(The Center Square) – New York City and New York state have suffered a combined loss of more than three-quarters of a billion dollars in property tax revenue over the past year, according to a report from a real estate trade organization.
The report from the Real Estate Board of New York paints just how devastating the COVID-19 crisis has been to the city and state since the pandemic began in March. The board’s report indicates that compared to March-September 2019, investment and residential property sales dropped by 48 percent.
Comparing the year-to-date totals from this year to last, the decline in sales has led to a $755 million decline in tax revenue generated for both the city and state. The slumping property sales are especially critical considering that property taxes make up the majority of the city’s tax revenue. At 53 percent, the property tax share is about two-and-a-half times the percentage generated by the city’s personal income tax.
In the 2020 fiscal year, property taxes contributed nearly $32 billion toward the city’s overall budget, which was more than $92 billion.
“This historic decline in market activity due to the COVID-19 pandemic isn’t just affecting the real estate industry – it’s hurting millions of New Yorkers who rely on the publicly funded government services that have been devastated by a loss of $755 million in tax revenue,” REBNY President James Whelan said in a statement.
Even the good news has more than a tinge of bad news to go with it. The total sales volume for September was $3.48 billion, up 9 percent from August’s $3.18 billion. However, compared to September 2019, when $6.57 billion in sales were reported, it represents a 47 percent decline.
Both the city and state are facing massive deficits due to the COVID-19 crisis, and earlier this week New York City Mayor Bill de Blasio spoke in support of a tax increase that could potentially stymie a real estate recovery in the city.
For nearly 40 years, the state has offered a rebate of the stock transfer tax, and the mayor said Wednesday he’d support ending that practice.
“If ever there was a time in history to right that wrong and make sure that was true progressive taxation, it's now,” de Blasio said. “So, I think we need to increase taxes on the wealthy across the board. This is something I'm going to fight for in Albany, for sure. It is time for higher taxes on millionaires and billionaires.”
New York Gov. Andrew Cuomo has resisted talks of raising taxes, especially on high income earners. However, he’s softened that stance a bit as the likelihood of Congress offering states and localities funding to shore up budgets is less certain. Cuomo said that if Washington doesn’t bail out state and local governments, then taxes should be raised across the country and not just in New York.