N.Y. City Council Set to Approve Budget

New York’s City Council was expected Thursday evening to sign off on a $68.5 billion budget for fiscal 2013, to which Mayor Michael Bloomberg and council leaders agreed earlier in the week.

If approved, it will mark the 11th straight year the city has enacted an on-time budget. The city must finalize one by June 30, the end of the current fiscal year.

“Our budget isn’t just a plan for how to spend taxpayer dollars. It’s a statement about who we are as a city,” said council speaker Christine Quinn.

The proposed budget has no tax increases and protects politically hot-button items such as teacher jobs, fire houses and early childhood programs, but also relies on stop-gap infusions, such as an estimated $1 billion from the sale of taxi medallions that may not withstand a court challenge; the nearly $500 million settlement with CityTime payroll system contractor Science Applications International Corp.; and $1 billion in funds from the Retiree Health Benefit Trust, which the city created with surplus revenues in 2006 and 2007.

The budget also relies on almost $6 billion in savings generated through 11 rounds of deficit-closing actions taken since 2007.

While the agreement between Bloomberg and Quinn ensured a balanced budget, the city faces a gap of roughly $2.5 billion for fiscal 2014. “We face a significant challenge again next year,” Bloomberg said.

The Independent Budget Office said earlier this month that such budget gaps may be smaller than what Bloomberg’s administration has projected.

“While mayors are generally cautious in their fiscal estimates, Mayor Bloomberg may be particularly cautious with his revenue estimates this year given the economic uncertainties. Continued economic turbulence in Europe and the potential for a stalemate in Washington on U.S. fiscal policy provide significant reasons for caution,” said IBO director Ronnie Lowenstein.

Moody’s Investors Service rates the city’s general obligation bonds Aa2, while Fitch Ratings and Standard & Poor’s each assign a AA.

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