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PR- 173-05
May 5, 2005


City to Invest in Critical Programs and Infrastructure and Lower Taxes

Mayor Michael R. Bloomberg today announced his Fiscal Year (FY) 2006 Executive Budget and presented an updated four-year financial plan for New York City.  The $49.7 billion budget invests in education, human services, public safety and economic development while closing, what was once, an almost $4 billion budget gap and reducing taxes.  For almost four years, despite the challenging fiscal environment, more than $3.8 billion in gap-closing actions and a reduction in City headcount of 15,000, City services and the quality of life have improved dramatically.  In addition, 311 has fielded nearly 20 million calls and has transformed how New Yorkers interact with their government.

“New York City has come a long way since September 11th and the fiscal crisis that followed,” said Mayor Bloomberg. “Difficult choices, fiscal prudence and the sacrifices New Yorkers made have paid off.  The City’s fiscal outlook is strong; our economy is improving; and tax revenues are increasing so we can continue to lower the tax burden on New Yorkers. We now have the ability to make investments in critical programs, from education to economic development. However, long-term fiscal stability and structural balance remains elusive because of increases in non-discretionary spending. The City still faces significant challenges in the future.”

New York’s Improving Economy:
New York City’s economy continues to strengthen and jobs are being created throughout the City.  The unemployment rate has declined for six consecutive quarters and is below 6% for the first time since September 11th, 2001. Wage earnings in New York grew by 6.8% in 2004. Visitors are flocking to New York in record numbers and employment in the tourism business is at a record high of 298,000.  New York’s commercial occupancy rate is the highest of any City in America and Wall Street’s profits are strong. The residential real estate market is booming; issuance of building permits is soaring; and non-residential construction has recovered after falling sharply in 2001.   Real estate transaction taxes have doubled in the last two years, buoyed by low interest rates that have caused a torrent of refinancing. However, interest rates are rising and revenue from these taxes is expected to decline sharply.

Tax Relief:
The FY ‘06 budget includes $500 million in tax relief for hard-working New Yorkers and their families.  Last year the City was able to reward homeowners who helped New York through its fiscal crisis with a $400 property tax rebate. Over 660,000 Class 1 and Class 2 homeowners received a $400 rebate on their property tax.  The program cost approximately $265 million and is being extended through FY ’07.

The exemption of the City share of the sales tax on clothing purchases under $110 will be accelerated to June 1, 2005.    The program will cost $23 million in FY ’05, $230 million in FY ’06 and $166 million in FY ’07.  Tax relief will also be provided for renovations of small rental buildings and repairs to Mitchell-Lama properties. 
Total City funding on behalf of the Department of Education (DOE) has increased by $2.5 billion since 2002.  In addition to bringing accountability and reform to the Department, graduation rates are at the highest rate in nearly 20 years.  Students meeting the new math standards are up 25% and there has been a 55% reduction in the number of City Schools on the State’s failing list.  In the FY ’06 budget, the City will increase funding to DOE by $804 million.

New Initiatives Include:
  • $25 million for early grade intervention for at risk students and class size reductions in grades K through 3.
  • $13.4 million will be spent by DOE to hire 327 new school safety agents.
  • $10 million will be spent to expand middle school intervention for struggling students.
  • $2.8 million will be allocated for gifted and talented programs and to expand advance placement offering in middle and high schools.
  • $7.1 million will be used to expand the Teacher Mentoring Program.
  • $2.8 million will be allocated to increase the Translation Unit and enhance English Language Learner classroom libraries and interim assessments.
Capital Investments Include:
  • $13.7 billion for school construction that will create 65,000 new classroom seats by 2009.
  • $415 million for campus-wide renovations at CUNY including $80 million for Borough of Manhattan Community College, $69 million for Medgar Evers College and $38 million for Bronx Community College.

Public Safety:
Since 2002, crime overall has dropped by 20% and the murder rate is at a 40-year low. Through targeted deployment, the NYPD is keeping New York safer with 1,000 officers now detailed to counter-terrorism. The Fire Department has brought the number of fire fatalities to its lowest point since 1919.

New Initiatives Include:

  • $11 million will be allocated to the Fire Department for the purchase, testing and training of personal safety rope systems for the firefighters.
  • $13.8 million for District Attorneys and the Special Narcotics Prosecutor.
  • $1.3 million will be spent to increase the diversity and minority recruitment at the FDNY.
  • $1 million to upgrade and expand email to all Police Department personnel.
Capital Investments Include:
  • $205 million to renovate 125 firehouses and EMS stations.
  • $157 million to renovate six police precincts.
  • $25 million to build a new police precinct on Staten Island.

The New Housing Marketplace’s $3 billion commitment to the construction and preservation of 68,000 units of affordable housing is largest investment in housing stock in twenty years.

