Printer Friendly Format Email a Friend

PR- 029-08
January 24, 2008


Budget Reflects Only 1% Growth in Controllable Expenses and Outlines Four-Year Financial Plan That Includes Agency Spending Reductions

Mayor Michael R. Bloomberg today presented his Fiscal Year (FY) 2009 Preliminary Budget and an updated four-year financial plan for the City of New York. The City's FY2008 budget and the preliminary $58.5 billion budget for FY2009 are both in balance. As part of the budget presentation, the Mayor announced that agency spending reductions and revenue actions will realize nearly $1.5 billion. The budget for FY2009 also includes the continuation of the $400 property tax rebate and will seek to extend the one-time 7% reduction in the property tax rate, which was included in last year's budget. The budget reflects 1% growth in controllable city spending from FY2008 to FY2009, and 3.7% growth overall after factoring in non-controllable expenses, which are projected to increase by 6.3%. The City will monitor the economy and budget conditions over the next several months and will take whatever actions are necessary to maintain balance for FY2008 and FY2009.

"Because we didn't squander our resources when times were good, we're much better prepared to deal with these more challenging times," said Mayor Bloomberg. "We used surpluses to close gaps in the out years, paid down debt and put money away to pay the healthcare costs for our retirees. All of those actions have put our budgets for fiscal years 2008 and 2009 in balance, and they have given us a running start in balancing FY2010."

Uncertain Economic Outlook:
New York City's current economic outlook is uncertain with many national economists forecasting a high likelihood of recession. Job growth and economic performance indicators have slowed in recent months. Wall Street firms have recently had multi-billion dollar write-downs and have posted record losses. As a result, New York City's projected Wall Street profits for calendar year 2007 are just $2.8 billion. In June, at the adoption of FY2008 budget, the City forecasted $16.8 billion in profits for these firms for 2007.

Agency Programs Reduce Spending:
In September of 2007, Mayor Bloomberg instructed City agencies to act prudently and restrain spending. At the end of October, the Director of Management and Budget requested that City agencies identify how they would continue to provide City services to New Yorkers with a 2.5% reduction in City-funded spending in the current fiscal year, and a 5% reduction next year. City agencies have exceeded targets for FY2008 and are near the target for FY2009. All City agencies have participated in the budget reductions, including the Police Department, the Fire Department and the Department of Education and these spending reductions and revenue actions will realize $1.42 billion over FY2008 and FY2009.

Continued Tax Reductions:
The City will continue the $400 property tax rebate. Last year, working with the City Council, the budget included a one-time 7% property tax reduction for all homeowners. Today the Mayor proposed extending it, dependent on the performance of the economy and funding commitments from the State and Federal governments.

Prudent Actions Which Helped Maintain Budget Balance:
Previous budget surpluses were used to stabilize the City's budget in future years.
$4.6 billion in surplus funds generated in FY2007 were used to help close budget gaps in FY2008, FY2009 and FY2010. In addition, the Bloomberg Administration contributed $2.5 billion to the Retiree Health Benefits Trust Fund for future liabilities the City faces for health benefits for its retirees. The City also paid down early over $1 billion of debt which was due in FY2009 and FY2010.

Out Year Gaps:
The Mayor also announced today that New York City is facing budget gaps of approximately $4.2 billion in FY 2010, $5.6 billion in FY2011 and $5.3 billion FY2012. The City has identified $350 million in funds that will be used to begin balancing FY2010. The City will work with partners at the federal and state levels and with municipal labor unions to help identify options to close the gap should they become necessary.


Stu Loeser / John Gallagher   (212) 788-2958

More Resources
Read the budget publications
Watch the video in low or high bandwidth