New York City will end the fiscal year with a $3.5 billion surplus, $151 million more than Mayor Bill de Blasio's estimate, according to the Independent Budget Office.
"IBO expects that the city's fiscal condition will remain stable—budget surpluses this year and next and shortfalls in future years that will be relatively modest as a share of city-generated revenue," the watchdog organization
The 51-member City Council must approve a spending plan by June 30. The council's finance and education committees were holding joint public meetings on Monday.
IBO projects a "comparatively small" surplus of $812 million in 2017 under the mayor's plan. This amount may be understated, according to IBO, because de Blasio's plan includes two reserve funds within the 2017 budget totaling $1.5 billion — dollars recorded as expenditures but for now don't support specific spending needs.
"Taking these reserves into account, the projected surplus for next year is effectively $2.3 billion," IBO said.
The city's fiscal condition will remain stable, said IBO, despite its own expectation of slow economic growth, notably a decline in job growth from the record levels of the past few years and a corresponding slowdown in revenue growth in the years ahead.
According to IBO, debt service, after adjustments for using prior surpluses to prepay some of it, is rising at an annual average rate of 7.7% and is expected to rise by $2.1 billion, increasing from just over $6 billion this year to about $8 billion in 2020.
De Blasio's plan to prop up the struggling NYC Health + Hospitals agency included the assumption of $735 million in debt service for the hospital system from 2017 to 2020 in addition to increasing the city's general subsidy by $160 million this year.
Still, IBO estimates that the city will spend $75 million less than budgeted on debt service each year from 2017 to 2020. The de Blasio administration has budgeted that expense in anticipation of short-term borrowing, but the city has not done any in more than a decade.
Moody's Investors Service rates the city's general obligation bonds Aa2. Fitch Ratings and Standard & Poor's rate them AA.
