New York City's outyear budget gaps are greater than the estimates from Mayor Bill de Blasio's budget team, according to an analysis by city Comptroller Scott Stringer.
"Given these gap projections, we need to be prepared with a strong financial cushion," he told reporters Wednesday at the David N. Dinkins Municipal Building in lower Manhattan.
Stringer's office pegged the total gaps at $2.7 billion in fiscal 2018 and $3.8 billion in both fiscal 2019 and 2020. By contrast, de Blasio's
By the end of the five-year plan, budget gaps will be $1 billion larger than the city’s, said Stringer.
City spending on homeless services, he said, would reach $1.7 billion in fiscal 2016, up 46% from two years earlier. Revenue from personal income, business and real estate-related taxes would drop by fiscal 2020.
In addition, Stringer’s office removed from projections $731 million in potential revenue from taxi medallion sales with that industry being disrupted by smartphone-dispatched services like Uber.
“There’s no question we have some turbulence in the taxi industry. We don’t want to bring the medallions to market and not get the revenue we need. The mayor recognizes this,” he said. “It’s not going to happen soon.”
He also warned of looming uncertainty including the fluctuating stock markets and turmoil in China, which could affect city investments and the financial services industry.
“If you think taxis are in a turbulent space, the stock markets are just as turbulent and it could have real ramifications,” Stringer said.
At the start of fiscal 2016, the city’s reserves were at 10.6% of adjusted expenditures. Using an internal metric for which his office consulted with major bond rating agencies, Stringer said the city remained $1 billion to $6 billion below a recommended range of 12% and 18%.
“We are not yet where we need to be,” said Stringer, who said the city can trim expenses through department efficiencies rather than layoffs or service cuts.
Moody’s Investors Service rates the city’s general obligation bonds Aa2. Fitch Ratings and Standard & Poor’s rate them AA.
“Budget monitors and rating agencies have all applauded this administration's fiscal prudence and focus on protecting against economic uncertainty – and investors agree,” said Amy Spitalnick, a press officer for the Mayor’s Office of Management and Budget.
“Reserves are at unprecedented highs after this administration both restored funds cut under the prior administration and added much more; out-year gaps are low and based on the city’s always-cautious revenue projections; and the administration has implemented an aggressive savings program of over $1 billion each year for the last two years -- in addition to billions in unprecedented health savings secured with the [Municipal Labor Committee].
The MLC is the umbrella organization for many city labor unions.
“As the mayor has made clear, we’ll build on those savings in the executive budget this spring,” Spitalnick added.
Stringer, a former state assemblyman who represented Manhattan’s West Side, said he would return to Albany to pitch for state funding. Two weeks ago he and de Blasio testified before skeptical state lawmakers.
“We are beholden to the state for a lot of financing,” said Stringer . “We need every last dollar from Albany.”
Cuts in state aid of $500 million to $1 billion could push the outyear gaps to $5 billion, he said.
According to Stringer, the city has experienced a “slow but steady” economic recovery from the recession, but fewer higher-wage jobs are available.
“When you take high-wage jobs and replace them with low-wage jobs, you begin to lose ground,” he said.
Over the last six years, he said, the fastest-growing job “super-sector” was retail with 30% growth, followed by technology, advertising, media and information at 23%. Education and medicine, or “eds and meds” had 20% growth, followed by business and industrial at 10% and 3%, respectively.
