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FOR IMMEDIATE RELEASE
PR- 331-03
November 19, 2003

MAYOR MICHAEL R. BLOOMBERG ANNOUNCES FY 2003 FINANCIAL PLAN UPDATE

Financial Plan Rolls Money Into Out Years, Cuts Agency Spending, Reinforces Commitment to School Construction and Recognizes Additional Revenue

Mayor Michael R. Bloomberg today announced the First Quarter Financial Plan Update for Fiscal Year (FY) 2003.  It describes minimal increases in revenue and expenses, but essentially reiterates the budget that was adopted last June by the City Council.  Unlike in previous years, it does not request that the Council modify the budget agreement between it and the Administration.

Changes in the Update include devoting a total of $413 million to reducing substantial out year budget gaps.  The Update also contains an “agency spending program” of $267 million in expense reductions and securing alternative revenue sources. It makes a $1 billion commitment over five years for pay-as you-go capital for school construction and it recognizes $575 million in additional tax revenue in FY ‘04.

“Today’s Update recognizes additional tax revenue, reduces spending without compromising city services, prudently begins to close out-year budget gaps and strengthens our commitment to building City schools,” said Mayor Bloomberg. “New Yorkers have done an excellent job weathering our City’s fiscal storm. We have tightened our belts, done more with less and have come together to make the difficult decisions necessary for the continued growth and greatness of New York.

“While the City’s fiscal situation is improving, we still face substantial out-year budget gaps that are increasingly difficult to close. In this fragile fiscal environment, we must be vigilant at every turn, watch every dollar and be cautious about our improving economic outlook,” continued Mayor Bloomberg. 

The First Quarter Update will use $213 million in FY ‘05 to reduce that year’s budget gap to $1.8 billion, and use $200 million in FY ‘06 to reduce that budget gap to $3.4 billion.  In October, City Agency Heads were asked to reduce their spending by approximately 3% on top of the $3.3 billion already reduced from the City’s budget.  The results achieved were $267 million of savings comprised of $111 million of additional non-tax revenue and $156 million of reductions in City tax levy spending.

The Update commits $200 million a year for the next five years for pay-as-you-go capital to build schools thereby helping to reduce class size and improving education.  The $200 million per year is part of the Mayor’s $13 billion school construction plan announced two weeks ago.

Improving Wall Street profits and increased Real Estate Transaction Taxes have increased FY ‘04 tax revenue forecasts by $575 million.  Previous Wall Street forecasts were made just prior to the beginning of the war in Iraq and calendar year profits for Wall Street are now expected to top $18 billion.  Recent Stock Market volatility demonstrates the unpredictability of revenue forecasts as opposed to the more accurate expense projections. Thus relying on increased revenues to cover expenses is problematic and in no ways suggests that we can relax our spending reduction efforts.

Minor budget adjustments to accommodate changes in the FY ‘04 First Quarter Financial Plan Update are expected to be made after the publication of the FY ‘05 Preliminary Budget and Mid-Year Financial Plan Modification in January 2004. The Update assumes the repeal of the Absentee Landlord Tax.  







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Edward Skyler / Jordan Barowitz   (212) 788-2958




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