For thThe New York City Council voted to approve a set of changes to the budget that were negotiated with Mayor Bloomberg, including an average property tax increase of 7.5% percent and an increase in the hotel tax while preserving the $400 homeowner property tax rebate checks. The property tax increase will generate an additional $576 million in revenue and an increase in the hotel tax could yield an extra $80 million between March and June 2010, while the homeowner rebate will cost $256 million.
The real estate tax increase comes on the heels of the worst economic developments in decades as the City faces a projected deficit of $1.3 billion next fiscal year and even greater deficits in future years. The financial sector, which accounts for 9 percent of the City’s revenue, has logged $500 billion in losses and projects huge job losses. The municipal workforce has shrunk by 3,000, including 500 layoffs as Mayor Bloomberg ordered agencies to cut their budgets.
The homeowner rebate checks were at the center of one of this year’s most divisive debates at City Hall. Mayor Bloomberg, who created the rebate program in 2004, abruptly announced in November that the City would not issue the checks, arguing that the City could not afford to issue the checks in the face of an increasingly bleak financial situation.
The City Council and Speaker Christine Quinn, who at one point said, according to the New York Times, that there was not “a snowball’s chance in hell” that she would agree to the Mayor’s decision on the property tax rebates, rebelled. The City Council argued that only the City Council, not Mayor Bloomberg, has the authority to withhold the checks.
In the end, both sides got something they wanted, though to homeowners, the deal was a wash, at best. The checks have gone out, but the 7.5% percent property tax increase, effective on January 1st, will largely offset the homeowner rebates and, in the case of rental properties, will increase taxes by thousands of dollars a year.
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