New York City Budget Deficit Next Year May Widen by $2 Billion, Page Says

New York City’s projected budget deficit for fiscal 2012 may widen by $2 billion, to $4.5 billion, because cuts in state aid may be greater than forecast, Budget Director Mark Page said.

Mayor Michael Bloomberg’s proposal last month to cut the city workforce by 10,000 as part of plan to save $1.6 billion during the next 18 months may not be enough to close the gap, Page told the City Council’s Finance Committee today.

“The reality that we’re facing is that the future could be considerably worse,” Page told the council members. “This is something we are solemnly worried about.”

The most populous U.S. city has a $65 billion budget projected for fiscal 2012, which begins July 1. Bloomberg last month cited increased pension costs and loss of $850 million in federal school aid in proposing to reduce the city’s 300,000- worker payroll, including more than 6,000 firings. About 4,000 cuts will be accomplished by attrition.

Governor-elect Andrew Cuomo, a Democrat who takes office Jan. 1, has until Feb. 1 to propose his first budget. Last month, state Budget Director Robert Megna said the New York state deficit for fiscal 2012, which starts April 1, may reach $9.3 billion.

The state gap may increase to between $10 billion to $12 billion in the event revenue and spending projections prove too optimistic, Page said today.

Not ‘Comfortable’

Even if the state finds $3 billion to save, $7 billion would still have to be cut from aid to municipalities, Page said. Because New York City historically has received about one- third of local aid, the loss would be about $2 billion, he said. The city’s projected 5 percent revenue increase wouldn’t be enough to make up that gap.

“Maybe things will go better; maybe they’ll go worse,” Page said. “It’s not a comfortable outlook for us looking forward over the next 19 months.”

The council members summoned Page to the hearing to voice opposition to cuts to programs serving seniors, homeless, abused and neglected youth and night-time firehouse staffing.

“These should not be the targeted areas,” said Council Speaker Christine Quinn, a Manhattan Democrat.

Although the council lacks authority to amend Bloomberg’s executive orders, it must approve next year’s budget.

Bloomberg underscored the administration’s concern at a City Hall news conference later in the day. While agreeing with Quinn’s assessment that budget changes would have to be made, the direction would be less spending, not more, he said.

“These cuts don’t go to address more than a third of what we think the problem is,” he said. “We’re going to be going in the other direction. You can always find ways to try to mitigate the pain. The problem is you have to go where the monies are,” schools, public safety and sanitation.

The mayor is founder and majority owner of Bloomberg News parent Bloomberg LP.

To contact the reporter on this story: Henry Goldman in New York at hgoldman@bloomberg.net

To contact the editor responsible for this story: Mark Schoifet at mschoifet@bloomberg.net

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