Economic outlook bleak despite record tourism

Despite a record-high 47 million visitors who spent $30 billion in 2008, the city’s economic future is likely going to get worse.
When Mayor Michael Bloomberg unveils his Executive Budget for the city later this month, he will likely have to come up with more spending cuts and revenue generators because of the continued economic decline, according to a recent report by New York State Comptroller Thomas DiNapoli.
The report, which cites a combination of lower-than-expected tax revenues and greater-than expected Wall Street losses from those projected in the city’s November financial plan, said the city should be prepared to face a $3.5 billion budget gap for 2010 and $8 billion for 2011.
“The mayor and the City Council have taken a proactive approach to the city’s budget problems,” DiNapoli said. “But the economic outlook continues to deteriorate with every new forecast. We don’t know how long the recession will last, or how deep it will be, but it’s clear that New Yorkers should brace themselves for possibly the worst fiscal crisis since the 1970s.”
When Bloomberg unveiled the city’s financial plan in November, he often spoke about the likelihood that the economic forecast would continue to get worse and that the city would have to adjust to those conditions.
According to Comptroller DiNapoli’s report, city tax collections could be lower by $575 million in the current fiscal year and $450 million in fiscal year 2010; job losses in the city could exceed 175,000 in the next two years; and Wall Street losses could top $30 billion this year compared to the $25.5 billion the city projected in November.
Meanwhile, DiNapoli said the city should not rely on the state for help, and the city should expect to see some of its state aid decrease.
“The state faces its own fiscal crisis,” DiNapoli said. “Balancing the state budget will require sacrifices that could hinder the city’s efforts to balance next year’s budget.”
Although the budget gaps will undoubtedly mean increased cuts for city agencies, Bloomberg said that the 47 million visitors to the city - up 1 million from 2007 - was definitely a bright spot for the city. The increase this year comes from an additional 1 million international tourists visiting the city bringing the number of international visitors to 9.8 million.
“The importance of diversifying our economy is clearer today than ever, and we will continue to make strategic investments to promote New York City and keep it the place travelers want to come,” Bloomberg said.
In addition to the increased number of tourists and money spent, the city’s hotel occupancy rates continued to top the national average in 2008 by at least 20 percent. The city also posted 1,800 additional rooms to its hotel inventory giving it about 75,600 rooms in total.