Fiscal management will be a "critical asset" for New York City amid uncertainty in Washington, Mayor Bill de Blasio's budget chief told City Council members.
"At this time, the consequences of federal action are unknown and potentially widespread," Office of Management and Budget Director Dean Fuleihan said at City Hall Wednesday during the council finance committee's hearing on the city's budget and November four-year financial plan.
Tax changes, infrastructure spending, affordable housing and the needs of 4 million New Yorkers who rely on the Affordable Care Act and Medicaid are all variables in the impending Donald Trump presidency, said Fuleihan.
De Blasio on Nov. 17 released his November update, which features a balanced $83.46 billion budget, which recognizes federal Hurricane Sandy recovery and reliance funds, Department of Homeland Security Grants, the maximization of other federal and state reimbursements and the prepayment of fiscal 2018 expenses.
The four-year plan includes $1 billion in savings in fiscal 2017 and 2018 and $719 million in fiscal 2019 and 2020.
The plan marked the first citywide savings program in a November update since 2012.
"This is in recognition of potential risks associated with major policy changes in Washington and mixed economic signals including weak [gross domestic product] growth, a decline in Wall Street profits earlier this year, a slowing of the city's revenue growth and uncertainty caused by international events," said Fuleihan.
The savings program, said Fuleihan, helped the city reduce the out-year fiscal 2018 deficit by $575 million. New York still faces a $2.2 billion gap for FY18.
"Closing [that gap] will have to take place in an environment where there are risks greater than at any time in recent memory, and where the city's economy has shown clear evidence of slowing down," said finance committee Chairwoman Julissa Ferreras-Copeland.
According to Fuleihan, the city expects to realize debt-service savings of $151 million in FY17, and $33 million, $72 million and $83 million over the following three years.
"Mayor de Blasio's latest financial plan might best be described as a placeholder," the watchdog Independent Budget Office said Thursday
The city had roughly $37.8 billion of general obligation debt as of Sept. 30. Moody's Investors Service rates the GOs Aa2, while Fitch Ratings and S&P Global Ratings assign AA. All three assign stable outlooks.
The underperformance of city pension investments, as city Comptroller Scott Stringer reported last month, require additional contributions of $120 million, $241 million and $361 million from fiscal 2018 through 2020. Stringer said the city's five pension funds, valued at roughly $160 billion, will cost the city about $722 million over the next three years.
"I think this is alarming," said Councilwoman Helen Rosenthal, who represents Manhattan's Upper West Side.
Moody's also warned about pensions and other fixed costs in a Dec. 2 report preceding the city's $850 million GO sale. "Despite its strong budgetary controls, high costs for debt service, pensions and retiree health care will continue to be a challenge for the city."
De Blasio is scheduled to release his preliminary FY18 budget in late January.
IBO estimated that the city will end FY17 with an $801 million surplus, or $362 million above the administration's estimate. According to IBO, that does not include the $1.5 billion sitting in the two reserves.
The nonprofit organization projected "relatively manageable" shortfalls for the last two years of the 2017-2020 financial plan period, shortfalls that reserves could substantially reduce.
