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GAO-02-882R 1 (2002-07-26)

handle is hein.gao/gaobaamal0001 and id is 1 raw text is: i Accountability * Integrity * Reliability United States General Accounting Office Washington, DC 20548 July 26, 2002 Congressional Requesters Subject: Review of the Estimates for the Impact of the September 11, 2001, Terrorist Attacks on New York Tax Revenues As a follow-up to our May 2002 report,' reviewing the estimates of the economic impact of the September 11, 2001, terrorist attacks on New York, you requested additional information on New York tax revenues. Specifically, you asked us to review the estimates of tax revenue losses that the New York City Office of Management and Budget and the New York State Division of Budget attribute to the terrorist attacks. Both these budget offices estimated that the terrorist attacks would reduce anticipated tax revenues to the city and state in both fiscal years 2002 and 2003.2 The purpose of this report is to present our review of these estimates. To respond to your request, we reviewed the budget offices' estimates and supporting analyses, using standard economic analysis principles. These include establishing a baseline of New York tax revenues absent the terrorist attacks, measuring the incremental effect of the attacks, and using economic models or sound professional judgment. We discussed the estimates and the supporting analyses with officials from the New York budget offices, as well as the Federal Reserve Bank of New York, the New York City Office of the Comptroller, the New York City Independent Budget Office, the New York State Financial Control Board, the Office of the New York State Comptroller, the Office of the State Deputy Comptroller for New York City, the Fiscal Policy Institute,3 and DRI-WEFA.4 We did not validate the budget offices' data or models. We carried out our work from May through July 2002 in accordance with generally accepted government auditing standards. Summary The budget offices' estimates of the tax revenue losses have limitations, such as including some of the economic slowdown that was under way at the time of the 1U.S. General Accounting Office, Review of Studies of the Economic Impact of the September 11, 2001, Terrorist Attacks on the World Trade Center, GAO-02-700R (Washington, D.C.: May 29, 2002). 2 New York City's fiscal year is from July through June, and New York State's fiscal year is from April through March. 3 The Fiscal Policy Institute is a nonprofit research and education organization that focuses on New York tax, budget, and economic issues. 4 DRI-WEFA is a consulting firm that analyzes and forecasts economic activity in the U.S. and world markets. GAO-02-882R Impact of Terrorist Attacks on Tax Revenues Page 1

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