By Katie Honan 

New York City's latest economic analysis paints a less dire picture than earlier this year, but it still needs a federal bailout to recover from the crisis caused by the coronavirus, Mayor Bill de Blasio said.

The first round of a federal stimulus package helped the city avoid steeper cuts in tax revenue collections this summer, according to the city's latest financial plan released Monday.

The city's updated budget grew from $88.19 billion in late June to $92 billion, buoyed by $3.2 billion in federal dollars with the majority going to pay for Covid-19 expenses, Mr. de Blasio said.

It added $748 million more in collections from personal income and business taxes than originally forecast in the fiscal year's earlier budget, the mayor said.

But it still needs more help from the federal government.

"If there is no stimulus we're going to have to make extremely difficult choices," the mayor, a Democrat, said at a press conference Monday.

The city still has a $4 billion revenue gap, and projected to continue to see less revenue. The absence of new federal stimulus could also hurt the budget of the state, which could then slash its own funding to the city to save money, he said.

Since the city shut down in the spring to slow the spread of the coronavirus, the mayor has prepared the city for stark cuts, slashing some services in the most recent budget, which was passed June 30. Thousands of city employees were required to take a 5-day furlough between October and March, including Mr. de Blasio, who was docked one week of pay earlier this month although he continued working.

Mr. de Blasio warned of possibly laying off 22,000 city employees if the city didn't get borrowing authority from the state, or a federal bailout. The layoffs have so far been avoided by deferring billions in labor costs to coming years to achieve savings within this and next year's budget.

But there could be future layoffs if more assistance isn't given to New York City, the mayor said.

Independent budget watchers said Mr. de Blasio doesn't do enough to achieve necessary savings, instead deferring payments to future budgets. There could still be more budget cuts at the agency level, said Andrew Rein, the president of the independent Citizens Budget Commission.

"Federal aid is needed and may be significant," he said in a statement. "Still, even if substantial, federal aid will only be a bridge and that bridge must land on a stable shore."

Write to Katie Honan at Katie.Honan@wsj.com

 

(END) Dow Jones Newswires

November 23, 2020 16:08 ET (21:08 GMT)

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