New York City may put off some tough financial decisions until next year as the City Council and mayor's office finish negotiations on a fiscal 2009 budget that could be passed this week. The new fiscal year begins on July 1.

When Mayor Michael Bloomberg presented his $59.1 billion budget last month, he said that a popular property-tax cut worth $1.1 billion would only be extended in the next fiscal year if the city could afford it.

"I'm not sure that we can maintain the 7% cut," Bloomberg said on June 13. "We may very well have to put it back right now for this year because without that we can't balance this year's budget, or we can balance this year's budget but we make next year so onerous that nobody wants to have that kind of precipitous tax raise."

The City Council has balked at reinstating the tax this year.

"We pretty much decided in the council that we're not going to consider raising the property tax," said council member David Weprin, chairman of the Finance Committee.

With the city ending the current year with a $4.6 billion surplus, the city can afford the tax cut, he said.

"The money is there for this fiscal year, the only issue is for 2010 and everybody recognizes the problem for 2010," Weprin said. "The real discussion will be on that next year. For this year our main concern will be restoring a lot of the mayor's cuts."

Those cuts include a $450 million cut in growth to the city department of education's budget that the City Council has been trying to mitigate.

Independent Budget Office spokesman Doug Turetsky said that the city's surplus could push off some hard choices until next year.

"Unless the floor really dropped out of the economy this year, 2009 is not much of an issue," Turetsky said. But "the choices you make today also affect the choices you're going to need to make next year."

The mayor could reduce the property tax cut without getting rid of it, said Charles Brecher, director of research at the Citizens Budget Commission, a business oriented fiscal watchdog organization.

"The discussion of the property tax increase is premature. They really need to figure out how to mitigate the impact of the arbitration decision," Brecher said.

The arbitration decision that awarded police unions retroactive raises through 2004 has added a wrinkle to budget negotiations. Unions for firefighters, sanitation workers and corrections workers have the option to reopen negotiations on their contracts to try to get a similar deal. City budget director Mark Page told the City Council last month that if all of those unions get similar settlements it will cost the city a total of $1.1 billion through 2010.

While many Wall Street firms announced layoffs in the past few months, those people hadn't been showing up in unemployment figures. The city added 14,100 payroll jobs in the first four months of 2008, according to a report by the New York City comptroller's office.

But data released last week by the New York State Department of Labor, which was not seasonally adjusted, show that the number of employed people in the city fell in May by 21,400 to roughly 3.7 million compared to the previous month. Unemployment numbers rose by 12,800 in May to 185,300 from 172,500 in April.

"If Wall Street doesn't turn around and we have a major fiscal situation, we might consider a mid-year budget modification," Weprin said. "But at this point I don't think we're in a panic stage."

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