New York City Budget Chief Pushes 20% Cut in 10-Year Plan

New York City budget director Mark Page on Tuesday called for a 20% reduction in capital spending in the city's next 10-year capital strategy plan to be released next year.

In a letter released Wednesday, Page cited rising fixed costs and ordered city agency heads to identify projects that could be cut or delayed in the long-term plan, which is updated every other year.

"Pension costs, retiree health benefits, and debt service are requiring a steadily increasing portion of the resources available for city spending," Page wrote. "We must reduce the plan for capital spending, which drives capital borrowing and its resulting debt-service costs to the city operating budget."

Last year's plan called for $61.7 billion of spending from 2010 through 2019, of which $47 billion was expected to be bond financed.

Mayor Michael Bloomberg's first 10-year plan, released in 2003, called for $49.3 billion of capital spending that was to use $46.7 billion of bonds.

Debt service is one of the fastest-rising items in the city budget. Annual debt service in fiscal 2011 is projected to be $5.46 billion compared to $1.88 billion in fiscal 2003.

Debt service as a percentage of city revenue is projected to rise to 10% in fiscal 2014 from 7.9% in fiscal 2010, according to budget documents.

Page wrote that while the city has been trying to reduce pension and health benefit costs, it was "obliged to address the amount of the budget going for debt service."

The move is a reversal for the mayor, who has often brushed aside questions about the size of the capital plan, which he has said was needed to prevent a return to the dark days of the 1970s when the city was forced to defer capital spending due to its fiscal crisis.

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New York
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