screen-shot-2012-10-29-at-30605-pm-7514493

“Frankenstorm” could easily inundate the tenuously balanced budgets of New York State, New York City and countless other localities in the storm’s path.

Last week, just as forecasters were beginning to warn that Hurricane Sandy would have a big impact on New York, Comptroller Thomas DiNapoli released a mid-year revenue analysis showing that state government tax collections through the first half of the fiscal year were $213 million below the updated July projections–which, in turn, were $223 below the projections at the time the budget was enacted in March.  ”Collections would have to grow 6.4 percent for the remainder of the year to make up for the lower-than-expected revenue thus far,” DiNapoli said.

New York City’s tax revenues as of August were coming in just above target — which is not necessarily consoling, since the city Office of Management and Budget makes a practice of significantly under-estimating revenues, and collections were actually slightly below target for everything but the property tax.  Meanwhile, as usual, the Nassau County budget has little margin for error.

Of course, none of those financial plans envisioned a fresh natural disaster in the final quarter of calendar year 2013, so their potential deficits will now get worse. And so will the fiscal outlook for already fiscally vulnerable places including Suffolk County (with more miles of exposed shoreline than anyplace other than New York City), the city Yonkers (whose newly redeveloped Hudson River waterfront could be flooded) and the already-drowning-in-red-ink city of Long Beach (a vulnerable barrier island), among other places.  The direct and indirect costs of Hurricane Sandy should easily outstrip those of Hurricane Irene, which devastated some wide but thinly populated swaths of upstate New York just over a year ago.

Sandy will hammer state and local finances in three ways: loss of tax revenues due to economic disruption, increased operating costs for overtime and cleanup, and higher capital costs to repair damage to physical infrastructure. Under the worst-case scenario, including a partial flooding of New York’s subway tunnels after a predicted storm surge of 11.7 feet above normal high tide, the economic disruption and its resulting costs to the state and surrounding region will be especially severe.

Contemplating the impact from a national perspective, economists at Moody’s Investor Service reportedly were looking on the bright side:

“While natural disasters take a large initial toll on the economy,” Moody’s Ryan Sweetsaid on the firm’s economy.com web site, “they usually generate some extra activity afterward. We expect any lost output this week from Hurricane Sandy will be made up in subsequent weeks, minimizing the effect on fourth quarter GDP.”

If you find solace in that kind of thinking, you need to re-read your Bastiat. For the economy as a whole, there is no net profit in destruction, no matter how much rebuilding activity it engenders.

About the Author

E.J. McMahon

Edmund J. McMahon is Empire Center's founder and a senior fellow.

Read more by E.J. McMahon

You may also like

Another Hochul To-Do: Timely Financial Reporting

The state will spend a record $212 billion in the current 2022 Fiscal Year, under the budget its elected leaders adopted in April. Read More

Health Research Inc. Turns Over its Payroll Records Despite Claiming To Be Exempt from FOIL

The full payroll records of more than 2,400 de facto state employees are available to the public for the first time after being released by Health Research Inc. Read More

Emergency Billions Pose Opportunity—and Risk—for NYS Schools

New York schools are to post publicly today plans for spending a huge pile of unexpected and unbudgeted cash. Read More

New York’s Medicaid Rolls Kept Pace with a Nationwide Surge During the Pandemic

New York's Medicaid and Child Health Plus programs added three-quarters of a million enrollees during the coronavirus pandemic, roughly matching the pace of a national surge in sign-ups. Read More

New York’s Medicaid and Public Health Crises Get Short Shrift in the New State Budget

In spite of an ongoing pandemic and spiraling Medicaid costs, New York's health-care system received surprisingly little attention in the new state budget. On issue after issue, law Read More

Schumer’s First Spending Bill as Majority Leader Tailors Money for New York Medicaid

The pandemic relief bill includes a boost in Medicaid funding that appears to be tailor-made for Senate Majority Leader Chuck Schumer. Read More

A Letter From Washington Shrinks New York’s Budget Gap by $2 Billion or More

In a letter to governors two days after President Biden's inauguration, the U.S. Department of Health and Human Services said that the pandemic-related federal public health emergency "will likely remain in place for the entirety of 2021." Read More

Governor Cuomo’s budget proposal leaves the Medicaid throttle open

Perhaps the most remarkable thing about Governor Cuomo's Medicaid budget is how little it changes the program's spending pattern. In spite of a once-in-century pandemic that rocked the state's health-care system and decimated state revenues, the govern Read More

Subscribe

Sign up to receive updates about Empire Center research, news and events in your email.

CONTACT INFORMATION

Empire Center for Public Policy
30 South Pearl St.
Suite 1210
Albany, NY 12207

Phone: 518-434-3100

General Inquiries: Info@EmpireCenter.org

Press Inquiries: Press@EmpireCenter.org

About

The Empire Center is an independent, non-partisan, non-profit think tank located in Albany, New York. Our mission is to make New York a better place to live and work by promoting public policy reforms grounded in free-market principles, personal responsibility, and the ideals of effective and accountable government.

Empire Center Logo Enjoying our work? Sign up for email alerts on our latest news and research.
Together, we can make New York a better place to live and work!