New York City Mayor Michael Bloomberg on Thursday proposed a $69.8 billion executive budget that projects an additional $800 million in tax revenue above January forecasts.
Bloomberg's
Bloomberg cited private-sector activity such as sales of stocks ahead of federal tax-law changes for the one-time revenue windfall. As a result, the city has lowered its revenue forecast for fiscal 2014.
The city, he said, collected roughly $200 million more in corporate tax audit revenue through aggressive corporate auditing procedures. Finally, the city has reduced taxi medallion revenue forecasts from $600 million next year to $300 million in fiscal 2014.
Bloomberg said the balanced budget has no tax increases. "Like every budget our administration has produced, this one will be balanced — and we'll do it without increasing taxes or cutting critical services New Yorkers rely on," said Bloomberg.
Moody's Investors Service rates the city's general obligation bonds Aa2, while Fitch Ratings and Standard & Poor's assign AA ratings.
The city's biggest costs involve employees, notably pensions and healthcare. Total personnel costs for municipal employees since 2002 have risen by 71% to $39.2 billion, despite the city having 14,000 fewer employees than it did then.
Since January, the city's independent actuary, who determines pension costs for the city, refined pension assumptions, resulting in an increase of New York's required pension contribution by $230 million through fiscal 2014.
City employees, meanwhile, are working under expired contacts.
"There are still some open issues with labor. Clearly the city will have to do something because its biggest expenditure is on its employees," said John Hallacy, head of municipal research at Bank of America Merrill Lynch. "The good side is that revenue is better than projected."
While the executive budgets for fiscal 2013 and 2014 are balanced, New York faces out-year gaps of about $2.2 billion in 2015, and $1.9 billion and $1.4 billion, respectively. Bloomberg said the city has put $142 million toward closing the gap in fiscal 2015, which begins July 1, 2014, and will pursue a 13th round of measures to help close the deficit in November.
"The gaps are always there, but they always find ways to close them," said Hallacy. "That's easier said than done, but at least there's some confidence in the process."
A longtime Bloomberg critic and current mayoral candidate, city Comptroller John Liu,
The budget "contains some major unwarranted assumptions that risk opening yawning gaps," said Liu. "It assumes the city will reap $1.5 billion over four years from a taxi medallion sale that for the foreseeable future is tied up in court. It budgets nothing more for municipal-worker pay raises, even as all city unions are working with expired contracts. In all, this represents a holding-pattern budget that gets Mayor Bloomberg out the door, even as it leaves a passel of problems for his successor."
