January 29, 2013

No. 42


Economic Growth and Spending Discipline Provide for a Balanced Budget with No Tax Increases 

City’s Private Sector Employment Continues to Outpace National Growth 

            Mayor Michael R. Bloomberg today presented the Fiscal Year (FY) 2014 Preliminary Budget and an updated four-year financial plan. The plan outlined today reflects the New York City’s ongoing economic growth and spending discipline, which provide for a balanced budget that does not rely on tax increases. The Preliminary Budget includes $6.5 billion in savings achieved through 12 rounds of deficit closing actions the City has taken since 2007. It shows that the city’s private sector employment have grown by 6.9 percent since the end of the recession in 2009, compared to 3.9 percent nationally. The FY 2014 Preliminary Budget reduces controllable City spending by 1.1 percent compared to the prior year while maintaining City services. It also estimates $4.5 billion in Sandy-related expenses, including $1.4 billion spent on emergency response and $3.1 billion on repairs – all of which the City anticipates will be reimbursed by Federal aid. The budget plan details the impact of a major loss of State education aid due to the refusal of the United Federation of Teachers to agree to a teacher evaluation system. The Mayor has requested that State legislators act to ensure New York City schoolchildren are not harmed by the union’s refusal to agree to an evaluation system. 

“The financial plan presented today continues to protect critical services and foster economic growth, while also taking the responsible, budget-minded actions that have resulted in a more efficient City government,” said Mayor Bloomberg. “Our investments in industries like the tech, film and tourism sectors are paying off in the form of new jobs and revenue. Still, there is more work to do, particularly in the area of State education funding and the potential loss of another $250 million. We’re hopeful Albany will protect our students against penalties levied because the teachers’ union refuses to agree on an evaluation agreement. The loss of this aid would undermine our consistent investments in public education and also jeopardize the progress City schools have made.” 

The Preliminary Budget is a $70.1 billion plan, with a City-funded portion of $50.7 billion. The Preliminary Budget reduces year-over-year controllable City expenditures by $254 million, a 1.1 percent decline from FY 2013. Expenses not fully controlled by the City – primarily pensions, health care, Medicaid and debt service – rise by $1.8 billion, a 6.8 percent increase from FY 2013. 

Improving Economy 

The City’s economy continues to grow and tax revenues have increased: in FY 2013, non-property tax revenue was $222 million higher than anticipated when the budget was updated in November. Private sector employment in New York City has grown by 6.9 percent since the end of the recession in 2009, compared with national growth of 3.9 percent. The City also welcomed a record 52 million tourists, generating sales and hotel tax revenue. 


           Since 2002, City-funded spending on education has increased by 132 percent, from $6.0 billion in FY 2002 to $13.9 billion in FY 2014. The continued increase in City-funded education expenses comes as the share of State-funded education expenses has declined: The City now funds 61 percent of non-Federally funded education costs, while the State funds 39 percent. In FY 2002, the State and the City evenly shared the costs.           

The City stands to lose $724 million in State education aid for New York City schools over the next two years because the UFT has refused to come to agreement on an effective evaluation system. In the current fiscal year, the City will lose $250 million in State education aid, resulting in a loss of 700 teachers through attrition this year, as well as the reduction of funds for extracurricular activities and afterschool programming. The City will forfeit another $250 million in the next fiscal year, as well as $224 million included in the State executive budget if the union continues to block an evaluation agreement. This reduction would result in another 1,800 teachers lost through attrition. The City would also need to eliminate 700,000 hours of afterschool programs, and would have approximately $67 million less for school supplies. The cuts would have a direct and dire impact on classrooms across the city and will be borne by the students who need and deserve high-quality education. 

Without an evaluation agreement, the City may also lose an additional $1 billion in education aid from the State and Federal governments.             


The City’s full-time and full-time equivalent headcount in FY 2014 Preliminary Budget is 293,527 a reduction of 18,277 positions (5.9 percent) since the start of the Bloomberg Administration. The City’s December 31, 2001 full-time and full-time equivalent headcount was 311,804. 

Hurricane Sandy 

The Preliminary Budget includes an estimated $4.5 billion in storm-related costs. Of that, $1.4 billion is for emergency response and debris removal and is a part of the Expense Budget. The remaining $3.1 billion is comprised of long-term repair needs for damaged infrastructure that will be incurred over time in the Capital budget. The total Sandy-related expenses include: $310 million for the schools; $812 million for hospitals; $1 billion for housing; and $601 million for parks. 


                        Contact:           Marc La Vorgna/Lauren Passalacqua             (212) 788-2958

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