The Independent Budget Office today released its analysis of the Mayor's Executive Budget for 2002. The report finds that if all the proposals in the Mayor's plan are adopted, the budget will be roughly in balance for the upcoming fiscal year. IBO projects that in 2003-which begins in just over a year-the city faces a $3.3 billion shortfall. The projected shortfall grows to nearly $5 billion by 2005.
"Although the city will end the current fiscal year with a budget surplus of $2.7 billion, slower economic growth means that large surpluses are unlikely to continue," said IBO Director Ronnie Lowenstein. "Without these surpluses, it will be particularly difficult for the next Mayor and City Council to close the shortfalls in 2003 and beyond."
IBO's report highlights a number of key changes since the Mayor released his preliminary plan in January. These include an additional $154 million in agency spending cuts and revenue initiatives, bringing the total to $846 million for 2002; shifting $269 million in pay-as-you-go capital for stadiums and schools out of the expense budget; and using $150 million in proceeds from the sale of tobacco bonds to pay costs related to the closure of Fresh Kills. The Executive Budget also includes $101 million in new tax cuts, bringing the total amount of proposed tax cuts to a half billion dollars for 2002.
Based upon IBO's revenue and expenditure projections, the city's budget gaps will grow from $3.3 billion in 2003 to $4.9 billion in 2005. The 2005 gap is nearly twice the size of the Administration's estimate, and would amount to more than 10 percent of total spending for that year. One of the primary reasons for this difference is that the Executive Budget includes no new funds for labor settlements for 2003 and beyond. The just-ratified DC 37 contract expires at the start of 2003.
The Executive Budget analysis is available upon request or at IBO's Web site, www.ibo.nyc.ny.us. The Web site also contains additional tables detailing IBO's economic, revenue, and spending projections.