Moody's downgraded the credit ratings of both New York City and New York state, citing the mounting toll of the pandemic on state and local economies, with sales-tax and income-tax revenues cratering
By Heather Gillers Close Heather Gillers , Katie Honan Close Katie Honan and Jimmy Vielkind Close Jimmy Vielkind Updated Oct. 1, 2020 10:49 pm ET Moody’s Investors Service downgraded the credit ratings of both New York City and New York state on Thursday, a consequence of the coronavirus pandemic’s mounting toll on the New York economy.
The pandemic, which has killed far more people in New York than in any other state, crushed sales and income tax revenues for both the city and state as they implemented sweeping shutdowns to slow the spread of the coronavirus. Both governments face significant revenue shortfalls. Robert Mujica, budget director for New York Gov. Andrew Cuomo, called the downgrade evidence that the nation’s state and local governments need half a trillion dollars in aid from Congress to make up for the hit from the pandemic.
New York state lowered its expected revenues by $14.5 billion as a result of the pandemic, and to conserve cash has been holding back 20% of scheduled payments to municipalities, social service organizations, and, in some instances, school districts. The ratings firm predicted that the lasting economic impact of Covid-19 on the city will be among the most severe in the country, dragging down the state and state-controlled Metropolitan Transportation Authority. The firm said containing the global spread of Covid-19 and bringing office workers, travelers and families back to the city will be crucial for recovery.
Mr. de Blasio has said the city needs to balance a $9 billion budget deficit over the next two years, and still hopes for a federal bailout or the authority from the state to borrow up to $5 billion.
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