Budget process
The budget is an estimation of future revenues and expenditures to streamline spending. It is a series of policy decisions on the Budget process is a technique of making decisions on a state or city the broad priorities for resource allocation. Both state and local governments must balance their budgets. NYS spending is distributed to state operations (13%), aid to localities (73%), capital projects (6%), and debt service (4%). The policy area of NYS expenditure is health and education.
The consequences of corvid 19 will be a direct impact on people’s health, while the pandemic’s economic effects will be spread beyond human health effects. State and city leadership have a role in responding to the crisis will reluctantly perform its duties bearing in mind that social distancing and shuttering of storefronts will decline its expected revenues. The overall effects of corvid 19 on state and city governments will be negative. There will be a variation of the impact on leading three sources of state and city revenue. Corvid 19 is affecting state budgets by pressurizing the health care systems and losses of revenue due to the cancellation of events.
Coronavirus will negatively affect transfers, tolls, and taxes. Some projections indicate that the financial impact of corvid 19 will be worse than it was during the great recession. The current fiscal year will experience a significant drop in revenue. Baltimore estimates there will be a 3.5 percent decline in revenue. New York City will lose billions, which would add up to 15 percent of is current budget revenue. Intergovernmental transfers, fees and charges, and property taxes are the largest sources of New York state and city budget. They consist of about 35 %, 30%, and 20% general revenue fund. Corvid 19 pandemic control measures will affect the revenue streams at different rates.
Property taxation is the traditional source of state and city revenues and consists of 30 percent of local revenue streams in the United States. Property income is less affected by economic changes over the year. The mechanism for collecting property taxes delays its ability to replicate economic changes. The state and city government uses stable property taxes revenue stream to finance its operational expenses. This will minimize the short-term impact of corvid 19 on New York City and state operational expenses. Property taxes will eventually be affected by the corona virus impact due to high unemployment on real estate demand but state government will have adequate time to make necessary preparations.
Intergovernmental transfers form a huge revenue share for the New York state and city governments. These transfers are generated from the states and federal entities but a huge portion comes from states. Tax revenues are determined by local economic activities but transfer revenues are determined by societal and political changes. Transfers are increasingly essential during the corvid 19 pandemic.
Fees and charges are the other revenue streams for New York city and state. They at least a fifth of state and city revenues and consist expenses of providing sewer, public transport fare, and water. The revenue is budgeted for state government to offer the services itself. The demand for these services will not decline rapidly because they are provided by state and city leadership. There will be insufficient provision of utilities by the state and city government during the corvid 19 epidemic. The social distancing rules has led to decline of charged services such as public transportation.
In conclusion, New York state and city government revenue sources that are dependant of local economic activities will decline. However, they will be offset by revenue streams that contribute to larger share of state and city income for the reminder of this year and next year. Finally, healthcare expenditures will increase during the remainder of this year as well as next year.
References