Mayor Michael R. Bloomberg recently released the New York City Executive Budget for the 2013 fiscal year. While the mayor lauded the $68.7 billion plan as a “balanced budget with no tax increases,” the City Council believes the preliminary budget still contains substantial and unacceptable cuts to services for families and communities.
Of the $68.7 billion proposal, the city-funded portion accounts for around $51 billion. According to the mayor, the executive budget reduces year-over-year controllable city expenditures by $110 million from FY 2012, but expenses that are not fully controlled by the city continue to rise and continue to make less funding available for city services. (Expenses not controllable include pensions, health care, Medicaid and debt service.) As such, the budget relies on $6.2 billion in savings for FY 2013 generated through 11 rounds of deficit closing actions taken by city agencies since 2007.
Those agency budget savings actions proposed by Mayor Bloomberg in November 2011, combined, the mayor said, to “produce a savings of $464 million in FY 2012 and $1 billion in FY 2013.” The proposed budget does not include any additional agency savings actions beyond what was originally proposed in November.
One of the most scrutinized items in the budget is monies allocated to education. “Our budget won’t impose any new taxes on New Yorkers, maintains the strength of the NYPD and continues our strong support for public schools,” said Mayor Bloomberg in a statement.
City Council Speaker Christine Quinn, who is also a possible contender in the 2013 mayoral race, while pleased that the budget spares education, elicited concern about other cuts that were made. She believes that the mayor’s budget contains substantial and unacceptable cuts to services, especially for families and communities that need them the most.
Concern for Cuts
“As it currently stands,” said Speaker Quinn, “these cuts fall particularly hard on our children through cuts to childcare, further reductions in the number of teachers in our classrooms due to attrition, and a nearly 50 percent cut to after school programs. These cuts will lead to lower graduation rates, a higher incidence of youth violence, and diminished prospects in the future. We simply cannot afford to shortchange the next generation.”
Mayor Bloomberg, however, countered that the proposed budget actually increases city funding for education, with that line item rising from $13.3 billion in FY 2012 to $13.6 billion in FY 2013.
The additional funding will also allow the city to increase the total number of teachers in the school system this coming year and maintain overall funding levels to schools. One other factor, said the mayor, is that the budget proposal relies on $300 million of funding in FY 2013 that will only be realized when the city and the United Federation of Teachers (UFT) agree on a teacher evaluation system that meets state and federal requirements. If an agreement is not reached, amendments to the education budget will be necessary to compensate for the loss of funding.
One other way the city has achieved cost savings is through employee reductions and attrition. “The city’s full-time and full-time equivalent headcount in FY 2013 Executive Budget is 293,606,” Mayor Bloomberg said, “which is a reduction of 18,198 positions (5.8 percent) since the start of the Bloomberg Administration. At that time, on December 31, 2001 the full-time and full-time equivalent headcount was 311,804.”
“We’re able to make all of those commitments,” added the mayor, “as a result of years of fiscal care, foresight and a constructive partnership with the City Council, as we began setting aside savings and reducing spending well before most other city and state governments heeded the economic storm warnings.”
Mayor Bloomberg said that the city has prepared itself well and was able to weather the storms of the Wall Street fallout. “In the not-so-distant past, a drop like the one we saw this year in Wall Street profits would have been a debilitating blow, but the hard work we’ve done to diversify our economy has done a lot to offset its effects. Our efforts in the tech, TV and film, tourism and higher education sectors are producing results, with private employment now at its highest level ever in the city, exceeding the record set back in 1969, and we expect this growth in private sector jobs to continue.”
One area garnering additional funding is the city’s five-year capital construction program, which will receive $39.5 billion, up nearly $800 million, and hopefully will provide a needed boost in additional job creation.
While upbeat during his presentation, Mayor Bloomberg warned that New York City still faces budget gaps of approximately $3.0 billion in FY 2014, $3.7 billion in FY 2015 and $3.2 billion FY 2016.
Property Tax Revenues
To help offset some of those budget gaps, analysts are predicting that tax revenues will continue to rise in the face of market decline.
In its analysis, the city’s Independent Budget Office (IBO) projects that property tax revenues will grow from $17.8 billion in 2012 to $18.3 billion in 2013, a 2.6 percent increase. Property tax revenue growth is expected to accelerate slowly after 2013, IBO says, averaging 5.1 percent annually in 2014 through 2016, when revenue will reach $20.9 billion. When the 2013 roll is finalized in May, IBO forecasts that market value in the city will total $838.1 billion, an increase of 2.9 percent over 2012. Assessed value for tax purposes on the 2013 roll is projected to grow 3.9 percent over 2012.
“With the pipeline of prior assessed value increases in commercial properties (assessment changes are phased in over five years for most income-producing properties plus co-op and condo buildings) replenished by the strong growth beginning in 2012,” the IBO report says, “the rise in assessed value for tax purposes accelerates over the forecast period to an annual average of 4.6 percent.”
Liam P. Cusack is associate editor at The Cooperator.