The New York City Independent Budget Office released its annual Fiscal Outlook report today, estimating that the city faces a $3.9 billion budget gap in fiscal year 2003, which begins in six months. The gaps grow to $4.9 billion in 2004 and $5.3 billion in 2005.
Although the city adopted a gap-closing program of $1.3 billion yesterday for the current fiscal year, roughly two-thirds of the savings do not recur in 2003 and beyond. This leaves large gaps to still be addressed by the next Mayor and City Council.
"New York City's fiscal outlook has dimmed considerably since last spring," said IBO Director Ronnie Lowenstein. "While IBO projects the current recession will not be as severe as the recession of the early 1990s, the city faces considerable challenges in the years ahead."
The $3.9 billion gap for 2003, the first full year of Mayor-elect Bloomberg's Administration, is 14.6 percent of city funds-twice as large in percentage terms as the gap Mayor Dinkins closed in his first full year. This is largely due to the fact that a roughly $3 billion gap was projected before the current recession began.
The Fiscal Outlook report also notes:
- Economic growth will begin to resume in mid-calendar year 2002 and tax revenues will begin to rise in fiscal year 2003 by 2.5 percent.
- The public assistance caseload will grow from 464,000 individuals in September 2001 to 530,000 in September 2002.
- The Mayor is counting on a number of one-time measures to close this year's gap, such as $399 million in unrestricted aid from the Federal Emergency Management Agency, early receipt (or "spin-up") of $73 million in state revenue sharing. The plan for 2003 a one-time $250 million loan from the Municipal Assistance Corporation.
- Immediately following September 11, the state authorized the city to borrow an unlimited amount in short-term notes, and allowed the city to roll them into the next fiscal year The state also permitted the city to convert as much as $2.5 billion of this short-term debt into long-term Transitional Finance Authority borrowing.
The report is available in print from IBO by calling 212-442-0632 or on our Web site at www.ibo.nyc.ny.us. Tables containing additional information are also available on the Web.