Stringer reports New York City's first operating surplus in years
In fiscal year 2015, New York City took in $1.83 billion more than it spends, according to a report to be released Friday by city Comptroller Scott Stringer. This gave the city an operating surplus for the first time since 2008, when the city ran a surplus of $773 million before the recession took its toll.
The city has operated using GAAP budgeting since the fiscal crisis of the 1970s. This means that a four-year plan is put forth each year. Any surplus or deficit is factored into the city’s budget cushion. Currently the cushion is about $8.7 billion, which is less than 10 percent of the budget. The comptroller’s office recommends a cushion of between 12 and 18 percent.
“The city’s fiscal health is in the best shape it has been in years,” Stringer said in a press release. “Steady economic growth and strong job creation have brought in more revenue than the city anticipated.”
The comptroller’s office also projects higher tax revenues over the next four years than the Mayor’s Office of Management and Budget, which released its financial plan in November. For fiscal year 2016, the comptroller’s revenue estimates are $539 million higher than the OMB’s, growing to $1.01 billion higher by fiscal year 2019.
The difference stems from a more optimistic projection of personal income tax and property tax revenue by the comptroller’s office. The city’s growing economy and booming real estate market have bolstered this optimism. One red flag, however, has been the types of jobs that have been created in fiscal year 2015. The report states that 41 percent of new jobs were in retail trade, home health care, food services and other low-income industries.
“Strong job growth is a great indicator of the resilience of our economy, but sluggish wage growth remains problematic,” Stringer said. “We need to continue to find ways to make sure that New Yorkers feel the economic recovery in their wallets.”
On expenditures, the comptroller’s “State of the City’s Economy and Finances” report does agree with the OMB’s assessment that spending will continue to grow, mostly because of the increased cost of personal services. This is driven largely by increased salaries for city workers because of contract agreements struck with Mayor Bill de Blasio since he took office. Under his predecessor, Michael Bloomberg, city workers went without contracts for years.
Historically, the OMB tends to be more conservative in its revenue projections than the comptroller’s office or independent outside agencies. In recent years, however, the OMB and comptroller’s assessments have been drawing closer to each other.
Despite the optimistic outlook, Stringer warned that the city shouldn’t rest on its laurels. “While this was a good year for the city, we must continue to repair the roof while the sun is still shining by putting more money away to protect against a potential economic downturn,” he said.