Image Credit: CityLaw.
On February 26, 2021, Richard Ravitch, Former New York State Lieutenant Governor and Former MTA and Urban Development Corporation Chair, spoke at the 171st CityLaw Breakfast. Former Lt. Governor Ravitch spoke on “The State and City Budget Crisis.”
Professor Ross Sandler, Director of the Center for New York City Law provided opening remarks. Stanley Shuman provided closing remarks. Mr. Shuman is the Chair of the Center for New York City Law Advisory Board. Mr. Shuman has been associated with Allen & Company since 1961. He has served as Executive Vice President, Managing Director and most recently Senior Advisor. He previously served on the (Emergency) Financial Control Board for the City of New York for 19 years.
The Breakfast was sponsored by Con Edison, Greenberg Traurig, and Verizon. This will be the fifth virtual CityLaw Breakfast as in-person events are not feasible at this time due to the COVID-19 pandemic.
Former Lt. Governor Ravitch began with a discussion about the City’s 1970s fiscal crisis, and how it differed from today. In 1975, the City was prevented from taking on more debt by banks and required a $3 billion line of credit from the federal government to avoid bankruptcy. The nation was in a recession, and the City eventually recovered through the oversight of the budgetary advisory board and a disciplined approach to the budget. Unlike in the 1970s fiscal crisis, Former Lt. Gov. Ravitch cited the tragic impact of the pandemic, politics that lean more toward spending money, and a current movement to tax the rich to explain our current situation. Former Lt. Gov. Ravitch expressed caution in wanting to solve budget issues with just taxes for the rich, because the pandemic has revealed that proximity isn’t necessary to do business, and that elected officials need to be aware of the balance between the cultural pull to stay in New York City versus the incentive for businesses to move to somewhere else for lower taxes.
While President Biden’s proposed COVID relief bill is expected to help New York’s state and city budgets remain balanced for the upcoming year, Former Lt. Gov. Ravitch expressed concern for the next few years out. He discussed the impact COVID has had on property tax revenue, and expects property tax revenue to fall over the next few years as the City continues in its recovery.
Former Lt. Gov. Ravitch expects that New York City will recover someday, but said it was unclear on when it would happen. While he believes vaccinations will help slow down the spread of COVID-19, it will take more time for people to regain the confidence to engage with major cultural institutions, dining, and the City’s social scene.
Former Lt. Gov. Ravitch recommends having an advisory board to supervise the budget in the upcoming years. He believes that citizens should be more informed about this fiscal crisis, and that candidates for Mayor and Comptroller will have a steep learning curve ahead of them in preparing to take on the challenges of dealing with the budget. In his Q&A session, Former Lt. Gov. Ravitch discussed unions and the MTA. He recognizes that unions can put pressure on budgetary decisions, and hopes unions can sit down with the business community and elected leaders to develop solutions. As for the MTA, he cited concern for the agency’s ability to bring in necessary revenue with reduced usage.
Stanley Shuman agreed with Former Lt. Gov. Ravitch’s observation that there will be a lag between getting people vaccinated and the return of the City’s cultural institutions. They discussed the fear of pushing out businesses with higher taxes, the upcoming election, and how the future Mayor and Comptroller will need to focus on reducing headcounts and expenditures to help build a revenue cushion where possible.
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