Bloomberg Balances NYC Budget With Unexpected Tax GainHenry Goldman
New York Mayor Michael Bloomberg presented an executive budget as more than $1 billion in unexpected revenue from personal-income taxes, corporate levies and audits helped balance his final spending plan.
Bloomberg’s $69.8 billion budget for the fiscal year starting July 1 benefits from a one-time $800 million windfall from residents selling stocks and property last year to avoid capital-gains tax increases. Corporate levies and audits raised more than $400 million that wasn’t expected in January, he said.
The budget, unveiled today at a City Hall briefing, proposes no new taxes and calls for reduced spending on education, as the 71-year-old mayor called for in January. Total spending is down from this year’s $70.4 billion spending plan. Bloomberg forecast a $2.2 billion deficit for 2015. The city’s budget must be balanced, under state law.
“The news today is reasonably good, as good as it’s been in a long time,” Bloomberg said.
The city still faces fiscal challenges. Billions of dollars in spending and revenue remain uncertain because of disputes over labor contracts and a plan to sell taxi cab medallions held up by litigation.
The spending plan “represents a holding-pattern budget that gets Mayor Bloomberg out the door, even as it leaves a passel of problems for his successor,” said Comptroller John Liu, a Democrat running for his party’s mayoral nomination this year.
The budget assumes the courts will permit the medallion sales to proceed. However, it reduces the expected revenue the transactions would yield in the current year to $300 million, down from $600 million Bloomberg forecast in his January preliminary spending plan. It still assumes the city would reap $1.5 billion from the sales over the next four years.
Spending cuts the mayor has proposed include $135 million for after-school and early-childhood education programs, which the advocacy group Campaign for Children said would affect 47,000 students.
The January plan to reduce 1,800 teachers by attrition over two years was scrapped after the state restored funds for next year that were cut after the city and union failed to agree on an evaluation plan, said Lauren Passalacqua, a mayoral spokeswoman.
City council approval of the budget would hinge on restoration of all or part of those programs, said Speaker Christine Quinn, another Democrat running for mayor.
Quinn, in an e-mailed statement, said council members “remain troubled” by deep cuts to funding for children, libraries and firehouses.
“Cuts to these programs would do irreparable harm to our city’s middle-class families,” she said.
The budget renews Bloomberg’s proposal to close 20 fire companies, which council member Domenic Recchia, head of the Finance Committee, said would have to be restored before the budget received approval.
Contracts have expired with the city’s 300,000 workers --in some cases since 2008 -- and the budget contains no money for back pay in the event bargaining results in salary increases. The cost of paying the city’s workforce retroactively would exceed $7 billion, Bloomberg said.
“It’s just something the city cannot possibly afford,” Bloomberg said. State law requires that expired contracts remain in force, providing wage and benefit increases, and work rules established under the old pacts, the mayor said.
If the unions and the administration can’t agree on new contracts, including a deal to require workers to pay part of their health coverage, the issues would be left to whomever succeeds the mayor on Jan. 1. Bloomberg’s third term ends Dec. 31, midway in the 2014 fiscal year. He’s barred by law from seeking re-election.
New York City general-obligation bonds maturing March 2025 and callable in 10 years are valued at a yield spread of about 0.59 percentage point above benchmark municipals, data compiled by Bloomberg using BVAL pricing analysis show. That difference was about 0.61 percentage point when the city sold the bonds March 1.
The mayor is founder and majority owner of Bloomberg News parent Bloomberg LP.