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NYS Comptroller

THOMAS P. DiNAPOLI

Press Releases

December 15, 2015, Contact: Press Office (518) 474-4015

DiNapoli: NYC Budget Benefiting From Strong Economy

Wall Street Profits on Track to Exceed Last Year’s Level

New York City is projecting a surplus of $135 million for fiscal year 2016, but the surplus will likely grow as tax collections are higher than expected amid a strong economic climate and robust job growth, according to a report released today by New York State Comptroller Thomas P. DiNapoli.

“This is shaping up to be another solid year for the city. Job growth in the five boroughs has been strong, helping to drive revenues up,” DiNapoli said. “New York City added a record 120,000 jobs in 2014, and it is on pace to add 100,000 jobs in 2015. At the same time, the securities industry, one of the city’s economic engines, is on track for a good year and profits are likely to exceed last year’s $16 billion.”

Mayor de Blasio’s administration intends to use the projected surplus to narrow the projected FY 2017 budget gap to $1.2 billion, while the projected gaps for fiscal years 2018 and 2019 are unchanged at $1.9 billion and $2.9 billion, respectively. These gaps are relatively small (ranging from 2.1 percent to 4.6 percent of city fund revenues), and the budgets for these years include a general reserve of $1 billion.

Employment growth in New York City has outpaced growth in both the nation and in New York state. Since the end of the recession in November 2009, the city has added more than 500,000 jobs, four times more than were lost during the recession. The city’s unemployment rate, 4.8 percent in October 2015, has returned to its prerecession level.

New York’s securities industry added 2,300 jobs in 2014, the first full year of job gains since 2011. As of October 2015, the industry was on pace to add 5,000 jobs in 2015, though the industry is still 8 percent smaller than before the 2008 financial crisis. Industry profits grew by more than 23 percent during the first three quarters of 2015 to $14.5 billion. The industry may curtail future hiring as it takes steps to support profits.

DiNapoli’s office expects the surplus for fiscal year 2016 to exceed the city’s revised forecasts by a net of $330 million based on current revenue trends. Personal income and real estate tax collections have been strong so far this year, although business tax collections have been weaker. The budget includes $1.5 billion in general and capital reserves, which are unlikely to be needed in FY 2016. DiNapoli’s office remains guarded in its revenue forecasts for subsequent years as risks that could slow revenue growth remain.

The Federal Reserve is expected to begin raising short-term interest rates after keeping them near zero for seven years. While rates will likely rise slowly, it remains to be seen whether the economy is resilient enough to withstand higher rates. A possible complication challenging the city’s financial picture is a slowdown in global economic growth, especially in China, Canada and Europe. Higher domestic interest rates and a stronger dollar could affect tourism and the real estate markets in New York City.

To protect itself in the event of an economic setback, the city has prudently increased its reserves over the past few years, which would cushion the impact of any adverse development.

DiNapoli’s report notes that the city’s Health and Hospitals Corp. continues to face serious fiscal challenges, which could require additional financial assistance from the city. Overtime costs also remain a concern. Last year, overtime spending in the uniformed agencies exceeded the city’s initial estimates by more than $400 million, reaching a record of $1.4 billion. Overtime is on pace to exceed last year’s level.

See the report Review of the Financial Plan of the City of New York, or go to: http://www.osc.state.ny.us/osdc/rpt8-2016.pdf

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