October 27, 2008 / 11:52 PM / in 9 years

NYC tax revenues leap despite Wall St woes

NEW YORK (Reuters) - New York City’s tax revenues rose $1.3 billion in the first fiscal quarter when compared with a year earlier but a “big chunk” of the increase was due to utilities paying property taxes early, the comptroller said on Monday.

Still, a $250 million increase in non-property taxes contrasted with gloomy predictions recently made by several fiscal monitors and Mayor Michael Bloomberg.

“Most of this unexpected money came from sales, personal income, and, banking and real property transfer taxes doing better than expected,” a spokesman for City Comptroller William Thompson said in an email.

The mayor, an independent who last week got the City Council to extend term limits so that he could run for a third term, has predicted that so-called economically sensitive taxes, such as income and sales, would fall 12 percent as Wall Street’s profits crater. And Bloomberg warned that the city will have to close a $1.5 billion deficit over two years.

A spokesman for the mayor, whose second four-year term ends in January 2010 unless voters agree that the city needs him to see it through the financial crisis, had no immediate comment.

On Monday, the mayor, at a news conference, again promised that under his leadership the city will not repeat its dismal mid-1970s experience, when thousands of teachers and police officers were let go. Crime spiked, schools failed and private sector jobs and property prices both fell.

While it can take time for personal income tax collections to fall, because individuals often keep estimated income tax payments level with the previous year to avoid penalties, at least one business tax and one real estate tax already are weaker.

The general corporation tax is running about $100 million below estimates while the mortgage recording tax is down about $18 million, said Thompson, a Democrat who says he will seek the Democratic mayoral nomination.

Later this year, utility property tax payments will be lower to reflect the sums they paid early, Thompson noted.

But New York City, which starts its fiscal years on July 1, also enjoyed a $283 million increase in net collections in the month of September versus a year ago, the comptroller said.

That gain also was $352 million more than forecast when the $59 billion budget was enacted in June, and the mayor first began warning Wall Street’s slide could force him to end a 7 percent cut in property tax six months sooner than planned.

New York City’s economy shares the securities industry’s boom-and-bust cycles; the sector employs only 5 percent of all city workers but pays 23 percent of all wages. Last year, bankers and brokers on average earned $379,000, according to the Empire Center, a conservative research group in Albany.

Bloomberg has repeatedly ordered spending cuts and in September agencies were told to prune $1.5 billion over two years. Fiscal monitors applauded these reductions, and the mayor’s saving cash for retired city workers’ healthcare, but criticize him for giving them overly rich pay packages.

Reporting by Joan Gralla; Editing by Gary Hill

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