NYC real estate revenue down, yet city surplus remains

By Joan Gralla

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."