FOR IMMEDIATE RELEASE
February 2, 2012
MAYOR BLOOMBERG PRESENTS FY 2013 PRELIMINARY BUDGET
Balanced Budget with No Tax Increases Due to Prudent Planning and Spending Restraint
Mayor Michael R. Bloomberg today presented a Fiscal Year (FY) 2013 Preliminary Budget and an updated four-year financial plan. The Mayor outlined a plan that achieves a balanced budget – closing a $2 billion budget gap without tax increases – which is made possible by the City’s years of prudent planning and spending restraint. The Preliminary Budget reduces year-over-year controllable City expenditures, but expenses that are not fully controlled by the City – primarily pensions – continue to rise and continue to make less funding available for City services. The Preliminary Budget relies on $6 billion in savings for FY 2013 generated though eleven rounds of deficit closing actions taken by City agencies since 2007.
“Cities across the country have struggled to keep their heads above water – laying off teachers, police officers, or firefighters, with a few even having to declare bankruptcy,” said Mayor Bloomberg. “We’ve avoided those painful steps, because we spent years planning ahead, made government more efficient and saved for a rainy day. The budget we are presenting today is a balanced budget – with no tax increases, no layoffs of teachers or uniformed workers and no walking away from our long-term investments. It is a responsible budget that continues to make responsible spending cuts, while protecting the core services and investments that have helped our city to weather the national recession better than most other places. But we face a ticking time bomb in rising pension costs. The only way we will be able to continue to pay for top-quality public schools, fire and police protection, and other services New Yorkers need, and also to protect the very financial security of the pension system City workers rely on, is to adopt real pension reform.”
The Preliminary Budget is a $68.7 billion plan, with a City-funded portion of $50.7 billion. The Preliminary Budget reduces year-over-year controllable City expenditures by $437 million, a 1.9 percent decline from FY 2012. Expenses not fully controlled by the City – primarily pensions, health care, Medicaid and debt service – rise by $2 billion, a 7.5 percent increase from FY 2012.
The City will spend less in virtually every major area of controllable spending except for education, where City funding will again increase.
The City’s Improving Economy
Tax revenues continue to rebound as the city’s economy continues a gradual recovery. New York City has regained 65 percent of the private sector jobs lost during the recession, while the rest of the country has only gained back 36 percent. The city now is expected to recover all jobs lost during the recession by the end of 2013, one year sooner than the rest of the country.
The Preliminary Budget assumes the City’s Independent Actuary will make a series of changes to the actuarial assumptions that determine the City’s pension bill, including an expected change in the assumed rate of return from 8.0 percent to 7.0 percent. The Preliminary Budget estimates the changes will increase the City’s pension costs by $575 million in FY 2012 and FY 2013 – bringing the City total pension costs to $7.8 billion in FY 2012 and $8.0 billion in FY 2013. The Preliminary Budget funds these increased costs by utilizing dollars the City specifically reserved over the last two years in anticipation of the actuary’s actions and the increased costs. The City had reserved $1 billion in FY 2012 and $1 billion in FY 2013 in anticipation of the actuary’s changes and the City will use the reminder of the reserve funding to help close the budget gap.
Since FY 2002, City funded pension costs have now increased by nearly 500 percent, rising from $1.3 billion to $8.0 billion in FY 2013.
The City’s pension funds have produced an average return of 5.6 percent over the last ten years and pensions systems across the country have reduced their assumed rate of return in recent years. Pensions systems in Delaware, the District of Columbia, Illinois, Indiana, Virginia, Wisconsin and more have recently reduced their assumed rate of return.
The Preliminary Budget increases the City’s five-year capital construction program to $39.4 billion, up nearly $700 million.
The City’s full-time and full-time equivalent headcount in FY 2013 Preliminary Budget is 291,326, a reduction of 20,478 positions (6.6 percent) since the start of the Bloomberg Administration. 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 2013 presents a balanced budget, New York City will still face budget gaps of approximately $3.0 billion in FY 2014, $3.5 billion in FY 2015 and $3.4 billion FY 2016.
Stu Loeser / Marc La Vorgna (212) 788-2958
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