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Nationwide nearly 160 million Americans are estimated to be less than three months away from running out of money.  16 million people were put out of work in a three week period because of COVID-19.  So many people have attempted to file for unemployment in New York State that the state's unemployment website 'collapsed', and this week Governor Cuomo instituted a streamlined form for applying for pandemic unemployment relief.  204,716 unemployment claims were made in New York State the week of April 13. By comparison, 12,048 the week of April 15, 2019.

All this loss of jobs will surely have an impact on income taxes. But for taxpayers, income tax only applies if you are earning income.  Property taxpayers have to pay no matter what their income is, and New York has the 9th highest property taxes of the 50 states.  The property tax portion of municipal revenue actually isn't an issue for the towns and villages.  Unpaid taxes are reimbursed by Tompkins County, which then takes on the responsibility of collecting the money,  What happens to properties whose owners have defaulted on their taxes because of lost jobs or any other reason?  That could be a problem.

"It's a concern," says Tompkins County Administrator Jason Molino. "To what extent we don't know because we're still in the process of collecting those non-pays from the towns. And then we will then take over managing the collection of real property taxes. We don't have that information as of yet, but it's likely that you're going to see a little bit of an uptick in compared to prior years.  We're watching that and we're monitoring it."

Molino says that the County doesn't end up foreclosing on many properties each year.  In part that is because the mortgage holders foreclose on delinquent lenders, then pay the property taxes themselves so they don't lose their equity in the properties.  He estimates that 40% to 50% of property tax bills are paid through mortgage escrow accounts, which are funded by a percentage of each mortgage payment.

"The properties we do foreclose on are abandoned properties, they're on pieces of property parcels usually defined as commercial or residential properties," Molino says. "But we don't foreclose on a lot of properties, which is a sign of a healthy real estate market."

Molino says counties don't have discretion on whether to forgive penalties on late tax payments.  It would be up to the Governor to suspend those penalties if he should decide to provide that relief.

County officials are also concerned about uncertain potential reductions of state aid.  Albany has warned governments and school districts across the state that mid-year adjustments to state aid will be made if state revenue goes below 99% of what the state expected during three monitoring periods. The first ends in just one week from today, with the other two periods ending June 30 and December 31st.

State aid is less of an issue for towns and villages than it is for the County.  Town and Village of Lansing officials have said that even though they are in good fiscal shape they are monitoring other revenue streams like mortgage and sales taxes that may be threatened as a result of social isolation due to the coronavirus pandemic.  They are also talking about postponing road, sewer, and other projects that were slated for this year.

"What we're going to have to do is make some prioritized decisions as to what projects we actually go forward with," Village of Lansing Donald Hartill said Monday. "It could delay some of this stuff by a year without too much trouble."

Molino notes that the $6 billion state deficit before the pandemic hit has exploded to between $10 and $15 billion, which makes the prospects for governments counting on state aid a bit bleak.  This week New York State Comptroller Thomas P. DiNapoli warned that New York State will take years to recover from the expanding state deficit resulting from the pandemic.

"The ultimate price of the coronavirus remains undetermined," DiNapoli said. "What is clear is that Washington must do more to help stabilize state and local government finances to avoid drastic cuts that would hurt hospitals, schools and vital services. The Executive and Legislature passed a budget under very difficult circumstances to address our immediate needs, but we must be mindful of the bigger picture. Tax revenues will be substantially lower in the near term because of the pandemic, and likely well beyond. The state should minimize long-term costs from any new debt and commit to building up our rainy day reserves. The road ahead is a challenging one and will require a long-term strategy."

Molino says the County has already put some measures in place in anticipation of a reduction in revenue.

"We have issued a hiring freeze," he says. "We have issued a spending freeze. We're going through the process right now of trying to estimate revenue shortfalls because we have both sales tax and revenue shortfall. We also have an issue with state aid, you know, with the state facing it at 12 and a half billion dollar deficit we're expecting pretty broad cuts in state aid across the board. "

By now everyone knows about the coronavirus relief payments of $1,200 the ," DiNapoli said. " government is sending to qualifying citizens.  New York State has also initiated relief programs.  Molino says there will be some rent relief in Tompkins County as well.  The County is proposing to use Community Development Block Grant (CDBG) funds that were to be used for housing rehab programming for rent-relief.

"We talked to the Legislature's Housing Economic Development committee (Thursday) to say we want to re-purpose these funds and provide rent relief for income-qualifying families," he said. "It's about $300,000 or $400,000that we're going to re purpose to provide rent relief. That would have been rent relief effective when the state of emergency was issued in early March, and anybody that was impacted after that. I think that that's going to be a well-received opportunity for folks that are going to need it. I think it'll go very quickly."

Molino also says that Tompkins County is placed better than many other places in the state to recover financially once the economy reopens.

"We're in a healthy real estate market. I can tell you some places -- Western New York, Central New York, and even the North country -- those are areas where the real estate market is not anywhere near as lucrative as this one," he notes. "They were already in a difficult position, you know, pre-crisis let alone now post-crisis. So it's going to be very much regional as to the impact. The only thing I can say is we'll continue to monitor it and that the local economy here was healthy going into this crisis, which is only going to help us in order to come out of it."

For property taxpayers with mortgages, the crunch won't come from taxes owed so much as meeting their obligation to the banks, which may or may not decide to provide some kind of payment relief or refinancing.  For those without mortgages it will be incumbent on them to come up with the money.

For local governments, all local officials acknowledge that the situation changes daily, and there are many outcomes that can't be predicted.

"We're going to keep monitoring property tax payments and see if there is a decline," Molino says. "To say what will happen by the time the fall comes, your guess is as good as mine."

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