NYC tax revenue now $834M ahead of estimates for fiscal 2021
New York City’s tax revenues are running $834 million ahead of projections, according to Comptroller Scott Stringer’s first quarter revenue update for fiscal 2021.
“While potential state budget cuts continue to present a sizable risk to the city’s budget condition and a robust Federal stimulus package is essential to the city’s recovery,” Stringer said Tuesday, adding “the higher-than-expected tax revenues provide a path to closing the city’s budget gap next year.”
Stringer said Mayor Bill de Blasio is now in a position this month to present his updated Financial Plan, which can provide a path to a balanced budget for fiscal 2022 without cuts to essential services, layoffs of city workers, or borrowing to support operating expenses.
The comptroller said some of the existing resources the city can use include debt service savings from refinancing outstanding city bonds, a Revenue Stabilization Fund or rainy day fund, that would allow access to almost $500 million of General Fund balances, surplus revenues from fiscal 2020 and tapping into reserves.
Since the fiscal 2021 budget was adopted in July, a number of factors have changed, so Stringer said an update was needed. While the fiscal 2021 budget was balanced there was a projected budet gap of $4.2 billion for fiscal 2022. Since that time, additional resources have become available to help address this gap, such as the fact that fiscal 2020 tax revenues were $1.019 billion more than projected.
Also, the Comptroller’s Office and the Mayor’s Office of Budget and Management have refinanced outstanding municipal bonds over the past months, which has resulted in a $610 million reduction in debt service paymets: $469 million this year and $141 million next year. Stringer said additional bond refinancings are expected before year end that will add to this total.
Additionally, the state passed legislation that lets the city access $493 million in fund balances for gap-closing purposes through creation of the rainy day fund.
However, Stringer cautioned that the budget picture is far from rosy.
He said the biggest risk to the city is from the state’s budget situation, which is being balanced by cuts to local aid. A 20% cut in state aid to the city comes out to about $3 billion, two-thirds of which will be a cut for schools.
He added that the risks from insufficient Federal aid made it urgent to begin work now to bring the budget into balance and better position the city to face future uncertainties.
“While we should not underestimate the scale of the challenge before us, with thoughtful leadership, there is a clear path to financial stability,” Stringer said.