NYC-WTC_000195490

NYC 9/11 Public Portal Document

c TAX REVENUE Overview Tax revenue is forecast to increase 4.2 percent in 2001, but declines in 2002 by 2.9 percent.

The robust national recovery and booming financial markets that have marked the latter stages of this j! national expansion came to an end in calendar year 2001, Nationally, real GDP growth of 5.6 percent in QI slipped to 1.0 percent by Q4. Securities industry profits hit a record of $21 billion in 2000, but much of that was on the strength of an unprecedented $8 billion profit quarter seen as the year began; subsequently, profits slipped back to S3 billion by the last quarter of the year. Locally* tile New; York City economy also began the year on a strong note with employment growth averaging 36,000 jobs a quarter for the first half of the year, but falling to 7,500 jobs a quarter during the second half of the year. A careful analysis of the tax collection information to datfc suggests that this economic weakening will soon manifest itself in the City’s tax collections, although the record bonuses on Wall Street have,/to a great extent, obscured the evidence. In 2001, the personal income tax is forecast to grow 11.1 percent (common rate and base), due to a strong bonus payout, but business tax collections (general corporation tax, unincorporated ^business tax and bank tax) are expected to rise by only $8 million, reflecting the current weakness in business conditions and the liquidations of overpayments made last year when business tax collections grew 19.0 percent (common rate and base). F'i Sales; tax is growing strongly at 7.4 percent (common rate and base) in the City, but outside the City al collections have already begun to weaken. Finally, mortgage and transfer tax collections, while holding up reasonably well so far, are still off from peak levels achieved last year, dropping 9.2 percent. In all, non­ property taxes are forecast to increase 2.6 percent. Adjusting for the annualization of the clothing exemption, the mid-year reduction in the personal income tax surcharge, the increase to the STAR program personal income tax reduction and an increase in Transitional Finance Authority (TFA) retention, results in a common IF rate and base growth in non-property taxes of 6.3 percent. 2001 and 2002 Tax Revenue Forecast sr ($ Millions) / \ 2002 Increase/(Decrease) 2001 Executive From 2001 to 2002 'LtXj Forecast Budget Amount Growth Real Property $8,136 $8,643 $507 6^2% 364 9 2.5 tl Commercial Rent Mortgage Recording / 355 / 366 i 325 (41) (11.2) I I Real Property Transfer Personal Income/' General Corporation ■' 439 / 5,398 / 1,806 404 4,766 1,490 (35) (632) (316) (8.0) (11.7) (17.5) ! Banking Corporation 357 359 2 0.6 Unincorporated Business 776 778 2 0.3 Sales and Use 3,651 3,710 59 1.6 Utility 260 258 (2) (0.8) All Other 749 761 12 1.6

Subtotal $22,293 $21,858 ($435) (2.0)

Id STAR Aid Tax Audit Revenue 504 399 670 487 166 88 n.a. 22.1 Tax R,eduction Program 0 (494) (494) n.a.

Totd $23,196 $22,521 ($675) (2.9%) I 1 t Excludes revenuefor TFA debt service of$427.1 million in2001 and $502.6million in 2002. * The April 4,2001 report, “Tea Revenue Forecasting Documentation" discusses the taxforecasting techniques used in this Executive i Budget. ; 1 30 J •

NYC-WTC_000195527