DiNapoli: NYC Sees Balanced Budget in 2011, Gaps Beyond
Conservative Planning, Faster-than-Expected Economic Recovery Generate Surplus
New York City projects a surplus of $3.3 billion for the current year and a balanced budget for fiscal year 2011 due largely to prudent fiscal practices and a faster-than-expected economic recovery, according to a report New York State Comptroller Thomas P. DiNapoli released today. The absence of a State budget, however, complicates the City’s fiscal picture, particularly in the area of education.
“New York City is emerging from the recession faster and stronger than expected,” DiNapoli said. “But without a state budget in place, the City is forced to estimate how much State aid it will get. That only increases budgetary uncertainty.
“There are some signs of recovery; the City is beginning to add jobs. But in the face of out-year gaps that range from $3.8 billion to $5.4 billion, there are still some difficult choices to be made.”
Since the State has not adopted a budget for the fiscal year that began April 1, 2010, the City’s financial plan assumes a nearly $1.3 billion reduction in State aid, including a potential loss of $493 million in education funding. On June 2, 2010, the Mayor announced that he would eliminate raises for teachers and principals, and would use the savings to mitigate the proposed cut in State education aid and avoid teacher layoffs.
DiNapoli’s report notes that the net $3.3 billion surplus results from higher revenues ($2.4 billion) and a drawdown in reserves ($1.2 billion). The Mayor plans to close the FY 2011 budget gap with surplus funds from the current year ($3.3 billion), nonrecurring revenue ($2.5 billion), and agency actions ($1.3 billion), which would reduce services, improve efficiencies, and increase fees.
The City projects out-year budget gaps of $3.8 billion in fiscal year 2012, $4.6 billion in fiscal year 2013, and $5.4 billion in fiscal year 2014. The DiNapoli report noted that these gaps could be significantly larger depending on the outcome of collective bargaining and how the State and the City replace the scheduled loss of federal stimulus funds for education in fiscal year 2012.
DiNapoli’s report indicates encouraging employment trends in New York City. While employment through the recent recession declined by 6.1 percent nationally, the decline was 4.9 percent – about 186,900 jobs – in the City. Even though the peak unemployment rate in the City in November 2009 (10.5 percent) was higher than the nation’s peak in October 2009 (10.1 percent), in April, the City’s rate declined to 9.8 percent and the nation’s rate declined to 9.9 percent. Since December, New York City has added 53,000 jobs.
Click here for a copy of the full report.