New York City's social-justice themed $75 billion spending plan is up 7% from last year and bound to generate discussion among budget observers.
New York City Mayor Bill de Blasio and the City Council came to terms Thursday night, 11 days before the legal deadline for enactment.
The agreement "follows a more honest budget process that ended the cynical 'budget dance'," de Blasio said as he and City Council President Melissa Mark-Viverito announced the deal at 10:15 p.m. at City Hall.
The plan, which contains no tax increases or major cuts, is also a slight bump from the $73.9 billion the first-year mayor proposed on May 8.
Administration officials cited last week's bond sale that exceeded $1 billion — upsized from $850 million — as a sign of confidence from the capital markets.
Moody's Investors Service rates the city's general obligation bonds Aa2. Fitch Ratings and Standard & Poor's rate them AA.
"A 7% increase overall is pretty big. It probably includes some things they don't need," said Anthony Figliola, vice president of Empire Government Strategies, a Uniondale, N.Y., consulting group.
"Keep in mind that this is just a handshake agreement," he said. "The details will come out next week. What are they spending on? And how long-term is their pension liability issue?"
New York's budget includes funding for a new nine-year contract with the United Federation of Teachers, just ratified. That deal calls for $1 billion in health-care savings. De Blasio's administration sees the deal as a prototype for settling with 152 other municipal labor unions, all working on expired contracts.
"The city's institutionalized budgetary controls and early recognition of future budget pressure help it maintain a balanced financial position and weather economic downturns," Moody's said recently. "Despite its strong budgetary controls, mounting costs for debt service, pensions and retiree health care will continue to be a challenge for the city."
The four-year financial plan forecasts out-year budget gaps of $2.6 billion, $1.9 billion and $3.1 in fiscal 2016 through 2018, respectively. It rolled $1.6 billion extra from fiscal 2014, known among credit analysts as the "surplus roll," into this year's fiscal budget.
"The outyear gaps are a grave concern to me," said Figliola.
The council downsized de Blasio's $100 million proposal for an additional 1,000 police officers, instead approving $6.2 million to hire 200 civilian administrative aides.
The agreement includes $19 million toward crime reduction in New York City Housing Authority developments by increasing community engagement efforts and expanding neighborhood watch and domestic violence outreach teams; $32.5 million for increased programming and enhanced services to inmates with mental illness at Rikers Island correctional facilities; and $6.25 million to provide school lunch to all middle schoolers.
