FOR IMMEDIATE RELEASE
July 23, 2007
MAYOR BLOOMBERG TESTIFIES BEFORE NEW YORK STATE FINANCIAL CONTROL BOARD
The following is the text of the Mayor's testimony as prepared.
"Thank you, Governor Spitzer, and good afternoon everyone. I want to begin by thanking the Financial Control Board, its staff, and also my fellow board members for working with us to secure New York City's economic future.
"The Financial Control Board has played an invaluable role in our City's recent history, helping to bring us back from the brink of crisis in the 1970s. The lessons we learned then about fiscal responsibility and the importance of investment in essential City services, even in hard times, have helped us to overcome the fiscal crisis that followed 9/11 - the most challenging in a generation.
"Let's not forget that just four years ago, those of us sitting around this table faced a grim reality. An FCB report described an economy with 'unemployment rising, payroll jobs falling, and Wall Street in the doldrums.' This board concluded that a structural budget gap of the magnitude we faced 'had no easy solution.' And in fact, there were no easy solutions. We had to make some tough choices. And because we made the prudent decisions instead of the most popular ones, today, it's my pleasure to report to you that New York City stands on very firm fiscal ground.
"The $5 billion deficit from FY 2003 has been turned into nearly a $5 billion surplus for FY 2007, and the budget we adopted last month for FY '08 continues this path of fiscal responsibility. The FY '08 budget fulfills a pledge we made in our State of the City in January: to substantially cut New Yorkers' taxes. Our $1.5 billion package of tax reductions will help continue our economic growth, help struggling families to get ahead, and let those home owners who shared the burden a few years ago share in the gains today.
"At the same time, our budget includes investments that will allow us to do even more to keep our streets safe, improve the services City government provides, and save for future expenses - instead of doing what usually happens in politics, which is to squander surpluses on feel-good projects. I want to applaud the Council, and particularly Speaker Christine Quinn, for working with our Administration to achieve a budget that will help ensure our City's long-term growth and financial stability.
"I am pleased to report that the course we've set has been heartily endorsed by three bond-rating agencies, which have once again upgraded their ratings of the City's general obligation (GO) bonds. Last year Standard & Poor's raised our GO bond rating from 'A+' to what was then an all-time high of 'AA-.' This year, for the third time in two years, they topped that with a new GO bond rating of 'AA.' Fitch also upgraded our rating to AA-, its highest ever rating for our City. And just last week, Moody's upgraded our rating to Aa3. Now, for the first time in City history, our bond rating is in the AA- category from all three major rating agencies. And I should note that, for the first time since the fiscal crisis of the 1970s, the City's GO bonds have been rated as high as the State's GO bonds by all three rating agencies.
"Not only does a higher rating give businesses the confidence to invest in our City's future, it also saves taxpayers money by lowering the City's cost of borrowing to finance much-needed infrastructure projects. In their evaluation of the City's finances explaining the reasons for the upgrade, the independent rating agencies cited a number of positive factors, including: our substantial and diverse economic base; our commitment to paying down our debt and addressing future long-term liabilities, such as retiree health benefits; and our comprehensive financial planning process - which, today, embodies the kind of fiscal discipline and transparency that the FCB envisioned when it was first established 32 years ago.
"Today, I'd like to touch upon each of these areas briefly. First: our City's substantial and diverse economic base. By virtually every measure, our economy is firing on all cylinders. A record number of tourists visited last year - 44 million. Our annual unemployment rate dropped to an all-time low - 4.9%. Over the 12 month period ending in June, we gained 49,400 private sector jobs - outpacing the nation's current year-over-year growth rate.
"Housing starts and construction permits are still at near record levels, which would explain why the construction industry has added 6,200 jobs over the past 12 months and is now just shy of its peak in 2000. A combination of public and private construction is leading the way. In fact, the Building Congress estimates that the value of construction in our City will reach $21 billion both this year and next - back-to-back record levels.
"Wall Street is also booming - and our Administration is working hard to ensure that New York City remains the financial capital of the world. Last year, Senator Schumer and I commissioned a report to identify the challenges we face in this effort, and we were very pleased that the report was also supported by Governor Spitzer. But we also know that we can't sit back and rely on Wall Street - because the good times never last forever.
"To sustain our current growth, and to minimize the effects of any national downturn, our Administration continues to pursue its successful five-borough economic strategy to strengthen key industries and further reduce our reliance on Wall Street. For instance, to help us compete with other cities for convention business, we've strongly supported expanding the Javits Center and we've also included a convention space in our master plan for Willets Point in Queens - the area across from the new Shea Stadium.
"Film and television production is another important industry that employs tens of thousands of people in our City. And thanks to the 'Made in New York' program, it's never been easier to film in the five boroughs. Last year, we set a record for the highest number of film and television production shooting days ever. To push our record tourism numbers even higher, we've dedicated $45 million over three years to help promote New York and reach our ultimate goal of 50 by '15: That's 50 million visitors by the year 2015, and I think we can do it.
