A Report by James A. Parrott and George Sweeting, City of New York Affairs, The New School, January 11, 2024.*
Posted by David Badertscher
“The past four years not only brought unprecedented economic upheaval to New York City and state related to the pandemic and its aftermath, but also a resumption of stark polarization in the well-being of New York’s population. New York’s employment recovery is incomplete, and while job growth is likely to remain moderate in 2024, the economic outlook for the year ahead has brightened considerably in recent weeks, as inflation has continued to cool and projections for a recession in 2024 have faded. For the state and city government, the improved economic outlook bodes well for revenue collections. The migrant influx and the winding down of federal pandemic fiscal relief pose significant, but not insurmountable, fiscal challenges.
2024 is a year of reckoning for New York City and New York State. It is a time to come to grips with the uneven and incomplete pandemic recovery, and also a time for the State to join the City in mapping out a coordinated response to the migrant crisis. It is not a time for austerity but a time for facing and addressing problems, and for the State to use its considerable fiscal resources (much of which have been generated by the city’s economic might) to shoulder more of the resulting fiscal burden.
The State should use a portion of its considerable $22 billion in budget reserves to increase financial aid to the City of New York, and some should be used to respond to rising poverty and economic hardships, both of which otherwise will undermine the state’s long-term economic performance. The State needs to craft better policies to improve the grossly inadequate compensation for the growing number of health care and social assistance workers whose pay is largely determined by New York State and local governments.
The City should also consider equitably fair proposals to raise additional revenues to moderate severe budget pressures, as it did in the early 1990s and in the wake of 9/11″
This Report is divided into a series of sections, each with supporting data. The first section introduces the topic. It provides an overall discussion of ” unprecedented economic upheaval to New York City and state related to the pandemic and its aftermath, a resumption of stark polarization in the well-being of New York’s population”, and sets forth the rationale for creating and publishing New York’s Economic and Budget Outlook: Post Pandemic Reckoning for the City and State. “The next section summarizes the dual economic status of the state and city at the end of 2023. It reviews data showing how New York’s lagging employment recovery from the pandemic affects those in the bottom half of the income distribution, while also discussing how the State’s economic strength in high-paying industries has lifted State revenue growth. The following section turns to the 2024 city and state economic and revenue outlook. Attention then shifts to the budget front, with discussions of the New York City fiscal situation and the recently proposed budget cuts. The next section discusses why, contrastingly, the State budget is in much better shape and in a position to provide more assistance to New York City. Recognizing that additional resources beyond increased State aid are warranted to avert damaging budget cuts, the final section discusses three areas where, provided State approval is affirmed, New York City could reasonably seek additional revenues. ”
*About the authors
James A. Parrott is Director of Economic and Fiscal Policies at the Center for New York City
Affairs at The New School.
George Sweeting is Senior Fellow for Fiscal Policy at the Center for New York City Affairs.
We would like to acknowledge contributions from Lauren Melodia, Lina Moe, Prisca Agombe,
Robert Noble, and Nishka Shah of the Economic and Fiscal Policies staff. We thank Bruce Cory
for editing the report, Isabella Wang for design and website support, Nishka Shah for preparing
the charts and layout, and Kristin Morse and Seth Moncrease for general support. We gratefully
acknowledge the funding support for this report provided by the Robin Hood Foundation, the
JPMorgan Chase Foundation, the New York Workforce Funders, and the New York Community