New York City budget director Mark Page yesterday faced sharp questions over spending and budget cuts at the City Council’s final hearing for the fiscal 2011 budget.
Lawmakers criticized proposed cuts to the fire department and libraries, as well as the possible closing of 50 senior centers and the elimination of 1,100 child care slots, while the city invests in an electronic payroll system.
Page defended the payroll system, called CityTime, which has been under development for about a decade.
“To contemplate turning off this system at this moment would be crazy,” Page said. “We have spent approximately $600 million in city capital to develop a serviceable, effective timekeeping system.”
Off-the-shelf payroll systems available in the 1990s were available for $50 million to $60 million but those systems couldn’t handle the many collective bargaining agreements covering city employees, and so a custom system was needed.
The system needs about $30 million of further capital investment to finish and will eventually save the city $60 million annually, Page said. Once fully implemented, the system will cover 167,000 city employees, not including Department of Education employees who may be added at a later date.
Comptroller John Liu is auditing the project, which he called a “money pit” in prepared testimony. Liu said the project was a “prime example” of waste, and estimated its cost to be higher than Page’s estimate, at $738 million.
Last month, Mayor Michael Bloomberg proposed a $62.9 billion fiscal 2011 budget that calls for the city to sell $6.05 billion of bonds for general capital financing in fiscal 2011.
Annual debt service over the next five years is projected to rise to $6.82 billion in fiscal 2014 from $5.07 billion in the current fiscal year. The city’s fiscal year begins July 1.
The city’s fiscal picture has brightened over the past year, Page and others said.
“We seem to have bottomed out, at least in employment, with about half as many job losses as we thought were likely to happen a year ago,” Page said. “Probably the biggest benefit of that is we are able to increase our forecast of tax revenues for the city this year, fiscal year ’10, and fiscal ’11 by $3 billion. That’s made a tremendous difference in the circumstances we’re now facing in funding city services.”
Independent Budget Office director Ronnie Lowenstein told the City Council she expected the city to end the current fiscal year with a $3.4 billion surplus, which is $101 million better than Bloomberg administration projections. Those funds will help close the gap in fiscal 2011, but the city will face a $3.3 billion shortfall in 2012, she said.
“Although we undoubtedly face a tough budget climate in the next few years, it is important to recognize that after more than a year of daunting job losses and declining tax revenues, the city’s economic and fiscal condition is gradually beginning to improve,” Lowenstein said in prepared testimony.
The proposed budget faces a number of risks. New York State has entered its third month without a budget and has been operating on an emergency spending bill, leaving the city with uncertainty as to how much aid it will get from Albany. Bloomberg proposed cutting about 11,000 jobs, including 6,400 teaching jobs to offset state cuts. Last week, he said that he would eliminate teacher raises to save 4,400 teaching jobs.
