More Cash in Coffers than City Says, According to IBO
MANHATTAN — A new report from the city’s Independent Budget Office suggests the budget deficit may not be as dire as the Mayor’s Office has predicted, though it warns the shrinking shortfall "could be thrown off course" by the Eurozone crisis and cuts in federal and state aid.
The latest report by the independent agency predicts the city faces a $1.2 billion budget shortfall for the coming fiscal year — nearly $800 million less in debt than the city's latest budget predicted.
For 2014, the IBO predicts a gap of $2.2 billion — $1.7 billion less than the mayor.
"The fiscal road for the coming years as mapped under IBO's revenue and spending projections poses challenges that are considerably less daunting than the city has faced over the past few years," the report's authors wrote.
The office makes several rosier predictions than the mayor's office, including higher tax revenue and an expected 89,000 new jobs over the next two years — more than three times as many as the administration.
Still, the group anticipates several areas where they expect spending to outpace city predictions, including at the Department of Homeless Services, where they expect a cost overrun of $9 million this year and $17 million the next, thanks, in part, to the growing shelter population.
The city's latest round of budget cuts, announced in November, includes major cuts to cultural groups, as well as layoffs in the Department of Transportation prompted by the switchover to Muni-Meters. The Department of Health also faces large staffing cuts to the medical examiner's office, including staff responsible for DNA analysis, the IBO said.
But the report's authors also warned the recovery could be thrown off-course by outside factors, including the debt crisis pummeling Europe, which could impact banks and shrink demand for business services and tourism.
"The fragility of the U.S. and international economies and recent weakness in the city's financial sector are cause for concern," they wrote.
"Other keys to the direction of the roads ahead lie in Washington and Albany and what will happen to the levels of state and federal aid for the city," they said, adding that renegotiating contracts with the city’s major unions "still looms large” with little cash on hand for wage increases.
Marc LaVorgna, a spokesman for the mayor, noted that several recent analyses, including one by the city comptroller and one by the state, have argued that the city's deficit projections may actually be too low.
"Some have said deficits are larger than we projected, others have said lower, but everyone agrees we still have a large hole to fill even with a billion dollars in new taxi medallion revenue," he said in a statement, trumping the city’s past performance, despite "two historic downturns."
“We have a tough road ahead and will continue to take the same proven approach," he said.