N.Y.C. IBO Offers List of Possible Cuts Along With Revenue Enhancements

The New York City Independent Budget Office Tuesday released its annual list of potential spending cuts and revenue enhancements, including a proposed waste-to-energy plant that could generate $29 million of savings per year.

This is the IBO’s 10th annual “Budget Options for New York City” report. It includes more than 60 different expenditure reductions and revenue generators to help the city control costs and raise additional funds. The report offers pros and cons for each budget suggestion. It does not endorse or promote any of the options listed in the report.

“Although New York City’s tax revenues may have started to rebound from the recession, the city still faces significant budget challenges,” IBO director Ronnie Lowenstein said in a statement. “This volume, with its clear calculations of expected savings or revenues from dozens of budget options as well as the best arguments for and against each of the measures, can help policy makers and the public as they consider ways to address the city’s ongoing fiscal difficulties.”

This year’s report adds nine new initiatives, including a plan to construct a new waste-to-energy facility that would reduce the amount of waste that the city exports each year by 27%.

Currently, the city transports 11,000 tons of waste each day to landfills and WTE plants outside of the city at a cost of $92 a ton and $70 per ton, respectively. Those costs are expected to increase to $140 per ton in 2019.

The IBO estimates that if the city were to build its own incinerator plant, it would save $29 million per year beginning in 2019, once the facility is operational. In addition, electricity generated from the WTE plant could bring in revenues of $0.11 per kilowatt hour.

Conversely, the IBO projects a new incinerator facility would cost $681 million. Financing could come from issuing 30-year bonds at a rate of 6% annually, according to the report. Construction would take about three years after the city secures the land and necessary permits.

Other new budget suggestions include taxing private-equity and hedge fund investment gains, also called carried interest, to generate about $200 million, on average, each year from 2012 through 2015.

Eliminating 1,509 parent coordinator positions in the Department of Education would save $86.7 million annually. A 6-cent tax on disposable plastic bags would generate $94 million in its first year, and boosting collections of fines on housing maintenance code violations would bring in $66 million per year by 2014.

In looking at suggestions included in previous IBO reports, the organization estimates the city would collect $1.3 billion in 2012, with that amount increasing in later years, from a progressive commuter tax on non-residents that would range from 0.97% for the lowest tax bracket to 1.29% for the highest earners.

Restoring a former commuter tax that the New York Legislature ended in 1999 would generate $735 million in 2012, tolls on the East River and Harlem River bridges would bring in $970 million per year. Requiring all city employees and retirees not yet on Medicare to contribute 10% towards their health insurance costs would generate $496 million of savings.

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