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Plunging tax revenues spell NY budget woes 3 o 3

J City, state shortfalls are due to looming recession By NANCY DILLON “It’s already becoming very clear that stock market will lead to reductions in DAILY NEWS BUSINESS WRITER {he stato’s fjscal reserves, worth $2.6 bil- taxes tied to income, business, sales and New York officials are predicting a Hon, wiH be necessaiy to offset substan- capital gains. plunge in tax revenues following the tial revenue losses associated with the at- “Budget forecasts prior to Sept. 11 Sept. 11 terrorist attacks, putting the tacks,”, said state budget spokesman were predicated on the belief that the squeeze on state and city budgets. Kevin Quinn. economy would remain soft but not go in- Thn cLafo’o nivieinn nf Rndo-ot cniH thic Govcrnor George Pataki said this week to recession. Now with the shock of the week that the sudden decline^ineconom- he was not ready to discuss use of the re- disaster and worse-than-expected Au- ic activity will likely cleave more than $1 ^eiye fends, adding simply that total gust numbers, we have to assume reces- billion from expected state tax receipts , "L this vear tax shortfalls, clean-up and rebuilding —- rector of the Independent Budget Office, .J I--, xi. x. u J X • X-.1 were gioing to be "multiple, multiple bil- a city budget watchdog. And while the city budget office is s ill dollars. Lowenstein said recession, in budget- working on Its assessment, city controler -pj^g state’s final budget for the next fis- ary terms, often means a one-two punch and former mayoral candidate /Van Heve- ggi yg^^ is already six months overdue, of lower tax revenues and a need for in- si has said he expects a city-based tax having just weathered an ugly bout of creased city spending. shortfall in the area of $1.5 billion. wrangling over school spending. “As the economy and stock markets HEIDI SCHUMANN Putting such figures in perspective. According to state officials, tax short- stumble, more people tend to need public $1.5 billion is more money than New fall estimates are based on the assump- assistance and the city must pump more Gov. George Pataki may have to dip York City spends each year on sanitation, tion that weakness in wages, corporate of its own money into its pension funds,” Into reserves due to tax shortfalls. libraries and park services combined. profits, consumer confidence and the she explained.

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