THE BUDGET CRISIS

Nov 14, 2002
Press Release

WASHINGTON: A group of New York elected officials urged Governor Pataki today, to lead a renewed effort in Washington for help with staggering budget shortfalls facing the city and state after 9/11. While some of New York's budget woes stem from the slowed national economy, about $8.8 billion in losses was incurred as a result of the terrorist attacks, according to data from City and State budget offices that was found to be 'reasonably approximate' by the federal General Accounting Office. But so far New York has received no aid from Washington to help cover these losses.
A letter sent to Governor Pataki today, from Congressmembers Carolyn Maloney, Jose Serrano, Jerrold Nadler, Major Owens, Nydia Velazquez, Edolphus Towns, and Nita Lowey, with City Comptroller William Thompson and City Council Speaker Gifford Miller, states, "The budgetary problems created in the wake of the attacks are too great to solve using our current available options without making some difficult choices . . . This is why we need Federal assistance for lost tax revenues. ... We believe the American people would agree that New York services for schools, libraries, police, and even water and highways, should not suffer because of Osama Bin Laden."

The letter can be viewed in full at: https://maloney.house.gov/sites/maloney.house.gov/files/documents/olddocs/Sept11/111402TaxRevenues.pdf 

Rep. Maloney said: "Pulling out of these budget deficits, largely from 9/11, will be one of the toughest challenges New York has ever faced, and that's why we need the Governor to help ensure that the federal government lends a helping hand. New York doesn't deserve years of tax hikes and deep cuts to its school systems, hospitals, and other critical services because of Osama bin Laden's attack on New York."

Rep. Serrano said, "New York has had to endure many daunting challenges over the last year. Confronting these challenges will be even harder if we do not untie New York's hands to receive federal assistance for lost tax revenues. We need the federal government to recognize this disaster not only as a local event but as the national tragedy it was. That is why we are supporting legislation to repeal the sadly insufficient cap currently in place on how much federal aid can go to help for lost tax revenues following disasters."

City Council Speaker Miller said, "The Community Disaster Loan Equity Act would give us a powerful option as we try to close the City's budget deficit this year. Thanks to our leaders in Washington, the City's infrastructure is on it's way to being fully restored. Now we must turn the focus to lost revenues. If we ignore this part of our deficit, then New Yorkers will have to shoulder more than their fair share."."

Comptroller Thompson said, "It is imperative that Washington be convinced of the fairness and necessity of 'The Community Disaster Loan Equity Act of 2002.' The fiscal challenges now facing the citizens of New York City are due in part to lost tax revenue caused by the 9/11 attacks. These acts were an attack on the nation and the city should not have to shoulder the burden alone. It is only fair that Federal assistance be provided to adequately compensate New York for lost tax revenues."

BACKGROUND: The recent GAO Report on Estimated Tax Revenue Losses for the State and City of New York can be found at https://maloney.house.gov/  and at https://maloney.house.gov/sites/maloney.house.gov/files/documents/olddocs/073002gao.pdf.  The report states that the estimates made by the New York City and State budget offices of $1.6 billion in lost tax revenues to the City and $1.6 billion in losses to the State in fiscal year 2002 as a result of the attacks were "reasonably approximate.'' The report also accepts the fiscal year 2003 estimates produced by New York City and State of combined losses of up to $5.6 billion, bringing the total loss of tax revenues to $8.8 billion for the City and State over two years.

Last month, on October 2, 2002, Congresswoman Maloney, along with Senators Clinton and Schumer, and Representative Charles Rangel and other New York lawmakers, introduced the Community Disaster Loan Equity Act of 2002 to repeal an arbitrary cap that was imposed on the amount of federal aid allowed to assist localities for lost tax revenues after national disasters. The limited federal aid of $5 million per disaster falls far short of the billions in tax losses incurred in New York after 9/11. Now, with Mayor Bloomberg's announcement of massive cuts in city services and tax hikes, and similar announcements expected at the state level, the issue has become New York's most urgent.

The following web link provides additional background information on this issue, with links to economic reports about the city and state's tax revenue losses, and details about the federal legislation that can help: https://maloney.house.gov/


###