New York City is projecting a surplus of $3 billion for fiscal 2015 and a balanced budget for fiscal 2016 with relatively small gaps in the following three years, according
"The city's economy is strong and shows no signs of slowing. Still, Mayor [Bill] de Blasio and the city's budget team deserve credit for increasing reserves to hedge against any future economic setback," DiNapoli said June 8.
Higher than expected tax collections account for most of the current year's surplus. Tax collections are now expected to exceed the city's original forecast by $2.4 billion to reach $51 billion, 32% higher than before the recession. Strong job growth, tourism and a robust real estate market have driven tax revenues.
The securities industry, one of the city's most powerful economic engines and a major source of tax revenue, added 2,300 jobs in 2014 -- the first job gains since 2011 -- and is on pace to add nearly 4,000 jobs during 2015. Industry profits were strong during the first quarter of 2015, totaling $6.5 billion, and are on pace to exceed the city's annual forecast.
During the past 12 months, the city has also reached new labor agreements with nearly 80% of its workforce, providing a level of cost predictability through 2018.
DiNapoli's report notes some areas of concern, notably that debt service will reach $7.5 billion by fiscal 2019, up 38% over five years, and will account for 13.5% of tax revenue in that year. The city has a plan to keep the debt service burden below 15% of tax revenue, a level considered high.
In addition, said DiNapoli, the city's unfunded liability for post-employment benefits other than pensions totaled $89.5 billion in fiscal 2014; and closing the Metropolitan Transportation Authority's $14 billion funding gap in its proposed five-year capital program could require additional city funding.
The city has already taken on greater financial responsibility for the Health and Hospitals Corp. and the New York City Housing Authority, which are both facing serious challenges.
