDS
Collections from the unincorporated business tax may have been boosted by hedge funds and private equity firms, van Wagner said. New York City is home to 29 billionaires who have earned their fortunes from these businesses, according to the Fiscal Policy Institute, a think tank.
In contrast, corporate taxes fell $62 million, a worrying sign because the tax generated $3.9 billion last year. That is more than double the $1.7 billion the unincorporated tax generated.
The often enviably large paychecks paid by hedge fund and private equity firms could be one reason why the city's personal income tax collections are running $430 million above a year ago, van Wagner said.
"Estimated (personal income) taxes are coming in very strong," she said, adding that some of these payments might be due to a spate of home sales earlier in the period.
"You have to keep in mind that the city gained (about) 80,000 jobs last year," van Wagner said, adding that the city got almost $8 billion from the personal income tax last year.
(Editing by Jan Paschal)
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