The die had been cast decades ago — the Big Apple was headed for financial ruin… it was simply just a matter of time.
Financial experts are now seeing the telltale signs of a city in financial distress, and perhaps on the brink of BANKRUPTCY.
The clock is ticking daily as both individuals and businesses are leaving the city in record numbers for lower taxes in more business-friendly states, while NYC’s out of control spending continues unabated at an all-time high.
The last time the city came close to filing for bankruptcy, one of the very first blockbuster films, “Jaws,” was released, the Vietnam War ended, and former President Gerald Ford publicly refused to give the city a bailout package to settle its debt.
This prompted the New York Daily News on October 30th, 1975, on its front page in big bold type, what is now considered an iconic headline, “FORD TO CITY: DROP DEAD.”
Fast forward 40-years to the present and economist Milton Ezrati is echoing the same dire warning saying, “The city is running a deficit and could be in a real difficult spot if we had a recession, or a further flight of individuals because of tax reform.”
Adding, “New York is already in a difficult financial spot, but it would be in an impossible situation if we had any kind of setback.”
Peter C. Earle, another economist at the American Institute for Economic Research, has also sounded the fiscal alarm acknowledging that, “New York City could go bankrupt, absolutely. In that case, the city would get temporary protection from its creditors, but it would be very difficult for the city to take on new debt.”
According to an October 2018 Citizens Budget Commission report, the city’s budget deficit has reached an all-time high over the past year. New York City’s long-term liabilities, which include pensions, bonded debt, and retirement benefits for city government employees have reached a staggering $257.3 billion.
Analysts say de Blasio’s preliminary fiscal 2020 budget includes $750 million in savings, but that won’t be enough if a recession comes, as many predict.
And although the city is hemorrhaging red ink, New York’s progressive mayor shows no sign of curbing his appetite for wasteful spending. In fact, a just-released financial report has uncovered almost 1 billion dollars entrusted to the mayor’s wife concerning a mental health program; overseen by Chirlane McCray cannot be accounted for.
Moreover, according to Ezrati, the mayor has added an additional $3 billion in spending to the current $89.2 billion budget, and he’s spending the funds at three times the rate of inflation.
To make matters even more problematic for de Blasio, the likelihood of being bailed out by the state is remote, in that Gov. Cuomo has a major shortfall of his own, to the tune of almost $2.5 billion.
The unexpected budget deficit caught the governor by surprise because a record number of New Yorkers, including many wealthy residents, have fled the state for more tax friendlier regions.
This, in turn, has reduced the governor’s preliminary budget for New York City by a whopping $600 million in cuts.
Cuomo, along with Comptroller Tom DiNapoli, says they are sounding the alarm after reviewing the results of the January quarterly estimated tax payments.
The governor acknowledged that collections are even “worse than anticipated,” and “as serious as a heart attack.”
Comptroller DiNapoli says it’s the biggest hit to the state’s finances in some time.
“This is the most serious revenue shock that the state has faced in many years,” said DiNapoli. “That $2.3 billion figure, frankly, governor, I think could get worse before it gets better.”