Upward revisions by two bond rating agencies validate New York City’s fiscal planning and emergence from COVID-19, its budget director told the City Council.
Moody’s Investors Service and S&P Global Ratings within the past 10 days have elevated their outlooks on the city’s general obligation bonds to stable from negative.
“Right now, we are starting to see signs of the recovery across the country and at home,” Jacques Jiha, director of the Mayor’s Office of Management and Budget, told members of the council’s finance committee on Monday.
Jiha cited an influx of federal aid and the city’s vaccination program.
“While the stimulus is a bridge to economic and financial recovery, it is important to note that the city is on the path to emerging from the greatest financial stress-test it has ever experienced,” he said. “You can see a resurgence happening right now throughout the city."
For instance, the New York Knicks sold out all 15,000 seats for their first two National Basketball Association playoff home games, the largest indoor gathering for the city since the pandemic took hold in March 2020. That represents about 80% of seating capacity for that sport at Madison Square Garden.
The 51-member City Council must act on Mayor Bill de Blasio’s $98.6 billion executive budget — the final one for the term-limited mayor — by July 1. De Blasio’s 10-year capital program totals $133.7 billion.
S&P and Moody’s rate New York’s GO bonds AA and Aa2, respectively. Fitch Ratings assigns AA-minus and for now, a negative outlook.
New York’s infusion of coronavirus federal aid from legislation already passed is expected to reach $22.3 billion, according to the watchdog Citizens Budget Commission. That includes $15.7 billion in the executive budget, which de Blasio released on April 26.
CBC Director of City Studies Ana Champeny, said that while the new funds, primarily from the recently enacted American Rescue Plan, help the city meet a variety of important short-term needs, “the city’s planned uses fail to leverage the federal aid to help stabilize the city’s long-term fiscal position and in fact worsen it by widening out-year budget gaps.”
The city has front-loaded its new federal funds, according to CBC, with two-thirds, or $9.5 billion, spent by the end of fiscal 2022 and just 12% and 7% left for fiscal 2024 and fiscal 2025, respectively.
City Comptroller and mayoral candidate Scott Stringer expects outyear gaps shortfalls to remain close to $4 billion a year through the end of the financial plan in fiscal 2025.
"The most important question we can ask about this budget is this: How are we using these federal funds? This is an unprecedented amount of money, to address an unprecedented crisis," Stringer said.
Short term, businesses hit the hardest by the shutdown should be the priority, Stringer said. A survey by his office found that half of minority and women business enterprises had to lay off or furlough employees during the pandemic, and that nearly a third expect to miss rent payments in the next three months.
"Businesses need our help," Stringer said.
The $133.7 billion capital plan is up nearly $14.9 billion, or 12.5%, from the preliminary plan de Blasio released in late January. “We anticipate investing just over $21.9 billion in infrastructure in fiscal year 2022 alone,” Jiha said.
Despite disruptions from the pandemic, the city allocated $6.7 in capital commitments through April 2021, Jiha said.
Major additions to the 10-year capital plan include fully funding affordable housing through the Your HomeNYC program; resurfacing miles of lanes, including 50 miles of bicycle lanes annually; expanding school capacity for universal 3K; completing the Manhattan Greenway; funding the East Side coastal resiliency project; and expanding the LifeSci NYC initiative designed to advance research and innovation.
