Mayor Michael R. Bloomberg today announced his Fiscal Year (FY) 2009 Executive Budget and presented an updated four-year financial plan for New York City.  The $59.1 billion budget maintains the City's firm financial footing in the near term by reining in expenditures across the city, with city-funded spending expected to only grow by 0.1 percent.  Because of this restraint in spending and higher than projected revenues, the budget presented today will continue the $400 property tax rebate and the 7 percent property tax rate reduction for this fiscal year.  The Executive budget includes $600 million in savings in FY 2008 and $1.3 billion in FY 2009 from reductions in planned agency spending and it will produce out-year savings of $1.1 billion annually.  The Mayor also announced that the financial plan shows deficits of $1.3 billion in FY 2010 and $4.6 billion in FY 2011.

“Through a combination of agency savings and short-term revenue receipts, we will once again return tax dollars to New Yorkers who today face their own budget problems created by the sub-prime mortgage meltdown and the ensuing credit crunch,” said Mayor Bloomberg “That includes the $400 homeowner property tax rebate, which will be continued in Fiscal 2009 and in the out-years as well.  Our expectation at this time is that we’ll also be able to extend, for another year, the 7% property tax cut that we enacted last year.”

Economic Outlook:

Nationally the economy is slowing, as GDP growth decelerates and the labor market continues to soften.  Locally, New York City's economic outlook is uncertain.  Wall Street firms have announced hundreds of billions of dollars of write-downs and thousands of planned layoffs.  After posting a record $21 billion in profits in 2006, Wall Street firms had over $11 billion in losses in 2007.  Large commercial real estate transactions have already begun to decline and are forecast to fall further.  Tourism remains a bright spot, with New York City recording an increase in overseas visitors of 33% since 2000, while the rest of the country has seen a 20% decline in overseas visitors during this period.     

Program to Eliminate the Gap:

The City will realize savings of 3%, or more than $600 million, in FY 2008 and is proposing savings of 6.4% of City funded expenses, or more than $1.3 billion, in FY 2009 through the Agency Program.  The reduction program includes actions to help close the budget gaps in Police, Fire, and Education as well as all other major agencies.  The Department of Education will actually see an increase of more than $200 million from FY 2008 to FY 2009 because of additional City funding.                            

Tax Relief:

While tax revenues are running higher than expected currently, they are forecast to decline by 6% in FY 2009.  Although the City will be able to continue the $400 property tax rebate for homeowners, the plan the Mayor released today only anticipates   the 7% property tax rate reduction being included in FY 2009 and not in FY 2010 and beyond.  

Capital Program Commitments:

The Mayor announced today that the City is stretching four years of City-funded capital program commitments into five years, thereby reducing the City-funded portion of the capital commitment program by 20% annually FY2009-2012. The City will now meet the City-funded capital goals we had set for ourselves one year later, in 2013, rather than in 2012.  The capital commitments for FY 2009-2012 total $55.7 billion with this reduction.  Details of this measured slowdown will be made available in the September update to the capital commitment program.  

Out Year Budget Gaps:

The City is using resources from FY2008 to help close the budget gaps in the out-years of the financial plan.  Additionally, the City will make an early payment on outstanding debt to help reduce the budget gap we are facing in FY 2010.  The City will use $3.2 billion of FY 2008 resources to help balance FY 2009 and another $1 billion of these one-time resources to reduce the budget gap in FY 2010, and an additional $350 million to help close the budget gap in 2011.   Even after these actions, in FY 2010, there is a projected $1.3 billion budget gap. The budget gaps grow to $4.6 billion in FY 2011 and $4.5 billion in FY 2012.