New York City Budget Deficits May Ease With Job Growth, IBO Report Says
New York’s economy may grow more than Mayor Michael Bloomberg has predicted, making balancing the budget in the next three years less difficult than city officials had forecast, an independent monitoring agency said.
The Independent Budget Office, a nonpartisan research agency, said the city may create 89,000 jobs by 2014. That’s about 27,000 more than the mayor’s estimate, which would reduce future budget gaps, the agency said. New York closed a “small” $242 million deficit in this year’s $70.8 billion budget, according to the IBO.
“Our tax-revenue projections for 2013 and beyond are increasingly stronger than those of the Bloomberg administration and help narrow the projected shortfalls,” the IBO said in a report released today.
The office said the city still faces risks from the European debt crisis and political gridlock in Washington. Locally, the deficit could widen if unresolved contract negotiations force larger labor expenses, and if federal and state aid continues to decline, the report said.
State law requires the mayor to present a preliminary budget to the City Council by the first week of February. Throughout his 10-year tenure, Bloomberg has said he favors conservative estimates of economic growth, erring on the side of less revenue, in drafting his financial plans.
The IBO estimated a $1.2 billion budget shortfall in 2013, about $800 million less than Bloomberg predicted in November, when he modified the city’s multiyear financial plan. For 2014, the agency forecast a $2.2 billion gap, or $1.7 billion less than the mayor’s. Its deficit estimate for 2015 of $1.9 billion came in almost $3 billion below Bloomberg’s.
“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 said.
The IBO analysis followed Dec. 15 reports from state Comptroller Thomas DiNapoli and city Comptroller John Liu, who each predicted that Europe’s sovereign-debt crisis and reduced state and federal aid may combine with increased costs to create budget deficits even larger than the mayor predicted in a November modification.
‘Tough Road Ahead’
“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,” said Marc LaVorgna, a mayoral spokesman. “We have a tough road ahead and will continue to take the same proven approach.”
This week Governor Andrew Cuomo struck a deal with lawmakers that will let New York City sell an additional 2,000 taxi medallions and permit so-called car services to pick up passengers who hail them outside Manhattan.
The IBO said 38,800 jobs would be created in 2012 and 49,900 in 2013, concentrated in health and education, tourism and professional and business services. Some of those gains may be offset by job losses in the financial industry and in government.
Weak economic growth, regulatory constraints and declining Wall Street profits may cost more than 5,200 finance jobs in the second half of 2011 and the first half of 2012, the report said. After 2013, the IBO predicts that every major industry in the local economy except manufacturing will add jobs, with gains averaging 54,900 jobs a year in 2014 and 2015.
The mayor is founder and majority owner of Bloomberg News parent Bloomberg LP.
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