New York City’s $87.96 billion budget for fiscal 2018 shows “a responsible increase” of 2.8% from the adjusted 2017 budget, according to an analysis done by New York City Comptroller Scott Stringer.
The FY18 adopted budget was adjusted for prepayments from the prior year and excludes reserves.
“The mayor has put money away in reserves and invested in critical programs. This budget helps ensure that we’re on strong fiscal footing,” Stringer said. “While businesses are still growing and jobs are still on the rise, there are signs the economy is slowing. Of course, with chaos in Washington and the White House seeking to slash the safety net, we have to remain vigilant.”
According to the report:
- The comptroller’s office expects the city’s economy to continue to outpace the national economy through 2019. The most likely risks to continued economic growth are a premature increase in short-term interest rates by the Federal Reserve and the success of fiscal policy initiatives from Washington;
- In the first quarter of 2017, the city’s economy grew 2.6%, outpacing national economic growth of 1.4% in the same period;
- In the first half of the year, the city’s unemployment rate averaged 4.3% -- down from 5.3% in the same period last year. Between January and June, the number of payroll jobs in the city rose 1.9%, or 82,000;
- The FY17 budget increased the city’s cushion to $9.8 billion — close to the comptroller’s suggested minimum level of 12% of adjusted city spending;
- About 72% of the FY18 budget is funded with city-generated revenue, followed by state grants (17%), federal grants (9%), other grants (1%), and inter-fund agreements (1%);
- More than 80% of budgeted expenditures -- almost $70 billion -- are allocated to education, social services, public safety, and judicial, fringe benefit, pensions, and general government spending;
- According to unaudited preliminary returns, the city pension funds’ investments grew 13% in FY17, above the actuarial interest rate assumption of 7%. Since 2014, the funds have averaged annual returns of more than 7%. These preliminary numbers may be revised up or down in the coming months, but the comptroller’s office expects that potential market declines in future years could lower returns;
- The city’s FY18 budget reflects $4.17 billion in prepayments from FY17, including $3.47 billion for debt service, $400 million for retiree health benefits, and $300 million for Health + Hospitals subsidies; and
- The comptroller’s office analysis of the financial plan estimates smaller out-year gaps in FY2020 and FY2021 than the city, based primarily on higher expected property tax revenue in those years.
The comptroller’s office also identified four main spending-based risks in the FY18 adopted budget: overtime, homeless services spending, Health + Hospitals payments, and special education Medicaid reimbursements.
“Throughout this budget cycle, we’ve worked with the mayor and city council to deliver a balanced, responsible budget that serves New Yorkers,” Stringer said. “My office will continue to work with the administration and council to monitor the budget and ensure our city stays on track to handle whatever challenges we face.”