|William C. Thompson,
Comptroller, City of New York
Remarks Prepared for Delivery
Association for a Better New York
September 4, 2002
Thank you, Bill, for that kind introduction. I would like to thank
you and the Association for a Better New York for giving me the opportunity
to address you this morning.
Next week, we will mark the one-year anniversary of September 11th.
Like many New Yorkers, I find it hard to believe that a full year
has passed since that tragic day, when our lives, and the life of
our city, were forever changed.
Now is the time to remember the men and women who never came home
on the evening of September 11th -- those who worked in the Twin
Towers, those who responded to the scene and gave their lives saving
others -- everyone who perished on that fateful day. It is a time
to reach out and comfort those who lost loved ones, who are still
grieving and still struggling to carry on.
Now is also a time to celebrate the spirit of New York, which remained
undefeated in the darkest moments of that day, and which carried
us through the past twelve months.
From the individuals who volunteered their efforts at Ground Zero,
to the businesses that refused to close their doors, New York has
sent a strong message to the world: we will keep going, we will
We recognize that the process of recovering as a city is a challenge
of staggering scale. And, when we look at the numbers, it would
be easy to grow discouraged and think that we simply won't be able
to do it.
New Yorkers, however, are not easily discouraged. We have a tremendous
ability not only to overcome obstacles, but to grow even stronger
in the face of adversity.
To overcome this greatest of challenges, we need to understand
what we're up against. We need a comprehensive understanding of
the impact of 9/11 on the finances of this city.
As President John F. Kennedy once noted, "To state the facts
frankly is not to despair the future."
Today, we state the facts without despair; facing the facts is
simply the most responsible way of ensuring that our city recovers
fully and stands prepared for the future.
For this reason, my office has prepared a report entitled "One
Year Later: The Fiscal Impact of 9/11 on New York City."
In order to understand where we find ourselves today, we must take
a look at where the economy and our city's finances stood on September
At that point, our city, and the nation as a whole, were showing
the first signs of recovering from a mild recession. There had been
a downturn, but it was expected that the economy would continue
to show signs of improvement.
And then, on September 11th, our city suffered a monumental loss,
and in a single day, the economic picture was completely transformed.
Due to the magnitude of the event, and the complexity of factors
involved in the long-term impact, it is difficult to attach a fixed
number to the economic loss sustained by the city.
After an in-depth analysis, however, my office has estimated that
the final calculations for the economic costs from the attacks will
reach at least 83 billion dollars; and may escalate to as much as
95 billion dollars.
The true cost will depend, in part, on the number of jobs lost
to business relocation, a figure we cannot pinpoint at this time.
And, in fact, many of you in this room today will have a hand in
determining the final figure. The business decisions you make today
-- whether or not you stay in New York City -- will directly affect
our city's finances next year and beyond, and ultimately, our recovery
as a city.
But let me return to the findings I am reporting today.
My office's estimate of the cost of 9-11 is based on two types
of loss. The first involves the one-time loss of wealth, which includes
damage or destruction of physical structures and loss of personal
The second type is the loss of goods and services produced and
sold -- which is measured as Gross City Product, or GCP.
As the report indicates, the impact of the attacks on the City's
wealth is estimated to be 30.5 billion dollars.
The attack destroyed 13 million square feet of Class A office space
in Lower Manhattan. To understand the magnitude of that figure,
consider the fact that this equals the entire office space inventory
of the Central Business Districts of Atlanta or Miami. It will cost
21.8 billion dollars to replace the lost buildings, infrastructure
and tenant assets.
We must also consider the economic impact of the loss of personal
There is no way to place a value on human life. A person's contribution
to the world goes far beyond the workplace. The person who dies
is denied his or her potential. A child is left alone. A mother,
or a spouse, or a brother or a loved one must continue alone.
Economically, however, we recognize the financial impact of the
loss of personal income on families, businesses and our city. And,
in economic terms, at their present value, the loss of expected
earnings is estimated at 8.7 billion dollars.
In addition to the one-time loss of wealth, New York will lose
between 52 and 64 billion dollars in economic activity, or Gross
New York's Gross City Product averages 1.2 billion dollars per
day. In the early weeks after 9/11, with so much business activity
slowed or brought to a halt, the impact on the City's economy was
In the immediate aftermath, the New York Stock Exchange was closed,
stores were closed, the airports were closed, the transportation
system was disrupted and theaters were mostly dark. And that was
only the tip of the iceberg.
Some downtown businesses were able to continue operating from other
locations to varying degrees. Basically, however, for several weeks,
our city lost the economic contributions of the 50,000 people who
worked in the World Trade Center
the 50,000 more who worked
in nearby buildings
and the 100,000-plus additional people
who ordinarily passed through the downtown PATH hub and subway stations,
and shopping areas.
