DiNapoli: New York City's FY 2009 Budget Plan is Sound
Financial Plan Report Sees Challenges Ahead
New York City’s fiscal health continues to benefit from effective financial management and conservative budgeting, according to the Review of the Financial Plan of the City of New York that State Comptroller Thomas P. DiNapoli released today.
“The City continues to manage its finances in a fiscally prudent manner and that has enabled the Mayor to propose a balanced budget for fiscal year 2009 that is based on reasonable assumptions,” DiNapoli said. “While the 2010 budget gap appears manageable with more than one year before the start of that fiscal year, the gaps projected for fiscal years 2011 and 2012 present a greater challenge. Much will depend on the depth and the duration of the national and local economic slowdowns.”
The City is on track to end fiscal year 2008 with a $6.5 billion surplus, including $2.5 billion that was rolled over from the prior year. An end-of-year surge in tax collections stemming from strong capital gains and earnings from hedge fund managers in calendar year 2007 helped the City exceed revenue forecasts by roughly $2.3 billion, according to the DiNapoli report.
City officials predict a short recession at the national and local levels, which will present more revenue challenges. The Financial Plan assumes a 10.4 percent contraction in non-property tax revenue in fiscal year 2009, a $2.6 billion decline, as business profitability falls, income growth stalls and the economy sheds about 90,000 jobs, including 25,000 jobs on Wall Street. Continued growth in property tax collections should help mitigate the impact of the downturn on the City’s budget, as those revenues are projected to increase by $1.8 billion over fiscal years 2009 and 2010.
These trends will push baseline out-year gaps to $6.6 billion, $7.6 billion, and $7.1 billion in fiscal years 2010, 2011, and 2012, respectively. The Mayor has proposed spreading the $6.5 billion surplus over the years to narrow the gaps, and has also called for agency gap-closing measures. Additionally, the Mayor has proposed raising property taxes and negotiating with the municipal unions to lower health insurance costs. If these actions are implemented, the gaps would be reduced to $1.3 billion in 2010 and about $4.5 billion in the next two fiscal years.
Click here for a copy of the report.