The $82.1 billion budget New York City adopted for fiscal 2017 is a slight credit positive for the next two years, S&P Global Ratings said in a report.
"While the short-term outlook is stable, the city will be challenged to close sizable out-year gaps," said credit analyst Hilary Sutton. New York, she said, "faces significant fiscal pressures that could affect its ability to close projected budget deficits in fiscal years 2018 through 2020."
The City Council on June 14 approved the spending plan to which its leaders and Mayor Bill de Blasio had already adopted. It marked the earliest agreement between the mayor and council on a fiscal plan in 15 years.
According to Sutton, while the budget gaps in fiscal 2018 through 2020 -- $2.82 billion, $2.95 billion and $2.33 billion, respectively -- are smaller than the average of the last 15 years and include $1 billion general reserves in each year, they are still significant and could widen if a number of scenarios materialize.
They include subsidies for health and hospitals, unbudgeted capital spending, uncertainty over the receipt of state-controlled funds, higher-than-expected labor costs and failure to achieve citywide savings plan goals.
S&P and Fitch Ratings assign AA ratings to the city's general obligation bonds. Moody's Investors Service rates them Aa2.
