Mayor Bloomberg gives grim update on city's economy

New York City Mayor Michael Bloomberg delivered his address on the state of New York City's economy Friday, outlining a preliminary plan aimed at closing a gaping deficit for the next fiscal year through layoffs, budget cuts and a possible increase in sales tax.
?This is a very tough time for our city and our nation, and our administration is trying to do everything possible to help New Yorkers weather the storm,? Bloomberg said.
The mayor painted a grim picture of the city?s finances, saying that according to estimates, the gap for fiscal year 2010, which begins July 1, currently stands at $4 billion. However, Bloomberg pointed out that belt-tightening actions taken by city agencies over the past year lowered the projected deficit by about $2 billion.
According to Bloomberg, one of the biggest problems that plagues New York City?s economy is plummeting tax revenues. Estimates show that in 2010, tax revenues will be $5 billion lower than in 2008.
One reason behind the tax troubles are layoffs, the mayor said. By 2010, nearly 300,000 people in the city are expected to lose their jobs, including 46,000 in the financial industry. Those layoffs are expected to deliver a heavy blow to the city?s economy.
?The public is afraid,? Bloomberg said. ?They are not willing to go out and buy a new car or start a new business.?
New York City sales tax would possibly rise from 8.37 to 8.62 percent under one of Bloomberg?s proposals to help bridge the deficit. However, the mayor pointed out that the final decision to raise the tax will depend on three factors: The state?s budget, the city?s economic health and the amount of anticipated federal aid.
The federal government is expected to provide the city with $1 billion to fund Medicare, but the mayor said he will be working to secure additional resources to help boost education. Under Gov. David Paterson?s budget proposal, New York City?s education budget will be decreased by $770 million in the next fiscal year.
Bloomberg asked all city agencies last month to submit plans for cutting spending, after he already announced $500 million in cuts for the 2009 fiscal year. Those included a round of layoffs, delays to the next class of firefighters and police officers, as well as a property tax increase. The mayor said another round of layoffs and cuts is likely.
Associated Press reports contributed to this article.
To watch Bloomberg's news conference, go to Channel 612 on your iO digital cable box and select iO Extra.