IBO: N.Y. Surplus Looms Ahead of Labor Challenge

New York City will end the current year with a surplus of $2 billion, $244 million more than Mayor Bill de Blasio expects, according to the Independent Budget Office watchdog organization.

IBO, which studied de Blasio's preliminary budget and financial plan though 2018, also assumes that if the entire surplus is used to prepay some of next year's expenses, the city would end 2015 with a $1.2 billion surplus.

"IBO's revenue and spending projections under the Mayor's plan present an unusually positive fiscal outlook," IBO director Ronnie Lowenstein said on March 26.

The 51-member City Council must enact a budget by June 30.

Lowenstein, though, said settling expired labor contracts with roughly 150 municipal unions hovers over the city's fiscal landscape.

The IBO report said there has been no growth in inflation-adjusted wages and salaries in the city from 2010 through 2013, which have stagnated at an average of about $82,000. Also, more than $900 million has been added to the city's new capital commitment plan, with nearly 60% of the new funds added for parks department projects. The commitment plan now totals $38.6 billion for fiscal years 2014-2017.

While the de Blasio Administration projects that debt service will grow by nearly 20% next year, this increase may be overstated, said IBO. For example, the budget plan assumes short-term borrowing next year and each subsequent year at an annual cost of $74 million, yet the city has not borrowed short-term since 2004.