New York’s finances | In a state of shock | Economist.com: "IT HAS been 33 years since the headline “Ford to City: DROP DEAD” was on the front page of the Daily News, but it has not been forgotten by New Yorkers. At the time, New York was on the brink of bankruptcy. The city defaulted on some bonds and owed $5 billion. One in five of all city jobs (including police ones) were eventually eliminated. The city closed several firehouses. But Gerald Ford was unhelpful.
Now, because of Wall Street’s ongoing meltdown, another fiscal crisis appears imminent, this time at state level. Costs are rising and revenues are falling fast. In June 2007 the 16 banks that pay the most taxes on their profits remitted $173m to the state treasury. Last month this dropped to $5m, a 97% decrease. This is a frightening fall given how much the state’s coffers rely on Wall Street taxes: 20% of all state revenues come from financial companies..."
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