“New York City’s $98.6 billion executive budget for FY 2022 and its financial plan for FY 2022-FY 2025 reflect a drastically improved short-term budget outlook, buoyed by more than $15 billion in federal relief since December and better-than-projected revenues.
“The city plans to help pace its recovery by stretching federal relief through FY 2025, avoiding new taxes, establishing short-term programs to aid businesses and individuals, restoring and adding certain city services, and reducing out-year gaps. The city has also reinstated a planned drawdown from its retiree health benefits trust of $1.6 billion.
“The financial plan reflects just how critical the economic recovery is to New York City’s ability to achieve structural balance. The city projects employment growth to double from January projections and reach 4.5 million jobs in FY 2021, but the timing of the return of real estate values, commuters and tourists leave forecasts uncertain. The city is projecting further improvement in both income and corporate taxes, while revising sales taxes downward and keeping property taxes flat. Any decline in these revenues due to a slower-than-expected recovery or behavioral changes related to increases in state income or corporate tax rates, which push the city’s combined income and corporate tax rates to the highest rates in the country, would widen the budget gaps.
“Despite historic federal relief, the plan would still leave the city with significant budget gaps in FY 2023 through FY 2025 and creates out-year risks by increasing baseline spending and using some federal aid for recurring operational costs, particularly for education, that are not directly related to COVID-19.
“The city no longer faces an immediate fiscal emergency and can avoid drastic actions for short-term savings. The restoration of planned cuts should be followed by renewed commitment to long-term initiatives that allow for recurring savings while addressing collective bargaining agreements, which will begin expiring in May.
“My office’s full analysis of the FY 2022 budget and the Mayor’s executive financial plan will be released in the following weeks.”