Dave Friedfel, Director of State Studies at the Citizens Budget Commission, made sense of New York’s financial picture.

“Federal aid’s a bridge and that bridge has to land somewhere solid,” said Andrew Rein, president of the Citizens Budget Commission.

Budget experts say that federal aid alone won’t be enough to plug the budget gap, even if a stimulus package is passed. “Not only would federal aid not come immediately, but it's very, very unlikely to be of a size and duration to close the state's four year financial plan budget gaps,” said David Friedfel, director of state studies at the watchdog group Citizens Budget Commission. He said the state should reexamine how it finances capital spending, potentially access its rainy day reserves this year and figure out how to deal with the money that has been withheld so far. “Those entities either need to be told that they're not going to be getting their money, or the state is going to have to find a way to fund those payments.”

Maria Doulis, a vice president of the nonpartisan Citizens Budget Commission, offered a stark analysis of the COVID-related financial crisis unfolding in New York, as well as the devastating impact if federal pandemic aid never materializes.



“It is an unprecedented shortfall in revenue, and it’s sent public budgets in New York and other states into a tailspin,” she said, adding states need “federal aid to be able to continue to provide core services.”

For now, the state has been withholding some funding to entities that rely on state payments. And at the moment, this arrangement can hold up. This has kept the door open to federal aid for state even as the plan B, an ugly mix of tax hikes, spending cuts and borrowing is yet to be specified, but remains in the wings.

"By the state not taking action, it makes it harder to close this year's gap and next year's gap," said David Friedfel of the Citizens Budget Commission.

"For entities who have been told that may have their payments will be decreased by 20%, it leaves them with the sense they won't know what their budgets look like for the rest of the year."

Andrew Rein, president of Citizens Budget Commission, questioned whether Trump winning a second term will “embolden the kind of ‘anarchist jurisdiction’ punishment policy, whether we'll see more of that, legal or not, types of actions and that battle between the two, New York and Washington, DC, which has been amped up.”

With less income coming in for the remainder of the year, the next due date where everyone has to pay something will prove to be a disastrous one for tenants, landlords and the city. With so much uncertainty, delinquency is still a huge risk, said Ana Champeny, the director of City Studies at the Citizens Budget Commission.

With the COVID-19 crisis entering its ninth month, the city’s economy and municipal finances face an existential threat, and Gotham’s need for real leadership grows ever more dire.

A new Citizens Budget Commission report paints another grim picture. Taxable sales in the tourism and business-travel sector from June to August were off a stunning 90 percent, or $2.2 bill­ion, from the same time last year. The recreation and entertainment sector also fell 90 percent. Total sales: down 23 percent, or $10.2 billion (on top of a $16.2 billion plunge in the prior three months).

The Metropolitan Transportation Authority is reaching a breaking point, and its ongoing viability has major implications for the tristate area.

The MTA’s chief executive, Patrick Foye, said this week that in the event Washington does not provide $12 billion in federal funding to the MTA, riders could see hour-long waits due to service cuts. The service reductions could reach as high as 40% for buses and subways and 50% for commuter rail service, he said.

“The MTA’s fiscal situation is incredibly dire,” said Andrew Rein, president of the Citizens Budget Commission. “They need to use every tool at their disposal."

Rein said that in addition to any federal relief money, the MTA also will need to depend on overall economic activity and negotiations with labor unions to shore up its budget.

Of all the industries devastated by Covid, hotels have perhaps been hit the hardest — and far worse than occupancy rates would suggest.

Sales tax from hotels from June through August were down 90 percent from the same time last year, according to an analysis by the Citizens Budget Commission. That represents a shortfall of $2.2 billion and was even worse than the previous quarter’s 88 percent drop.

Adhering to science and reopening the economy is not mutually exclusive, the former director of the Centers for Disease Control and Prevention told a New York City watchdog group.

“We can reopen but we must be cognizant of the challenges of COVID-19,” Tom Frieden said on a Citizens Budget Commission webcast Thursday.

According to a study by nonprofit CBC, recently released sales tax data illustrate New York's struggles. In contrast to the rest of the state, where aggregate taxable sales have rebounded to 2019 levels, city taxable sales declined 23% to $34.2 billion in June to August 2020 compared with the same quarter in 2019.

“New York City right now is set up for an economy to really be harmed and challenged during this period," CBC president Andrew Rein said. “Tourism, entertainment, face-to-face interaction, it's is what makes New York City great and it's what is most challenging right now.

While the mayor also touted the postponed DC37 payouts as “labor savings,” budget experts said that characterization is misleading.

“You can’t pretend that delays save money,” said Andrew Rein, president of the independent Citizens Budget Commission.

“The city needs to restructure its finances to be stable. We have to find enough savings in this budget so that the money we collect can pay for the services we need,” he explained.

Rein said it was a mistake for de Blasio to rely on an uncertain federal bailout to solve the city’s cash crunch.

“Federal aid, we’re worthy of it. It’s welcome, we should get some. We don’t know when, We don’t know how much.

“Counting on it to solve all of our problems is a dangerous thing because it will take the pressure off doing what we need to do which is restructure the city’s finances so we can have a stable government that we can afford.

“If we don’t find those savings in the right way and in a recurring way that happens year after year, we’re just going to make our problems worse, not better,” Rein said.