Sunday, December 18, 2016

Comptroller Scott M. Stringer Releases Analysis of the City’s Financial Plan

Comptroller’s analysis shows outyear gaps exceeding $3 billion in Fiscal Years 2018, 2019, and 2020

  A new report on the City’s November Plan released by New York City Comptroller Scott M. Stringer today forecasts modest economic growth at the national and City levels for the next several quarters. The report indicates that revenues could fall short of projections while expenditures will likely exceed estimates in each year of the Financial Plan. The Comptroller is required by the City Charter to submit the report.
The analysis identifies risks ranging from $585 million to $1.02 billion over the Plan period – from the current year (FY 2017) through FY 2020 – resulting in outyear gaps of more than $3 billion. With major shifts in federal fiscal and economic policies looming, significant uncertainties weigh on the forecast.
Among the key findings:
Tax Collections
  • Non-property tax revenues were revised downward in the Mayor’s November Plan to reflect shortfalls in collections through the first three months of FY 2017, relative to the June Plan.
  • The Comptroller’s Office forecast extends this trend into the remainder of the year and beyond, lowering anticipated tax revenues by a further $180 million in FY 2017, and $288 million in FY 2018.
  • Total City tax revenues during the first ten months of 2016 fell 1.0 percent from the same period a year ago.
City Spending and Saving
  • Despite the decrease in forecasted tax revenues, the total FY 2017 budget of $83.46 billion is $1.34 billion more than the Adopted Budget, due primarily to higher federal and state reimbursements for Hurricane Sandy and other programs.
  • The November Plan lays out modest City-funds agency spending increases of $131 million.
  • The Plan includes a Citywide Savings Program that totals $691 million in the current Fiscal Year and $1.7 billion over the four years of the Plan. The FY 2017 savings from the Citywide Savings Program enable the City to compensate for the decrease in revenue estimates, offset agency spending increases, and generate a budget surplus of $439 million to prepay FY 2018 debt service.
  • Much of these savings are based on spending re-estimates, including accruals savings and aligning estimates to reflect year-to-date spending – adjustments that are part of the budget modification during the course of the Fiscal Year, even in the absence of a Citywide Savings Program.
  • Only four percent of the FY 2017 savings is derived from proposed efficiency and productivity initiatives, such as more efficient use of the City’s vehicle fleet. Because most of the efficiency and productivity initiatives have recurring savings, they account for about 12 percent of the total recurring savings over the Plan period.
  • The Comptroller’s forecast anticipates lower revenues as well as a number of likely spending needs not recognized in the November Plan, including higher overtime spending, additional assistance to New York Health + Hospitals, and increased spending on homeless shelters to maintain the current level of support.
Higher Outyear Gaps
  • Consequently, the Comptroller has identified net risks of $585 million in FY 2017, $1.02 billion in FY 2018, $908 million in FY 2019, and $722 million in FY 2020. These risks would result in gaps of $585 million in FY 2017, $3.26 billion in FY 2018, $3.80 billion in FY 2019, and $3.10 billion in FY 2020.
  • With $1 billion in the General Reserve and $500 million in the Capital Stabilization Reserve, the danger of a shortfall in FY 2017 is remote.
  • However, the risks in the outyears are significant. Even with the use of available Plan reserves, including the $1 billion General Reserve and the $500 million Capital Stabilization Reserve, the City could still face a budget gap of as much as $2.3 billion for FY 2018, rising to over $3 billion in the latter half of the financial plan.
“There is a high degree of uncertainty about our economy in the future. We may see cuts from Washington that would likely fall most heavily on the most vulnerable New Yorkers. With potential long-term deficits looming, it is critical that we prepare now. We urge City Hall to take meaningful steps in the Preliminary Budget to prepare for the challenges ahead,” Comptroller Scott M. Stringer said.
It is more than likely that the Comptroller’s Office’s view of the economic and fiscal outlook for the City will change when President-elect Trump assumes office next year. Corresponding changes in policy may affect this forecast.

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