"This year, NYC & Company launched a unique advertising campaign in countries such as England, Italy, and Spain to encourage Europeans to take advantage of their strong currencies and come to New York where their money will go, in some cases, nearly twice as far as it does back home. Over the past year, NYC & Company has also more than doubled its international presence, opening tourism offices in places like Russia, Scandinavia, Japan, England, and Ireland. To keep the visitors coming back, we're continuing to invest in the diverse cultural institutions that make New York a top destination, from a redesigned Lincoln Center; to a new building for the Museum for African Art; to - my personal favorite - the newly constructed Reptile Wing at the Staten Island Zoo. And by supporting the new homes being built for the Yankees, Mets, and Nets in the Bronx, Queens, and Brooklyn, we're making sure that tourists will keep coming to visit and spending their money in our restaurants, hotels, and shops for decades to come.
"In their decisions to upgrade our bond rating, the agencies also cited our commitment to addressing future long-term liabilities, such as debt and retiree health benefits. The revenues for FY 2007 were higher than expected, but we did not squander the surplus on unaffordable continuing expenses. Instead, we used our surplus - the largest surplus in the City's history - to help pre-pay our debt and reduce the budget gaps in the out-years of the financial plan. For example, we have put aside $1.25 billion to retire outstanding debt, and we are continuing our commitment to pay-as-you-go capital, with $300 million in 2007, $100 million in 2008, and $200 million in 2009, 2010, and 2011.
"During Fiscal '06, we also took the unprecedented step of creating a health benefits trust fund to pay retirees. So far we've committed $2.5 billion to that fund. $2.5 billion is hardly sufficient to meet our future obligations. But it's a start - and it's more than just about any other jurisdiction has done. In addition, it sends a message to the financial markets and others about New York City's commitment to fiscal responsibility and transparency.
"Sustaining our economic growth also requires that we continue making other investments in our future, such as keeping our streets safe - so that this is a place where people want to live, open businesses, and invest in our neighborhoods. This year, New York has remained the undisputed safest big city in the nation. We've driven crime more than 27% lower than it was at this time in 2001. And our murder rate is the lowest it has been since the early 1960s. That's an enormous tribute to the bravery and skill of New York's Finest.
"But we can't afford to be complacent. We have to keep looking ahead and investing in the tools that our officers need to continue taking our crime reduction strategies to ever more advanced levels. That's why our capital plan includes $1 billion for a new, state-of-the art police academy, which will allow us to bring our training programs into the 21st Century.
"As our population grows - and the best estimates suggest that we will add about one million people over the next couple of decades - we have an obligation to manage the City's growth in a responsible way. That includes doing our part to protect our environment to improve our air quality and to fight climate change. As you know, last week we came to an agreement with the State on an initiative that will help us to achieve all of those goals while at the same time improving our business climate. I'm talking about our congestion pricing pilot, and I'd like to thank Governor Spitzer - who was an early supporter - along with Senate Majority Leader Joe Bruno, and Assembly Speaker Shelly Silver, for working together to make this project a reality for New York. But congestion pricing is really just one of many strategies we're implementing. In fact, we've set aside about $200 million to fund several other PlaNYC initiatives to help us realize a greener, greater New York.
"The third key area cited by the bond rating agencies was our comprehensive financial planning process. That process is largely the result of the standards that the FCB established three decades ago. Two years ago, New York's voters wisely decided to include in the City Charter many of the financial safeguards that have been employed by the FCB. Our Administration proposed and enthusiastically endorsed the 2005 Charter Reforms, which included requirements to balance our budget annually in accordance with generally accepted accounting principles, to prepare a four-year financial plan for the City to keep in place restrictions on the City's ability, to issue short-term debt, and to incorporate the standards State law has set concerning the annual audit of City accounts.
"The fact that we've written these safeguards into our Charter is especially important, given that, as originally intended, this meeting might be the last of the Financial Control Board. This board has served the City well and I believe we should spend the next few months in careful consideration of whether, and it what capacity, it might continue to serve the City in the future.
"Our current good fortune is a result of making the right long-term decisions. And now is not the time to let up. As this Board noted in its staff report reviewing FY 2007, the City has wisely seized the opportunity that our currently thriving economy has provided to get an early start at addressing the budget gaps for FYs 2009 and 2010. These future multi-billion dollar budget gaps will arrive. We have to be ready to face them - and we will be. At the same time, we will keep working with our partners in government and labor to address the causes of our long-term structural imbalances.
"By following the course that we are now on, by continuing to promote a diverse and growing economy, and by looking ahead at the challenges instead of burying our heads in the sand, we can maintain fiscally sound budgetary practices, and ensure that New York City will continue to grow even stronger."
Stu Loeser/John Gallagher (212) 788-2958
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