New York City faces $7.4 billion tax revenue hit from coronavirus

April 16 (Reuters) - New York City’s tax revenue will drop by $7.4 billion in its current and next budget due to the coronavirus outbreak, forcing the city to raid reserves and cut spending, Mayor Bill de Blasio announced on Thursday.

Compared with tax estimates released in January, revenue is now expected to fall by $2.2 billion in fiscal 2020 and by $5.2 billion in fiscal 2021, which begins on July 1.

With social distancing and stay-at-home orders in most of the nation, nonessential businesses and services have shuttered, leading to skyrocketing unemployment and lower consumer spending. As a result, cities and states are starting to project deep revenue losses, particularly for big money generators like income and sales taxes.

For New York, the U.S. epicenter for the COVID-19 pandemic, the lost revenue is primarily related to declines in sales, hotel, personal income, and business taxes, according to a statement from the mayor’s office.

At a news conference, de Blasio called for more financial support from the U.S. government, which has already allocated $150 billion to reimburse state and local governments for virus-related expenses.

“We need the federal government to make up for all lost revenue. Period,” the mayor said.

He added that his top spending priorities are to “keep people safe, protect their health, make sure there is a roof over their head and that food is on their table.” He also called furloughs and layoffs of city workers “a last resort.”

De Blasio, who proposed an $89.3 billion fiscal 2021 executive budget that he said was balanced, cautioned that revenue losses could grow even larger depending on how and when the economy restarts. The city’s Independent Budget Office has projected a tax revenue loss of $9.7 billion for the two fiscal years. (Reporting by Karen Pierog in Chicago, Additional reporting by Maria Caspani in New York Editing by Matthew Lewis)