Printer Friendly Format Email a Friend

PR- 193-09
May 1, 2009


Balances Budget While Maintaining Core Services - No Further Staff Reductions for Uniformed Officers or Teachers

City Agencies Have Taken a Total of $3.4 billion of Gap Closing Actions for FY 2010 - Including Reducing City Workforce by 13,500

Previous Savings Actions Prevented a Larger Deficit

Plan Relies on a Minimum of $1.4 Billion in Actions from the State and Organized Labor

Mayor Michael R. Bloomberg today presented the Fiscal Year (FY) 2010 Executive Budget and an updated four-year financial plan.  The Mayor outlined a plan to balance the budget for FY 2010 through: a cumulative total of $3.4 billion in agency gap closing actions, including $324 million of new actions detailed today; using more than $5 billion in surpluses saved from periods of economic growth; and revenue enhancements, including a proposed sales tax increase.  The plan also relies on a minimum of $1.4 billion in combined savings and revenues generated by anticipated actions from the State and organized labor, including pension reform and health care cost reductions.

The proposal balances the City's budget, while maintaining the core services needed to continue the progress made over the last seven years in keeping crime at record lows, improving City schools, keeping streets clean, increasing open space, improving life expectancies and reducing homelessness.  The balanced budget proposal calls for no further reductions in the number of uniformed officers or any further staff reductions at the Department of Education or at the Administration for Children's Services.

"Because we were on the alert more than a year ago and because we've continued to take prudent steps ever since, we are able to keep our budget in balance, while still delivering the services our City needs," said Mayor Bloomberg. "We've launched new initiatives to help New Yorkers stay in their homes, find new jobs and keep their small businesses open. These are the essential first steps on the road to economic recovery.  The budget isn't just about numbers. It's about making choices that keep our social safety net strong for those in need. It's about keeping our streets clean and safe for your kids and mine. It's about continuing to improve our schools. It's about creating jobs and keeping jobs here.  It's about keeping New York - New York."

Recession Impacts

Economically sensitive tax revenue, which includes personal income, sales, business, and real estate transfer taxes, are projected to fall by 30 percent, or nearly $7.4 billion, in FY 2010 when compared to FY 2008 levels - before the economic downturn began impacting City revenues.  Total FY 2010 City revenues are forecast to have fallen by nearly $5 billion compared to FY 2008 levels. Since January, when the Mayor presented a preliminary budget, City tax revenues have fallen by $680 million for FY 2010.

Agency Gap Closing Actions

A cumulative total of $3.4 billion in City agency gap closing actions, 16.4 percent of controllable expenses, have been taken to reduce the FY 2010 deficit, preventing a far larger shortfall.  The Mayor today presented $324 million in new agency gap closing actions, in addition to the $3.1 billion in actions already indentified.

The gap closing actions taken over the last year allowed controllable expense growth to be contained to 1.7 percent.

Examples of the new agency gap closing actions include:

  • Police: Reduction of 125 Traffic Management Enforcement Agents - $5.0 million.
  • Fire: Reduction of uniformed administrative overtime - $3.4 million.
  • Parks: Reduction in seasonal staff equivalent to 115 positions - $4.4 million.
  • Citywide Administrative Services: renegotiation of City leases - $2.0 million.
  • Libraries: Four percent reduction in subsidies equivalent to 241 positions - $11.2 million.
  • Information Technology: Renegotiation of vendor contracts - $4.8 million.
  • Sanitation: Reduced waste export contract costs - $6.5 million.
  • Children's Services: Eliminate 1,100 low-priority childcare slots - $9.1 million.

City Headcount Reduction

Since January, the $3.4 billion in agency gap closing actions for FY 2010 include a City headcount reduction that now totals 13,541 employees - 9,782 via attrition and 3,759 via layoffs. 

The Executive Budget adds new a headcount reduction of 2,268 - 1,153 via attrition and 1,115 via layoffs - to the previously identified reductions in the FY 2010 Financial Plan Modification, presented in November 2008, and the Preliminary Budget, presented in January 2009.

Support from the State and Organized Labor

The balanced FY 2010 budget relies on a minimum of $1.5 billion in combined savings and revenues generated by anticipated actions from the State and organized labor. 

The Administration has proposed the creation of a new Tier 5 pension plan for City employees, which would result in immediate savings of $200 million for FY 2010.  The new tier would save $7 billion cumulatively by FY 2030.  The new pension tier would need to be created by State law.

The Administration is seeking cooperation from organized labor to achieve $200 million of annual savings through a health care cost containment program. The Administration is also seeking 10 percent health care contributions from City employees, which would generate more than $350 million in annual savings beginning in FY 2011.

The Administration is also requesting a sales tax increase and a new consumer plastic bag fee, both requiring State legislative approval.

Proposed Sales Tax Increase

In January, the Administration proposed sales tax increases that would generate nearly   $1 billion in additional revenue through an increase in the City's portion of the sales tax, a repeal of the sales tax clothing exemption and an expansion of the sales tax to include other currently untaxed purchases.  The Executive Budget presented today proposes sales tax increases that would generate nearly $1 billion in new revenue by increasing the City portion of the sales tax by 0.5 percent and repealing the sales tax clothing exemption.

A sales tax increase of 0.5 percent would bring the City portion of the sales tax to 4.5 percent and would generate $552 million in additional revenue in FY 2010.  The 0.5 percent increase would bring the total sales tax on purchases in New York City to 8.875 percent, including the current 4.0 percent State sales tax and .375 percent dedicated to the Metropolitan Transportation Authority.  A repeal of the clothing tax exemption would generate an additional $394 million in FY 2010.

State legislation would be required to enact both changes.

Capital Budget

The City's 10-year capital construction plan will invest $61.7 billion in City infrastructure projects.  This includes a 27 percent reduction in spending on projects funded with New York City General Obligation and New York City Transitional Finance Authority bonds.  No reductions will be made to the five-year school construction program - the City will utilize federal stimulus tax-credit bonds to maintain funding for all school construction.

While overall capital commitments have been reduced over the course of the next ten years, actual capital spending will remain near the current record levels over the next two fiscal years.  Capital spending was $10 billion FY 2009 and is projected to be $9.4 billion in FY 2010 and $9.8 billion in FY 2011.

Use of Prior Surpluses Prevented Larger Deficits

The FY 2010 Executive Budget benefits from more than $5 billion of surplus funding saved during periods of economic growth. Those resources were saved and rolled forward in anticipation that economic growth would eventually slow. Without the benefit of the saved surpluses, far more severe measures would have been necessary to close the FY 2010 deficit.

Out-Year Gaps

The Mayor also announced today that if all measures outlined in the FY 2010 Executive Budget are adopted, including the required actions from the State and organized labor, and assuming the beginning of economic recovery, out-year deficit gaps will be reduced, but New York City will still face budget gaps of approximately $4.6 billion in FY 2011, $5.2 billion in FY 2012 and $5.4 billion FY 2013.


Stu Loeser/Marc LaVorgna   (212) 788-2958

More Resources
Watch the video in low or high bandwidth