Editorial: Economically, we are in very deep trouble now

As Long Island continues its recovery from the devastating effects of COVID-19, there are clouds on the near horizon that should alarm everyone. While the pandemic rages on in places like Florida, concerns grow here that a second wave could hit us later in the summer or early in the fall, which would force us to take a big step backward.

Beyond worry about a resurgence, though, are all the signs that highlight the pandemic’s devastating impact on Long Island’s economy — repercussions that could last for years and will reach into everyone’s pocketbooks.

Last week, a new report laid out in stark terms what COVID-19 has done to the local and state economy. In just March and April, as the pandemic intensified, 270,000 jobs were lost on Long Island. Those jobs evaporated at a far higher rate than even in New York City and other suburban counties in the state.

The report predicted that job losses in Nassau and Suffolk could top 375,000 by the end of the year. The estimated price tag: $61 billion in local economic activity. This deep hole — made worse by huge losses in sales tax and other government revenues — will have to be filled somehow, either through steep cuts in government spending or sharp increases in taxes. 

One snapshot of COVID-19’s local financial impact is provided by data released last week by the U.S. Small Business Administration. More than 1,500 businesses on the North Fork secured more than $116 million in Paycheck Protection Program loans.

In Riverhead 853 companies received funding from the program; 651 companies in Southold did the same. The top eight borrowers in Riverhead and Southold secured between $2 million and $5 million each in PPP funds; 25 local companies obtained loans of $1 million or more, including four nonprofits.

In releasing the economic report, county officials documented a Long Island economy that fell off a steep cliff after COVID-19 struck. Some 82,000 hospitality industry jobs vanished; health care lost 60,000 jobs. Retail enterprises — the very heart of small town economies — totaled about 52,000 jobs lost.

Gov. Andrew Cuomo’s budget office said in May that statewide financial losses would require either $10 billion in spending cuts or higher taxes.  State officials also said then that sales tax revenue on Long Island had fallen by more than 33% over May 2019.

There is no doubt that state aid to Long Island’s school districts will fall — some estimate by as much as $8 billion. In one of the most heavily taxed regions in America, this will be a heavy hit for residents who will be asked to pick up the tab.

The consultants who did the economic study estimated that revenues for Suffolk County for this year will fall by at least $325 million. County officials have said the budget gap in the county, which has 1.4 million residents, could top $800 million. 

Suffolk County Executive Steve Bellone said that shortfall could soar to $1.5 billion over the next 15 months.

Right now, our regional economic future looks grim. Census records in recent months also show that New York has one of the highest rates of residents relocating to states with lower taxes. 

The current economic crisis will only make that worse.