FOR IMMEDIATE RELEASE
November 18, 2010
MAYOR BLOOMBERG RELEASES NOVEMBER FINANCIAL PLAN UPDATE
$1.6 Billion in New Budget Gap Closing Actions; Cumulative Gap Closing Actions Over Last Two Years Saved $5.2 Billion
Hiring will Continue to be Limited; Only One Employee Hired for Every Two that Depart for Most Positions
Budget Gap of $2.4 Billion Remains for Next Year – Additional Cuts, Revenue Increases or Economic Growth will be Required to Balance Next Year’s Budget
Mayor Michael R. Bloomberg today released the City’s November Financial Plan for Fiscal Year 2011 and an updated four-year financial plan. In September, Mayor Bloomberg ordered a partial hiring freeze and directed City agencies to submit proposals to help eliminate the budget gap for the next fiscal year – Fiscal Year 2012 – that begins on July 1, 2011. As a result, City agencies will be taking $585 million of new budget gap closing actions in the current fiscal year and $1 billion of new budget gap closing actions in Fiscal Year 2012. The budget gap closing actions have reduced the Fiscal Year 2012 budget deficit from $3.3 billion to $2.4 billion. City agencies will continue to be limited in hiring employees, with agencies only permitted to hire one employee for every two that leave, if resources are available. Hiring will continue for positions immediately impacting public health and safety, positions that generate revenue or positions that are not funded with City tax dollars. The November Financial Plan increases City funding for the Department of Education to replace $853 million of expiring Federal stimulus dollars.
“We’ve kept the City’s financial house in order through these difficult times by planning ahead and never shying away from making the hard decisions, and our current budget remains balanced because of that sound approach,” said Mayor Bloomberg. “But we face a significant challenge for next year, as Federal stimulus dollars run dry and the city still suffers from the impacts of the national economic downturn. We began working to attack next year’s deficit immediately after passing this year’s balanced budget, and there is still more work to do. More spending reductions are going to be necessary, and we have to continue to reduce the number of employees we have by not filling positions – we simply cannot afford the size of our current workforce.”
In January, the Mayor will present the Preliminary Budget for Fiscal Year 2012, which will detail the City’s initial plan to balance the Fiscal Year 2012 budget, as required by the New York City Charter.
The November Financial Plan replaces $853 million of expiring Federal stimulus funding at the Department of Education with City funding in Fiscal Year 2012 and the out years of the plan. The City’s July 2010 Financial Plan had assumed that the Department of Education would lose nearly 10,000 teachers. Even with the influx of new City dollars to cover the loss of stimulus funding, the Department of Education will face a loss of 6,166 teaching positions in Fiscal Year 2012 in the updated Financial Plan.
The November Financial Plan reflects higher pension expenses than were assumed in the July 2010 Financial Plan, due to anticipated changes to pension assumptions and methods, which are expected to be made by the New York City Office of the Actuary and would take effect in Fiscal Year 2012. The changes are expected to increase costs in Fiscal Year 2012 by $1 billion.
The current plan also reflects an increase in Medicaid costs. The July 2010 Financial Plan included savings from an extension of the Federal Medical Assistance Percentages (FMAP) program. A lower than expected benefit was passed by Congress, resulting in a $180 million cost increase for the City.
Agency Gap Closing Actions
This is the ninth round of budget gap closing actions City agencies have been required to undertake in recent years. The cumulative impact of the last two years of gap closing actions and the latest round of actions is $5.2 billion in savings for Fiscal Year 2012.
Examples of the latest round of City agency budget gap closing actions include:
Department of Correction:
Department of Sanitation:
Administration for Children’s Services:
Human Resources Administration/Department of Social Services:
Department of Homeless Services:
Department of Youth and Community Development:
Department of Health and Mental Hygiene:
Department of Cultural Affairs:
Department of Probation:
Department of Housing Preservation and Development:
Department of Finance:
Department of Transportation:
Department of Parks and Recreation:
Department of Education:
Civilian Complaint Review Board:
Department of Information Technology and Telecommunications:
The new budget gap closing actions used to reduce the City’s budget deficit for next year will require a reduction in City headcount of 2,102 employees in the current fiscal year, 2011, and 8,264 in Fiscal Year 2012. The headcount reductions include 889 layoffs in Fiscal Year 2011 and 5,312 layoffs in Fiscal Year 2012.
The City’s budget for the current year, Fiscal Year 2011, remains balanced. The budget gap in Fiscal Year 2012 is now forecast to be $2.4 billion, down $900 million from the most recent forecast in July.
The budget gap closing actions detailed in the November Financial Plan will help to reduce budget gaps in the remaining years of the Financial Plan, but the City still faces significant deficits in future. The budget gap for Fiscal Year 2013 is currently forecast to be $4.8 billion and the budget gap for Fiscal Year 2014 is currently forecast to be $5.6 billion.
Stu Loeser / Marc La Vorgna (212) 788-2958