Capital Investments Include:

  • $1 billion partnership with the Enterprise Foundation to build 10,000 new homes and preserve 5,000 existing affordable housing units.
  • $130 million in Battery Park City Authority joint purpose funds to create the New York City Housing Trust Fund.
  • $341 million for supportive housing for the homeless
  • $30 million to build a new Homeless Family Intake Center.

Economic Development:
Over the last three years the City has pursued an aggressive five-borough economic development plan.  There are 62 major economic development projects that will create at least 330,000 jobs over the next 30 years as well as 35 rezoning projects covering 3,000 city blocks in the pipeline.

New Initiatives Include:

  • $26 million to create Industrial Business Zones that will include expansion and relocation tax credits.
  • $12.5 million per year for a Film Production Tax Incentive

New Capital Investments Include:

  • $130 million for the development of the Greenpoint/Williamsburg Waterfront.
  • $92 million for Brooklyn Navy Yard Development
  • $89 million for redevelopment of Downtown Brooklyn
    $66 million for development of the Staten Island Homeport
  • $28 million for Jamaica Station redevelopment
  • $26 million for Hunts Point revitalization.
  • $22 million for 125th Street redevelopment.

Critical Infrastructure:
Street cleanliness is at it highest level since the City began tracking it 30 years ago and the City has presented a new Solid Waste Management Plan that will take thousand of trucks off our City’s streets each year.

New Initiative Include:

  • $5.3 million will be added to the City’s baseline to fund supplemental trash basket collection.
  • $1.7 million in FY ’06 to fund three additional weekday Staten Island ferry runs.

Capital Investments Include:

  • $824 million for the construction and renovation of Department of Sanitation garages.
  • $1 billion to resurface 8,000 lane miles of City Streets.
  • $130 million for construction and renovation of Staten Island Courthouses.

Health and Welfare:
New York’s public assistance caseload has declined by 11% since 2002, and it is at its lowest point in decades. The Foster Care caseload is down nearly 6,000 since the administration began and the City has created a blueprint to end homeless in five years.  New York’s public hospital system is widely recognized as one of the finest in the country and a 130,000 New Yorkers have quit smoking since 2002.

New Initiatives Include:

  • $3 million for Healthy Women/Healthy Babies Initiative.
  • $17 million for senior services and weekend meals for homebound seniors.
  • $21 million for summer jobs and after school programs.

Capital Investments Include:

  • $225 million for Harlem Hospital Center Modernization
  • $140 million for Kings County Hospital’s New Behavioral Center.
  • $101 million for Gourverneur Hospital renovation and reconstruction.

Parks, Libraries and Culturals:
Since 2002, the Parks Department has added over 500 acres of new parkland and 24 miles of greenway. New York’s cultural organizations and libraries have never been more vibrant and are a driving force behind the City’s rising number of visitors and economic recovery. 

New Initiatives Include:

  • $3.1 million for general operating support for cultural organizations.
  • $7 million for general operating support for libraries.

Capital Investment Include:

  • $373 million for Neighborhood Parks Citywide
  • $200 million for Bronx Parks
  • $100 million for Fresh Kills Development
  • $17 million for Elmhurst Keyspan Park
  • $53 million for Brooklyn Bridge Park
  • $65 million for Hudson River Park
  • $25 million for the expansion of the Queens Museum
  • $10 million for the construction of an educational facility at the Society for the Preservation of Weeksville.
  • $6 million for the reconstruction of the Reptile Wing at the Staten Island Zoo.
  • $4.5 million for infrastructure improvements at the New York Botanical Gardens.
  • $24 million for facility modernization at the American Museum of Natural History.
  • $7.7 million for acquisition and renovation of the Kingsbridge Branch Library.

Increasing Revenues:
The FY ’06 budget gap is ameliorated by significant increases in tax revenue. Since the January 2005 plan, revenue forecasts have increased by $1.362 billion in FY ’05 and $692 million in FY ’06. These increases are being driven by higher than expected collection of the Personal Income tax ($587 million), the Unincorporated Business Tax ($156 million) and real estate transaction taxes ($457 million). 

Non-Discretionary Spending:
Mandated increases in City spending on Medicaid, fringe benefits, pensions and debt service are the principal cause of the City’s budget gaps in FY ’07 and beyond. Adjusted for inflation, City discretionary spending has declined by 5.4% between FY ’01 and ’06 while non-discretionary expenses has increased by 37.8% during the same time.   Non-discretionary spending have surpassed discretionary spending in total and is increasing at a rate of 12.3% between FY ’04 and FY ’05, and will top $22 billion by FY ’07.


Edward Skyler / Jordan Barowitz   (212) 788-2958

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