Mayor Bloomberg, City Council Speaker Christine C. Quinn and members of the City Council today announced an agreement for an on-time, balanced budget for Fiscal Year (FY) 2013 that includes no tax increases and preserves essential services. The budget remains balanced through the use of prudently saved prior-year resources, billions in agency savings actions and increased revenues from strong growth in the tech, film and television, tourism and higher education sectors. The City Council is expected to vote on the FY 2013 budget agreement this week, marking the 11th consecutive year Mayor Bloomberg and the City Council have enacted an on-time, balanced budget.
“Working with our partners in the Council, we’ve again produced an on-time, balanced budget for our city that doesn’t raise taxes on New Yorkers, and that preserves the essential services that keep our city strong,” said Mayor Bloomberg. “When times were better, the City set aside surplus revenue – and when the first storm clouds gathered in 2007, we began cutting budgets. These actions – and our work over the past decade to diversify the economy and make it less reliant on Wall Street – have allowed us avoid the severe service cuts that many other cities are facing. We face a significant challenge again next year, but given the effective and fiscally responsible partnership we’ve had with the Council – and the leadership we know we can rely on from Speaker Christine Quinn – I’m confident we’ll meet any challenges that arise.”
“Working parents need to have their children protected and cared for while they are at work. Children need to receive a high quality educational experience at an early age. We are creating a program that responds to both of these needs,” said Speaker Quinn. “We are saying that child care can and must be part of a lifelong education that continues with pre-K, through Kindergarten and that ultimately leads to every child graduating high school ready for college. That is our ultimate goal, and it begins with academic day care, and it begins with what we have built here today.”
“This budget saved jobs, maintained vital public services, and secured a strong financial footing for our city going forward,” said Councilman and Finance Chair Domenic M. Recchia Jr. “Most importantly, we made the right investment in our future and put children and families at the forefront of this process. Now, tens of thousands of families throughout New York City can rest assured that the daycare, early childhood education, and afterschool programs they depend on, will be there for them. I want to thank Speaker Christine Quinn for her leadership, as well as Mayor Michael Bloomberg, for working with us to deliver a sound budget. I also want to thank our Finance Division, my colleagues in the City Council, and most importantly, New Yorkers. Members of the public from across all five boroughs told us what was important to them and what needed to be done. This was a team effort and, considering the challenges we faced from a struggling economy and reduced government aid, it was a success.”
Balancing the Budget While Maintaining Services – Prudent Budgeting and Economic Growth
The FY 2013 budget remains balanced without increasing taxes or major cuts to essential services primarily through: 1) the use of prior-year resources that were prudently built up during better economic times; 2) rounds of City agency deficit closing actions that began before the national economic crisis began; and 3) a city economy that continues to grow and become more diversified.
The budget is supported by $2.4 billion of prior year resources carried from FY 2012 to FY 2013 and $1 billion from the Retiree Health Benefits Trust – a fund that was created with saved surplus resources in 2006 and 2007.
The budget also relies on nearly $6 billion in savings for FY 2013 generated though 11 rounds of deficit closing actions taken by City agencies since 2007, including $1 billion in savings enacted since last November.
Tax revenues continue to rebound as the city’s economy continues a gradual recovery, with economically sensitive tax revenues – personal income, business, sales and real estate taxes – growing again in FY 2013. While revenues from the financial sector have declined, tax revenues have been bolstered by strong growth in the tech, film and television, tourism and higher education sectors, areas where the Administration has focused its economic development initiatives.
New York City has regained more than 200 percent of the private sector jobs lost during the recession, while the rest of the country has gained back only approximately 40 percent. The city has now recovered all jobs lost during the recession and private employment in the city has reached an all-time record high at approximately 3.3 million, surpassing the previous record in 1969 of 3.275 million.
The budget agreement maintains the increases for education funding included in the Mayor’s May Executive Budget, which will allow the City to increase the total number of teachers in the school system this coming year by roughly 1,000 teachers, and maintain overall funding levels to schools.
Child Care and Out-of-School Time
The budget agreement adds approximately $150 million in combined funding to the Administration for Children’s Services Child Care program and the Department of Youth and Community Development Out-of-School Time from the levels in the May Executive Budget. The total combined funding level for the two programs in FY 2013 will now be approximately $75 million more than the total for FY 2012.
In June, the Mayor announced the transformation of the City’s child care system through contract awards under the EarlyLearn NYC Request for Proposal, which standardizes the quality of early care and education for the first time and makes significant quality improvements while providing nutrition, health and mental health services; child assessments to track progress; support services to children with special needs; and increased professional development for center staff.
The Mayor’s May Executive Budget enhanced the Out-of-School Time program to offer more comprehensive services than ever before, including providing students with full-time, year-round programming – rather than during the school year only for many slots – and with a focus on academic enrichment.
Cultural Institutions and Libraries
The budget agreement increases funding for the City’s cultural institutions by approximately $50 million, which brings total funding for FY 2013 slightly above FY 2012 levels and maintains the City’s continued strong support of the cultural institutions that have been an increasingly larger driver of tourism and economic activity in the city.
The budget agreement adds nearly $90 million in funding to the City’s library system, which will allow for, on average, more than five days of service throughout the system. The budget also includes the more than $100 million in capital funding included in the Mayor’s May Executive Budget for one of the largest renovation projects in the history of the library system.
The updated FY 2013 budget reduces expected revenue from the sale of taxi medallions in FY 2013, but increases overall expected revenue from the sale, which is now reflected over the fiscal years 2013, 2014 and 2015. The May Executive budget included $1 billion in revenue in FY 2013 from the sale of taxi medallions. Due to the delays caused by legal challenges to the medallion sale, the FY 2013 budget now assumes $635 million in taxi medallion revenue. The City now plans to extend the medallion sale over a longer period of time, with total revenue now estimated at $1.46 billion from the sale of all medallions. The medallion revenue is now budgeted as: FY 2013 – $635 million, FY 2014 – $365 million, and FY 2015 – $460 million. The overall estimate of $1.46 billion in revenue from the sale of 2,000 medallions remains a conservative estimate considering the typical sale price of taxi medallions.
Other Changes Since May
Other significant changes in estimates since the May Executive Budget include: debt service savings of approximately $150 million in FY 2012 and $90 million in FY 2013 primarily by taking advantage of low interest rates; the final estimate of the City’s actuary has resulted in a reduction in pension costs of approximately $40 million in FY 2012 and $80 million in FY 2013; the City received approximately $150 million from a Federal settlement with ING Bank in FY 2012; the collections for miscellaneous revenue collections (permits, licenses, fees) are now approximately $70 million higher in FY 2012; and a re-estimate of the City’s reserve for State and Federal audits after a review with the auditors saves approximately $180 million in FY 2012.
The budget agreement ensures a balanced budget for FY 2013, but New York City will face a budget gap of approximately $2.5 billion in FY 2014.