New York City faces $1.9 billion of budget risk through the end of fiscal 2010, which begins July 1, state Comptroller Thomas DiNapoli said last week.
A large portion of that risk stems from the Legislature, which Mayor Michael Bloomberg and the City Council are counting on to raise sales taxes by eliminating a tax exemption on clothing and footwear purchases over $110 and to close some business tax loopholes. The tax initiatives are worth an estimated $900 million.
“New York City officials are making progress on the budget, but tax collections are down and the city faces a series of significant out-year budget gaps,” DiNapoli said in a press release.
His office projects the city will end its current fiscal year with a $3 billion surplus due to measures taken by the city and state as well as the addition of federal stimulus funds.
The city plans to use $2.5 billion of the surplus to help balance the fiscal 2010 budget and $530 million to pay down debt due in fiscal 2011. It also relies on the state to enact a less-costly pension plan for new city employees.
Last week Bloomberg announced that municipal unions had agreed to changes in health care coverage, including the institution of co-payments by employees for certain services, that will save an estimated $200 million in the fiscal 2010 budget and produce recurring annual savings of $150 million.
“The city’s cut billions in expenses and prudently saved resources from the boom years but the mayor has said from the beginning that we need action from Albany as well,” said Bloomberg spokesman Mark LaVorgna.
The city still faces large out-year budget gaps rising from $4.6 billion in fiscal 2011 to $5.4 billion in fiscal 2013. According to projections by IHS Global Insight data cited by the comptroller’s office, New York’s real gross state product contracted at an annual rate of 6.1% in the final quarter of 2008 and 8% in the first quarter of 2009 but is expected to begin to recover in the fourth quarter.