The COVID-19 pandemic has created unprecedented strain on federal, state, and local economies. New York State has been among the hardest-hit regions in the country, and strict stay-at-home measures and forced business closures were implemented to help curb further spread of the disease.
The virus, and subsequent shutdown orders, have had a wide range of cascading effects, resulting in skyrocketing unemployment claims and an estimated $10 billion reduction in tax revenue. That amount is in addition to an approximate $6 billion budget gap that existed prior to the pandemic.
Legislators have introduced several pieces of legislation in order to bridge the gap that existed before COVID-19 and the additional gap resulting from the shelter-in-place order with the goal of adequately funding the State’s budget.
These budget proposals reflect the dire financial situation of New York State and City. New York has enacted legislation decoupling City taxes from select provisions of the CARES Act increasing the Section163(j) interest expense deduction limitation and Section 172 NOL deduction modifications. See PwC’s Insight for details. As budget shortfalls and other far-reaching effects of COVID-19 are felt throughout the economy, New York State may consider additional revenue-raising legislation.