Stringer Projects Widening New York City Budget Gaps

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New York City faces a budget gaps of $3.6 billion in fiscal 2018, according to an analysis by city Comptroller Scott Stringer.

The study Stringer released Wednesday projects the gap to widen to $4 billion in fiscal 2019 before narrowing to $3.4 billion the following year.

According to Stringer, city-funded expenditures in the $84.6 billion municipal budget for fiscal 2017, which began July 1, will increase by 5.4%, above the projected 1.6% growth in tax revenues.

DeBlasio signed the budget last month. Speaking at a July 12 Municipal Forum of New York luncheon, the mayor said the budget balances fiscal prudence with his progressive agenda. "It's a good reminder to choose carefully and always appreciate the value of keeping a strong reserve, to be prepared for the moments that we do not know that are coming."

Stringer's report, however, asserted that while the city has added to its budgetary cushion, it remains more than $750 million short of the minimum amount to be fully prepared for an economic downturn.

"Tax revenues have grown for seven years in a row, but the rate of growth is slowing," Stringer said in a statement. "With our budget cushion still below optimal levels, now is the time to act and build up our reserves. We must do more to find agency efficiencies while revenue growth is still moving in the right direction."

Over the past year, causes for concern about the national economy have intensified, said Stringer, with falling corporate profits, slowing job growth, and a deterioration of global economic conditions.

The greatest risk to the city's finances, said Stringer, remains its Health + Hospitals unit, which de Blasio is attempting to overhaul. Roadblocks, said Stringer, include under-budgeted overtime costs, increased homeless shelter spending, and low federal Medicaid reimbursements for special education services.

Howard Cure, the director of municipal bond research for Evercore Wealth Management, questions whether the city can meet its savings goals for Health + Hospitals without significant help from the federal and state governments, and from its own labor force.

"They historically served a very important function, to make sure that people of all income levels. Particularly poor people, have access to decent health care. It's a very expensive proposition to maintain that and requires a lot of expertise," Cure said on a Bond Buyer podcast. "And the paradigm financially has shifted because of issues like the [federal] Affordable Care Act."

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