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.