Mayor Michael R. Bloomberg today announced his Fiscal Year (FY) 2008 Executive Budget and presented an updated four-year financial plan for New York City. The $59.0 billion budget maintains the City's firm financial footing in the near term and takes the extraordinary step of using one-time FY 2007 resources to help close the budget gaps in FY 2008, FY 2009 and FY 2010. The City has not previously set aside this level of funding this far in advance (i.e. FY 2010) to meet budget gaps in outlying years. The Executive budget maintains the tax reduction initiatives and the additional funds for retiree health benefits that the Mayor announced as part of the Preliminary budget in January, and it offers new initiatives to improve the long-term financial health of New York City.
"Over the past five years, a rigorous policy of fiscal prudence has guided our recovery, and has earned the City its best-ever bond rating," said Mayor Bloomberg. "We're applying that same good sense to using this year's exceptional revenues. We won't squander what we have on politically popular giveaways that would jeopardize our future. Instead, we'll protect that future, both by wisely reducing our looming liabilities, and also by encouraging continued economic growth."
New York City's economy continues to be strong. The Administration's five borough economic development strategy has helped push unemployment to its lowest level ever. The commercial real estate market remains vibrant and the vacancy rate in Midtown Manhattan is 4%, the lowest in the country. Strong Wall Street profits in the last quarter of calendar year 2006, led to the second-best year ever for New York's finance industry. Nevertheless, job growth and gross domestic product are forecast to grow at slower rates later this year due to the continuing housing market correction across the country.
Because of New York City's strong economy, tax revenues are running higher than expected, with an anticipated surplus of $4.4 billion in FY 2007. As the Mayor previously announced in the State of the City address and in his January Preliminary Budget proposal, he intends to return $1.25 billion to the people of New York City in cuts to business, sales, and property taxes. Some $750 million of this tax relief will come as a temporary, one-year property tax rate reduction, which would come in addition to the extended $400 property tax rebates for homeowners (which total $256 million a year). It also includes $250 million in proposed permanent tax cuts for families and small businesses: $140 million in sales tax relief by eliminating City sales taxes on all clothing and shoes, and $110 million in five job-creating tax breaks for small businesses and S-corporations in New York City.
Fiscal Plan Update:
Since the January Plan, $1.3 billion in new revenue is expected for FY 2007 and $838 million in new revenue is expected in FY 2008. There is a total of $729 million in Agency Program savings in FY 2007 and FY 2008. $700 million of this savings is being used to fund new initiatives and PlaNYC expenses; the Administration is forecasting a surplus of $4.4 billion in FY 2007.
The Administration will use approximately $700 million of resources generated from our Agency Program savings to fund an equal amount of new initiatives and PlaNYC expenses, including the following for FY 2008:
- $3.3 million for bulletproof vests for auxiliary officers at the NYPD
- $1.5 million to enhance the 311 system at DoITT
- $5.4 million for ferry security at the Department of Transportation
- $2.8 million for additional EMS Tours and Fire Marshals at the FDNY
- $75 million in increased funding to the classroom at DOE
- $3.5 million to open up schoolyards citywide (PlaNYC 2030)
- $8.1 million for tree pruning and maintenance (PlaNYC 2030)
- $8.1 million to develop a City bike network (PlaNYC 2030)
Out-Year Budget Gaps:
While the strong City economy has generated extraordinary one-time resources, multi-billion dollar budget gaps remain in the out-years of the financial plan. The Administration will retire outstanding debt of $1.3 billion which is not due to be paid until FY 2009 and FY 2010, in order to begin to reduce the budget gaps forecast in these years. Also, the Administration is utilizing $2 billion of FY 2007 resources to help balance FY 2008. We are using another $2 billion of these one-time resources to reduce the budget gap in FY 2009 and an additional $350 million to help close the budget gap in 2010. Even after these actions, in FY 2009, there is a projected $1.6 billion budget gap. The budget gaps grow to $3.3 billion in FY 2009 and $4.3 billion in FY 2010.
Ten-Year Capital Plan:
The Ten-Year Capital Plan invests more than $83 billion in City infrastructure over the next ten years. The Administration will devote $1.6 billion in capital funding for PlaNYC 2030 capital expenses, including the following:
- $42 million for new soccer fields
- $387 million for eight regional parks
- $111 million to open up schoolyards
- $46 million for bus initiatives
- $938 million in funding for the City's Third Water Tunnel
- $28.2 billion for school construction
- $3.5 billion for reconstruction and resurfacing of 10,778 lane miles
The Administration will also spend $1 billion to build a new Police Academy for the NYPD in College Point, Queens, with planning and design scheduled to begin in FY 2008 and construction in FY 2010.