The rest of the downtown area below 14th Street was closed off
to allow free movement of the rescue and recovery workers.
In just the 16 weeks from the attacks to the end of 2001, the GCP
lost 11.5 billion dollars.
Beyond this immediate economic impact, our GCP continues to suffer.
This is particularly apparent in the effect of 9/11 on our job base.
The report indicates that the total number of lost or unrealized
jobs exceeds 146,000. This includes 83,000 jobs that have been lost
since the attack, and an estimated 63,000 jobs that would likely
have been created if pre-9/11 city trends had continued.
The job losses alone have already cost our local economy more than
17 billion dollars in lost wages.
In short, 9/11 had a staggering effect on jobs in this city. However,
I am encouraged by a small, but positive, trend in the past several
months. As my recent job reports show, nearly 16,000 jobs have been
created since April.
Indeed, we have found that the strength, the determination and
resiliency of New Yorkers prevented the economic impact of 9/11
from being as bad as it might have been.
While some companies whose facilities were destroyed in the attacks
relocated operations outside the city, others have shown their commitment
by choosing to remain here.
For example, American Express and Merrill Lynch, whose World Financial
Center headquarters absorbed tremendous damage from the World Trader
Center collapse across the street, have returned home to refurbished
Others, like the United Federation of Teachers, are relocating
to new quarters in lower Manhattan.
Some companies never left, even temporarily. They remained downtown
and opened for business day after day, despite tremendous obstacles.
These include many small businesses, whose efforts may not grab
headlines, but who are the backbone of our city's recovery.
Two of the many courageous business leaders who made the decision
to "stay put" and keep their doors open were Y.M. Yang,
President of Chinese American Bank, and Thomas Sung, President of
Abacus Federal Savings Bank.
The two banks, both located in Chinatown, not only remained in
lower Manhattan, they never completely suspended operations during
the difficult days following 9-11.
On September 11th, Chinese American Bank offices remained open
until 3 PM. They were closed the next day, September 12th, but have
remained open ever since.
Abacus Federal Savings Bank was open until 11 AM September 11th.
Due to its location below Canal Street, the bank had to close for
a week. During that hiatus, however, Abacus bankers continued to
conduct business every day by cell phone.
I am pleased that representatives of both banks are here today.
Please join me in recognizing Thomas Sung, President of Abacus Federal
Savings Bank, and William Hsiao, Senior Vice President of Chinese
I applaud the loyalty and determination of New York businesses such
as these. Their entrepreneurial spirit will help bring this city
back, and make it stronger than ever.
Another crucial component in our rebuilding efforts will be our
management of the city budget.
Unfortunately, when economic times were good in the latter part
of the 1990s, the city engaged in some fiscal practices that have
placed us in a particularly difficult position today.
When our revenue was high, the city increased spending, cut taxes
and used budget surpluses from one fiscal year to pay off bills
in the next one.
The city got into the bad habit of counting on economic boom-times
and windfalls to close budget gaps.
Of course, we are far from realizing a surplus in the current fiscal
In preparing the current budget, the city administration estimated
the budget gap to be 5 billion dollars. My office estimated the
gap to be 6 billion dollars.
Approximately half of this deficit is the result of structural
imbalances in the budget - the city simply continues to spend more
than it gains in revenue.
The other half of the gap, an estimated 3.5 billion dollars, is
a direct result of the damage incurred by the events of September
This estimate includes nearly 3 billion dollars in lost tax collections,
primarily from a decline in the economically-sensitive non-property
It also includes hundreds of million of dollars in unreimbursed
city expenditures such as overtime and capital costs.
Before I talk briefly about how the City is closing the budget
gap, I think it is important to single out and give credit where
credit is due. I think the Bloomberg Administration and the City
Council under the leadership of Gifford Miller has done an extraordinary
job from day one confronting a difficult situation when they first
got here and dealing with it quickly and in a very intelligent fashion.
So I applaud both Mayor Bloomberg and the City Council for the fine
job they have done on this year's fiscal budget and the job that
they have to do moving forward to close the budget gap.
The economic pressures brought on by the attacks have forced the
city to borrow more than we would have otherwise.
Indeed, the city addressed this year's budget shortfall, in part,
by borrowing 1.5 billion dollars. I accepted this action as necessary
due to 9/11. However, the city cannot afford to repeat this measure
without creating a debt service burden that would have a severely
negative impact on our future growth.
After all, our debt service currently eats away 16 cents out of
every city tax levy dollar, and this amount will increase to almost
20 cents of every dollar by Fiscal Year 2006. It's like using your
credit card to buy groceries, month after month.
However, while we cannot borrow our way to a balanced budget, we
also cannot completely cut our way to a balanced budget.
