New GAO Report On 9/11'S IMPACT ON NY STATE & CITY
NEW YORK: Today, eight members of Congress from New York released the first federal assessment of estimated tax revenue losses to New York City and State as a result of the September 11th terrorist attacks. The United States General Accounting Office (GAO) produced the report at the request of Reps. Carolyn Maloney, Charles Rangel, Maurice Hinchey, Steve Israel, Nita Lowey, Jerrold Nadler, Jose Serrano and John LaFalce.
The report states that "tax revenue loss estimates for the 2002 fiscal year - about $1.6 billion for New York City and $1.6 billion for New York State - appear to reasonably approximate the impact of the terrorist attacks on tax revenues" (p.2)
The report also details several undetermined factors that make estimates of City and State revenue losses for the fiscal year 2003 more uncertain, like "the degree to which the attacks have made New York City a less attractive location for businesses" (p.6). City and State estimates for combined FY 2002 and FY2003 revenue losses from 9/11 are $3 billion and $5.8 billion respectively.
Additional key points from the GAO review are highlighted on the following page while the full report can be viewed at https://maloney.house.gov/sites/maloney.house.gov/files/documents/olddocs/073002gao.pdf and at www.GAO.gov.
The members of Congress who requested and received the study released the following joint statement:
"This report provides a federal review of the extent to which 9/11 impacted New York's city and state revenues. It also points to potential future losses we must prepare for and work to prevent. The billions in lost tax revenue from 9/11increases stress on New York's annual City and State budgets and that affects social services, law enforcement, and investments in infrastructure. Current law limiting the amount of federal aid available to local governments after a disaster was clearly not created with the idea of a major terrorist strike in mind. We will be working with the President and with our colleagues in Congress to overcome the legal barriers that exist at present which are preventing the allocation of reasonable federal assistance to New York City and State to overcome the challenges of 9/11 recovery."
Ben Chevat (Maloney) 202.225.7944
Eric Schmeltzer (Nadler) 202.225.5635
Kevin O'Connell (Hinchey) 202.225.6335
Elizabeth Stanley (Lowey) 202.225.6506
Gary Luczak (LaFalce) 202.225.3231
Jack Pratt (Israel) 202.225.3335
Dale A. Crowell (Serrano) 202.225.4363
Summary sheet follows . . .
Key Findings of GAO Review of Estimates
for the Impact of the September 11, 2001 Terrorist Attacks on New York Tax Revenues:
(As Summarized by the Office of Congresswoman Carolyn B. Maloney)
PURPOSE OF THE REPORT
To present a review of "the estimates of tax revenue losses that the New York City Office of Management and Budget and the New York State Division of Budget attribute to the terrorist attacks" for both fiscal years 2002 and 2003 (p.1).
GAO FINDING IN REVIEW OF 2002 FISCAL YEAR ESTIMATED REVENUE LOSSES FROM 9/11
"tax revenue loss estimates for the 2002 fiscal year - about $1.6 billion for New York City and $1.6 billion for New York State - appear to reasonably approximate the impact of the terrorist attacks on tax revenues" (p.2).
GAO FINDING IN REVIEW OF 2003 FISCAL YEAR ESTIMATED REVENUE LOSSES FROM 9/11
"The tax revenue loss estimates for the 2003 fiscal year - about $1.4 billion for New York City and $4.2 billion for New York State - are more uncertain because they depend on some factors that are yet to be determined, such as the degree to which the attacks have made New York City a less attractive location for businesses" (p.2).
ADDITIONAL ESTIMATES REPORTED OF CITY & STATE REVENUE LOSSES
. Total Revenue Loss Estimated by City budget office for the City for FY 2002 and FY 2003
is $3 billion (p.3).
. Total Revenue Loss Estimated by State budget office for the City for FY 2002 and FY 2003
is $5.8 billion (p.3).
. "Of the total estimated loss [to the City] for both fiscal years combined, about $915 million was from reduced personal income tax revenues, $901 million from reduced business tax revenues, and $700 million from reduced sales tax revenues" (p.3).
. "Of the total estimated loss [to the State] for both fiscal years combined, about $4.9 billion is a result of lower-than-anticipated revenues from personal income taxes" (p.3-4).
ISSUES RELATED TO FEDERAL AID FOR NEW YORK TAX REVENUE LOSSES AFTER 9/11
"Under the federally administered Community Disaster Loan program, loans can be issued to local governments to help them replace lost tax revenues. However, the program has a maximum loan amount of $5 million and states are not eligible for assistance from this program" (p.2).
FACTORS OTHER THAN 9/11 THAT IMPACT CURRENT & FUTURE REVENUE LOSSES
. "the slowdown in the economy that was under way at the time of the attacks" (p.2).
. "the economic fallout from the collapse of Enron and accounting firm improprieties" (p.2).
. "employment losses" that "may have been unrelated to the attacks" (p.5).
Other factors the report mentions that could influence State and City revenues specifically for FY2003 include:
. "the extent to which those jobs that have been lost to date are permanently lost" (p.6).
. Anticipated business relocations out-of-state and the possibility that "additional relocations may occur if businesses that are currently based in New York City decide to further decentralize their operations ... to minimize the potential impact of a possible future attack" (p.6).
. "the ability of the econometric models to accurately project the effect of the terrorist attacks on the New York economy"(p.6).
KEY COMMENTS FROM CITY & STATE BUDGET OFFICES TO REPORT
The GAO report states that, "The Deputy Director of the New York City Office of Management and Budget said the pre-September 11 revenue forecast adequately accounted for the general economic slowdown under way at the time of the attacks and, therefore, the estimates of tax losses do not materially overstate the effect of the terrorist attacks" (p.7).
The Chief Budget Examiner for the New York State Division of Budget noted, as summarized by the GAO report, that "nearly half of the estimated loss for 2003 had already occurred in April, at the start of the fiscal year; the loss was related to the terrorist attacks, but not to other events" (p.7).