City received one-time surge in tax revenues in FY 2018, but stronger surpluses needed in the outyears
A one-time infusion of income tax revenues in FY 2018 helped the City balance the $89.16 billion Adopted Budget for Fiscal Year 2019, according to a report released today by New York City Comptroller Scott M. Stringer. The Comptroller’s report on New York City’s Fiscal Year 2019 Adopted Budget reiterates the need for long-term attention to the City’s out-year gaps and the need to align spending and revenue growth – as Comptroller Stringer renewed his call for a robust four-year City savings plan and for agencies to contribute more to efficiencies.
“I congratulate the Mayor and City Council on a balanced FY 2019 budget that funds many important priorities for our City, from raising the bar on education to relieving the burden of transportation costs for low-income New Yorkers,” said New York City Comptroller Scott M. Stringer. “Our City’s economy is strong, but we have many needs that make it more urgent than ever to prepare for the future. There is no question – bringing spending into line with revenue growth and bolstering reserves is necessary for enshrining our progressive values and policies for the next generation. From preserving our affordable housing stock to improving our mass transit infrastructure, our City is facing looming challenges that will require long-term investment. That’s why, just as we have a four-year financial plan, we must have a four-years saving plan. It’s one tool for ensuring the strong financial footing of our City for years to come.”
Key findings in the report include:
- The City’s adopted budget is essentially flat over last year, down by 0.5 percent. However, accounting for prepayments and reserves, spending for FY 2019 will increase $2.9 billion, or 3.2 percent, from last year’s spending levels, to $92.36 billion;
- Expenditures are projected to grow an average 1.7 percent annually in the remaining years of the Plan through FY 2022, driven by spending on salaries and wages, debt service, health insurance, and other fringe benefits; and
- The Comptroller’s analysis projects a small surplus in FY 2019 of $151 million, and larger budget gaps of $4.18 billion, $3.84 billion, and $3.42 billion in FY 2020 through FY 2022.
Based on the Comptroller’s projections, the City has enough funds available that the roughly $4.2 billion gap in FY 2020 could be largely balanced through the use of budgeted reserves and surpluses in the Retiree Health Benefit Trust.
However, Comptroller Stringer continues to urge the City to do more to prepare for future uncertainties. An economic downturn could lower revenues below current projections – limiting the City’s capacity for relying on past surpluses to plug future gaps. With the possibility of economic turbulence ever-more likely, especially with the growing threat of destructive trade policies, higher tariffs, and depending on the Federal Reserve’s manipulation of short-term interest rates, it is critical that the City continue to add to its reserves.
The report additionally analyzes two developments that occurred later in the budgeting process – the NYCHA consent decree and District Council 37’s labor settlement with the City.
Comptroller Stringer also announced that unaudited preliminary returns for the City’s pension funds were 8.7 percent, above the actuarial target of 7 percent, and bringing the average annual rate of return since 2014 to 7.2 percent. These preliminary numbers may be revised up or down in the coming months.
To read the Comptroller’s full report on New York City’s FY 2019 Adopted Budget, click here.
