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July 23, 2007

 

DiNapoli Addresses New York State Financial Control Board

Praises New York City’s Management, Smart Use of Surplus

New York State Comptroller Thomas P. DiNapoli today praised New York City for its sound financial management and applauded the City’s effort to improve its fiscal position by once again making smart use of surplus revenue.

“The City is using this windfall in ways that will improve its fiscal position by reducing projected budget gaps, lowering taxes, paying down long-term liabilities, and reducing its debt service costs,” DiNapoli said at the annual New York State Financial Control Board. “Just a few years ago, the City was facing a $6.4 billion budget gap. The turnaround has been nothing short of remarkable.”

New York City ended fiscal year 2007 with a record $4.7 billion surplus and for the second consecutive year has smartly managed its unanticipated resources, according to a DiNapoli report to the control board. The report shows that the City benefited from a $9.4 billion net revenue windfall for fiscal years 2007 ($6.5 billion) and 2008 ($2.9 billion), even after addressing funding needs that were not contemplated at the start of the fiscal year.

DiNapoli’s report indicates robust job growth, exceptionally strong activity on Wall Street, and a real estate market that has continued to buck the national trend have combined to drive the City’s economy.

The unexpected funds in FY 2007 and FY 2008 helped the City:

  • eliminate a $3.8 billion gap forecast for FY 2008;
  • reduce the projected FY 2009 gap to $1.6 billion from an earlier $4.6 billion gap estimate;
  • retire nearly $1.3 billion of debt that was due in fiscal years 2009 and 2010;
  • contribute $1.5 billion to the Retiree Health Benefits Trust Fund in FY 2007; and
  • adopt a $1.6 billion tax reduction program for FY 2008.

The report cautioned that although the City’s revenue and economic assumptions are conservative, the budget gaps projected by the City for fiscal years 2010 ($3.4 billion) and 2011 ($4.4 billion) are substantial and do not reflect the full potential cost of the next round of collective bargaining. Additionally, debt service is projected to reach $6.2 billion by FY 2011, which is 60 percent higher than the FY 2006 level.

The New York State Financial Control Board is chaired by the Governor, and includes the Mayor, the State Comptroller, the City Comptroller, and three members from the private sector. The board was created in 1975 in response to New York City’s fiscal crisis.

Click here for a copy of State Comptroller Thomas P. DiNapoli’s report on New York City

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