New York City’s tax collections outpaced forecasts by almost $1.5 billion in Fiscal 2018, driven by higher-than-expected personal income tax collections and lower-than-predicted property tax refunds, according to a report released by State Comptroller Thomas DiNapoli.
New York City now projects a surplus of nearly $3.7 billion for the fiscal year ending June 30, which will be used to balance the Fiscal 2019 budget, said the report, which was released on Friday.
The surplus was also boosted by cuts in unneeded reserves in the current fiscal year and benefits from the citywide savings program. Business tax collections, however, continued to fall short of expectations.
DiNapoli’s report said that while tax revenues are likely to exceed the city’s forecasts in the near term, the city should increase reserves in light of the possible budget risks.
The report also noted that growing federal deficits may spur cuts in federal programs, which would hurt many city residents.
“The city’s economy is strong and the out-year budget gaps appear manageable under current conditions,” DiNapoli said. “However, the city should increase its reserves during the financial plan period given the budget risks on the horizon, particularly the threat of federal budget cuts.”
The reported said the Health and Hospitals Corp. was still facing “serious long-term financial and structural challenges” and that the city may be forced to provide additional resources to the New York City Housing Authority.
The report also looked at growing labor costs.
“The city has set aside resources to fund annual wage increases of 1% after current labor agreements end, but the actual cost will be determined through negotiation or arbitration,” the report said. "The city’s financial plan assumes uninterrupted economic growth during the financial plan period, but business cycles are subject to change."