DiNapoli Releases Review of NYC Financial Plan
Economic growth in New York City is outpacing the state and the nation, with Wall Street, private sector job growth and tourism helping to lead the City’s economic recovery, according to a report released today by New York State Comptroller Thomas P. DiNapoli. However, DiNapoli noted public sector job losses are beginning to accelerate and unemployment, though down from a peak of 10 percent to 8.9 percent, remains high.
“There have been some encouraging signs from the private sector in the past year, which bodes well for the City’s continued economic comeback, but recent developments in the Middle East and Japan could slow the recovery,” DiNapoli said. “The City has managed its way through the recession and plans to absorb most of the impact of the state budget cuts for next year. But the picture is not completely rosy. The City still faces significant challenges. And the impact of cuts on the schools may save money, but it may also damage the gains the City has made in education.”
Since the recession ended, the private sector has added 73,400 jobs, half of the jobs lost during the recession, with the bulk of the growth concentrated in professional and business services, education, health care as well as leisure and hospitality. The tourism industry played host to a record 48.7 million visitors who came to New York City in 2010 and spent an estimated $31 billion.
Wall Street, a key driver of the City’s economy, returned to profitability much faster than was expected and has added 9,700 jobs since the economic downturn. The securities industry earned $27.6 billion in 2010, second only to the record set in 2009. While cash bonuses paid to securities industry employees in New York City declined by an estimated 8 percent in 2010, overall industry compensation climbed approximately 6 percent.
City fund revenues dropped by $2.5 billion in FY 2009 and remained depressed in FY 2010. With an economic recovery underway, the City’s financial plan assumes that fund revenues will grow by $2.4 billion in FY 2011 and by another $2.5 billion in FY 2012. These resources, combined with a draw down in reserves, helped contribute to a projected $3.2 billion surplus for FY 2011. The City intends to use these resources to help balance next year’s budget.
In November 2010, the Mayor announced plans to reduce staffing by 8,264 employees by June 2012, including 5,312 layoffs. The Mayor has indicated that additional agency cuts, valued at $600 million, may be needed if the state does not partially restore proposed cuts.
Although the City’s financial plan includes budget risks for this year and next, the level of risk appears to be manageable because of the City’s strong commitment to the financial planning process and the size of its reserves.
To view DiNapoli's report, visit: http://www.osc.state.ny.us/reports/budget/2011/nyc_budget_rpt_2011.pdf.