FOR IMMEDIATE RELEASE
February 17, 2011
MAYOR BLOOMBERG PRESENTS FY 2012 PRELIMINARY BUDGET
Outlines Plan to Close $4.58 Billion Deficit without Tax Increase or Additional Cuts to City-Funded Services
City’s $5.2 Billion in Savings and Growing Economy Prevented More Cuts Caused by State Budget; State Action Required to Avoid Further Reductions
Nearly $2 Billion in Additional City Money Committed to Education to Cover State and Federal Funding Losses
Mayor Michael R. Bloomberg today presented a Fiscal Year (FY) 2012 Preliminary Budget and an updated four-year financial plan. The Mayor outlined a plan to close a $4.58 billion deficit with no tax increases for New Yorkers and without additional cuts in City-funded services. The plan relies on $5.2 billion in savings generated though nine rounds of deficit closing actions taken by City agencies, additional tax revenues that reflect the City’s continually improving economy and $600 million in actions taken at the State level. The budget outlines the steps required to compensate for a loss of $2.1 billion in State funding, returned to the City, as detailed in the proposed State Executive Budget, and for the pre-existing $2.4 billion City deficit.
“By tightening our own belt for years and growing our economy, we’ve kept our house in order and closed our own budget gap without further cuts,” said Mayor Bloomberg. “Our sound management will help avoid the worst impacts of State cuts, but we can’t compensate for the full loss in State funding. So if we have to lay teachers off, we have to ensure we can keep the very best. The budget also relies on actions at the State level – to make cuts equitable and allow us to produce our own savings. We’re ready to do our part to help the State, but we don’t deserve to be penalized for our responsible actions. If the State does not come through, layoffs and service cuts will be more severe.”
The City’s Improving Economy
City tax revenues are forecast grow above previous projections, increasing from $39.0 billion to $40.0 billion in FY 2011 and from $40.8 billion to $41.9 billion in FY 2012, producing an additional $2.1 billion in revenues.
The increase in revenues was driven by economically sensitive tax revenues, which include personal income, sales, business, and real estate taxes. Economically sensitive tax revenues are projected to be $24.3 billion in FY 2012, and are approaching, but still below, pre-recession levels. In FY 2008, prior to the national recession, $25.7 billion in economically sensitive taxes were generated.
Factors contributing to the continued rebound in City tax revenue include:
The current State Executive Budget reduces education funding to the City for FY 2012 (the school year starting in the fall of 2011) by $1.4 billion. This massive reduction in funding comes at the same time as the City loses $850 million in Federal stimulus dollars used to support teacher salaries.
To prevent catastrophic personnel losses in the City’s school system, the Preliminary Budget provides a major increase in City funds dedicated to education, bringing the total amount of City funds used to replace lost Federal and State dollars to $1.86 billion.
City funded spending on education has increased from $5.9 billion in FY 2002 to $13.6 billion in FY 2012.
The State has not maintained a similar commitment to education in New York City. In FY 2002, State and City funding comprised a nearly equal portion of non-Federal spending on education. In FY 2012, City funding will comprise 62 percent of non-Federal spending and State funding will only comprise 38 percent of non-Federal spending.
Despite the City’s continued, strong commitment to education, State education cuts and the need to balance the budget mean that reductions in the size of the City’s teaching force are still required. A total reduction of 6,166 teaching positions will be eliminated, including 4,666 via layoffs.
State Social Service Cuts
The current State Executive Budget eliminates $403 million in funding for social services, health and criminal justice. The City’s Preliminary Budget uses $124 million of City funds to restore cuts to preserve the most essential services.
The remaining $279 State funding cut includes the elimination of:
State Actions Required to Achieve Balance
The Preliminary Budget relies on three changes at the State level to achieve a balanced budget and avoid further cuts in services. Those changes are:
If the actions above are not taken at the State level, the City will be forced to initiate a new round of agency gap closing actions to save $600 million. Given the cumulative impact of the $5.2 billion in gap closing actions already taken, an additional $600 million in actions would have a major impact on City services and personnel.
In order to reduce the increasing costs of annual debt service payments, the Preliminary Budget reduces the City’s ten-year capital construction program, excluding water projects, by 10 percent – from $39.8 billion to $35.8 billion. The reduction will reduce forecasted debt service costs over ten years by $807 million.
The City’s full-time and full-time equivalent headcount currently stands at 293,903. The City’s December 31, 2001 full-time and full-time equivalent headcount was 311,804.
The Mayor also announced today that while the Preliminary Budget for FY 2012 presents a balanced budget, New York City will still face budget gaps of approximately $4.9 billion in FY 2013, $4.8 billion in FY 2014 and $5.0 billion FY 2015.
Stu Loeser / Marc La Vorgna (212) 788-2958
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