Some cuts are inevitable, and indeed necessary, but excessive budget
cuts to our basic services will do more harm than good.
If we defer routine maintenance of our resources too long, we are
forced to undertake expensive new major capital projects to correct
neglected problems. If we slash basic services too deeply, we compromise
our quality of life and discourage people from staying in New York.
We cannot afford to let the solution become part of the problem.
That's what occurred during the fiscal crisis in the 1970s, and
we spent decades recovering from the adverse effects of draconian
cuts to education, public safety and other vital city services.
Simply stated, to address our future budget challenges, we will
have no choice but to both control expenditures and seek ways to
This is particularly important in light of the fact that in Fiscal
Year 2004, we anticipate a budget shortfall of at least $5 billion.
Fortunately, one of the city's most reliable sources of revenue
appears to remain stable: real estate has held its value outside
of lower Manhattan, and real property tax collections will be higher
this year than last year.
People and companies still believe that New York is the place to
be. This is a trend we obviously want to encourage.
Another positive trend, as indicated in the report, has been the
city's proficiency at managing its cash flow despite the cash drain
Quick assistance from Washington certainly helped us. Specifically,
since 9/11, the city received a total of 900 million dollars in
direct federal assistance. We were, and are, grateful for that aid,
and its timeliness.
And I would be remiss if I did not thank the New York State Congressional
delegation, led by Congressman Charles Rangel and the two United
States Senators, Sen. Chuck Schumer and Sen. Hillary Clinton. They
have done wonderful work in helping to move New York City, advocate
for New York City and get money into the city.
These dollars were part of a total of 2.7 billion dollars, including
2.3 billion through FEMA, that flowed from Washington to individuals,
businesses, the city and the state in response to 9/11.
We are, however, mindful that the 2.7 billion dollars received
represents only a small down payment on the 21.4 billion dollars
in Federal economic assistance pledged to New York City, assistance
that we need and deserve.
Delivery of the promised aid is particularly important in light
of the fact that, due to restrictions in FEMA's regulations, the
city will receive only partial reimbursement for the staggering
costs related to 9/11.
Current estimates indicate that direct World Trade Center-related
city expenditures, such as demolition, overtime, and disaster relief
Medicaid, will total approximately 2.1 billion dollars. Expected
federal reimbursement through FEMA will cover only 77% of these
costs, leaving the City short by close to 500 million dollars, a
cost taxpayers will have to bear.
On an encouraging note, the Federal government recently dedicated
about 2.8 billion dollars in FEMA funding towards the construction
of an intermodal transit hub in Lower Manhattan.
Once again I do applaud the Federal government for this latest
development. It expanded the scope of FEMA funding and using the
funds for a purpose that will stimulate recovery and long-term economic
development in the downtown area.
The federal aid will help us rebuild, but ultimately it will be
up to us to continue to chart our recovery and resurgence.
It will be up to businesses, large and small, and individuals,
of all professions, ethnicities, and backgrounds, from all of our
communities, to build our future.
There are thousands, indeed millions, of stories of New Yorkers
who, with grit, with imagination and with the help of friends, neighbors
and strangers, are fighting their way back.
In closing, I will leave you with just two of these business stories.
30 years ago, the Friedman family built J&R Music and Computer
World, close to City Hall.
Since then, J&R has been a landmark for downtown shoppers.
On 9/11, J&R was transformed into a triage center. For five
weeks, J&R's doors remained closed to shoppers. Since its reopening
in late October, business has slowly returned, although not nearly
to pre-9/11 levels. Still, the Friedmans remain hopeful and determined
(If a representative of J&R's is present, you will be handed
And, finally, a much heralded example of New York spirit -- Century
For years, a familiar sight greeted early morning arrivals in the
vicinity of the World Trade Center: eager shoppers waiting for Century
21 to open. On September 11th, the doors closed, perhaps for good.
Century 21 shoppers are known for their loyalty, but, after several
months shopping elsewhere, and after the transformation of lower
Manhattan, no one knew if the store would reopen, or if the customers
On March 1, 2002, the doors of Century 21 opened once more, and
one more New York business was up and running again.
Eddie Gindi, co-owner of Century 21, is here with us this morning.
Would you please stand, Mr. Gindi, so that we can recognize your
Century 21 is back in business. And, so is the City of New York.
New Yorkers have shown tremendous resiliency and determination
in the past year. It is the same spirit that New Yorkers have demonstrated
every day since the city was founded four centuries ago.
New Yorkers are survivors, yes - but we are more than that. Those
who were born and raised here, those who come here from all over
the world, are here not just to survive, but to succeed.
By working together, we will recover, we will succeed, and we will
be stronger than ever.
Thank you - and God bless you all.