The coronavirus has not just created a massive health crisis. It has also created a huge fiscal crisis for the city, one experts say hasn’t been seen in generations. 

What You Need To Know

  • The coronavirus health crisis has blown a $8.7 billion budget hole into the city’s $89.3 billion financial plan.
  • The city has projected a $7.4 billion loss in tax revenue since the beginning of COVID-19 health crisis.

  • State proposal would allow city to borrow up to $7 billion to pay for operating costs.

  • The city is currently prohibited from borrowing money to pay for daily operations.

Now, Mayor Bill de Blasio is laying the groundwork for a backup plan if the city can’t pay its bills.

“We have lost billions upon billions of dollars of revenue that we use to serve our people. It's gone. It's not coming back,” de Blasio said Tuesday during his daily briefing from City Hall. 

Both Mayor de Blasio and Governor Andrew Cuomo have said an infusion of billions from the federal government is desperately needed to keep the city afloat.

But with no guarantee the money will come, the city is preparing for the possibility it might not be able to afford its daily operations - like garbage pickup and policing. 

De Blasio has refused to say if he will cut salaries - including his own paycheck - or freeze hiring across city agencies. 

“No plans for pay cuts for any New York City employees right now, whether it's City Hall or any place else,” he said. “But you know, we never know what the future brings.”

But the city is laying the ground work — at least for now — to borrow money to cover expenses.

State Senator Liz Krueger introduced a bill this week to allow the city to borrow $7 billion to sustain operations.

Budget watchdogs are wary of that option.

Andrew Rein, president of the Citizens Budget Commission, said the city should look to make cuts first before increasing the city’s debt load.

“It lets the city off the hook from making the hard choices it needs to make today,” Rein said. “And if it doesn’t make those hard choices, and borrows for operations, we are going to make our children pay for our bill, we’re going to constrain future budgets, we’re going to make them have higher taxes.”

The mayor said he will only turn to borrowing as a last resort. 

He said he and Cuomo are pinning their financial hopes on the federal government. 

“The only way to possibly keep this city functioning, keep the services provided, keep people on our payroll is if we get a really substantial stimulus program from Washington.” de Blasio said. 

Cuomo casted doubt on the city’s ability to borrow money to cover operational costs.

“Borrowing for operating expenses is fiscally questionable. Fiscal responsibility is very important here,” Cuomo said. 

The bill would give the city bonding power through the Transitional Finance Authority, which would could issue up to $7 billion in bonds to be used how the city sees fit. 

Similar moves have gotten the city in financial dire straits before. The city has been unable to borrow to cover operational costs since the 1970’s financial crisis but exceptions have been made since including after 9/11.

Before the city can start borrowing, the city Comptroller must approve the new terms, and Scott Stringer does not appear to be on board. In a statement, a spokesperson for Stringer said the mayor should consider other steps before settling on borrowing against the future.