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NYS SealNEWS

From the Office of the New York State Comptroller

H. Carl McCall

CONTACT: Steve Greenberg/ Joan Lebow FOR RELEASE: Immediate

(518) 474-4015/ (212) 681-4825 July 22, 1998

McCall Issues Review of NYC Financial Plan for 1999 Through 2002

New York City is expected to see a third year of significant budget surpluses in FY 1999, according to a review of the City's four-year Financial Plan released today by State Comptroller H. Carl McCall.

"The City is enjoying a period of fiscal stability and economic vigor -- this year's private job growth rates reached a strong three percent -- providing the City with many financial opportunities as well as challenges, " McCall said.

In his report, McCall cited the opportunity for prudent long range planning with this surplus, encouraging the City to increase its reserves. Other steps could include retiring high interest debt and investing in capital improvements.

"New York's spending will continue to outpace revenues in FY 1999 as the City plans to use most of last year's surplus to balance this year's budget," McCall said. "This leaves the City especially vulnerable if there's an economic downturn. It would be wise to retain a deep financial cushion."

The review forecast a budget surplus of about $900 million in FY 1999. This figure includes $665 million already set aside in reserves, which are not likely to be needed in 1999 budget.

Despite the robust economic growth and recent surpluses, the City projects large out-year budget gaps.

"It's unfortunate that the City had made little progress made toward narrowing those gaps," said McCall. The out-year gaps range from $3 billion to $3.5 billion, according to the Comptroller's estimates.

The report also discusses the City's continued dependence on Wall Street as the engine driving the City's boom economy.

"It is commendable that the City has taken a cautious approach to accounting for Wall Street revenue in the out-years," McCall said. "While this sector has helped spur employment and tax revenues today, Wall Street's growing share of the City economy is worrisome for its long range impact. It's wise to plan for an eventual cooling off in the market."

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