DiNapoli: New York City Budget For FY 2009 is Balanced
Economic Slowdown Expected to Create Large Budget Gaps in Subsequent Years
New York City’s budget for fiscal year 2009 is balanced based on relatively conservative economic assumptions, though it faces budget gaps of $4 billion in fiscal year 2010 and $7.4 billion in each of fiscal years 2011 and 2012, a report State Comptroller Thomas P. DiNapoli released today shows.
“The City’s conservative approach to its four-year financial plan makes sense,” DiNapoli said. “The financial roller coaster ride isn’t over yet. The next two years will be challenging for the City, but I’m confident the Mayor and the City Council understand the need for prudent fiscal practices.”
The DiNapoli report concludes that a deeper or longer economic slowdown poses the greatest risk to the City’s finances. If needed, the City could draw upon reserves funded with recent surpluses, such as $812 million in the Budget Stabilization Account, to maintain budget balance in fiscal year 2009.
The report also indicates:
- The City will end fiscal year 2008 with surplus resources of $6.6 billion, which the City allocated over the next three years to help balance its budget.
- Despite subdued revenue growth, City spending will grow by nearly 21 percent over the next three years. These increases reflect high debt, relatively generous labor agreements, and fast-growing pension contributions and health insurance costs. Debt service is projected to increase by more than 50 percent to $6.4 billion by fiscal year 2012.
- The Mayor has proposed rescinding the 7 percent property tax cut that was enacted at the start of 2008 to generate $1.2 billion in annual resources and that the municipal unions help constrain the growth in health insurance costs for $200 million in annual savings.
- Wall Street, which drives the City’s economy, lost a record $11.7 billion in 2007 and then lost another $22.4 billion in the first quarter of 2008.
- The City expects Wall Street to cut 25,000 from its recent peak of 188,000 jobs in September 2007, a 13.4 percent decline, which is less than the 40,800 jobs lost during the last recession. Through June 2008, the securities industry had lost 9,200 jobs.
Click here for a copy of the report.