New York City’s budget is balanced for the current fiscal year, but dark shadows hover, according to state Comptroller Thomas DiNapoli.
Uncertainties, he said in an analysis of the city’s four-year financial plan released Thursday, include the impending fiscal cliff, Hurricane Sandy recovery, unresolved collective bargaining and delays in the sale of taxi medallions, the latter facing a legal challenge.
“This year’s budget is balanced and next year’s budget gap appears manageable, but there are a number of unresolved issues that could increase the size of projected gaps in the years ahead,” DiNapoli said.
Bright spots in New York’s financial recovery include a strong third quarter for Wall Street. DiNapoli called its $17.6 billion of earnings “an unexpected positive development.” New York Stock Exchange member firms are on pace to exceed $20 billion in profits for the year, twice what the city had assumed and the highest on record. DiNapoli’s analysis estimates that the extra profits will boost business tax revenues by $100 million in the current fiscal year.
Fitch Ratings and Standard & Poor’s assign AA ratings to the city’s general obligation bonds, while Moody’s Investors Service assigns its Aa2 rating. The city sold $1 billion of tax-exempt refunding GO bonds through negotiation on Tuesday, upsized from $850 million.
The city is appealing a ruling by state Supreme Court Justice Arthur Engoron in August that struck down the city’s plans to expand yellow taxi service into all five boroughs, a ruling that could blow a $1.4 billion hole in its budget. Because of the legal quagmire, the city no longer anticipates the receipt of any proceeds, according to DiNapoli. Engoron called the enabling law unconstitutional because Mayor Michael Bloomberg circumvented the City Council, which had opposed the measure.
Also complicating the city’s financial outlook, according to DiNapoli, is the lack of new labor agreements with municipal unions. The city assumes that employees will not receive compensation for wage freezes imposed during the recession and will agree to annual wage increases of 1.25%, less than the inflation rate.