(New York, NY) — According to a new fiscal analysis released today by Comptroller Scott M. Stringer, New York City’s Adopted Budget for Fiscal Year 2018 — adjusted for pre-payments from the prior year and excluding reserves — will total $87.96 billion, a responsible increase of 2.8% from the adjusted Fiscal Year 2017 budget. The report highlighted that the City’s economy has continued to grow, and found that the City is on strong financial footing.

“The Mayor has put money away in reserves and invested in critical programs. This budget helps ensure that we’re on strong fiscal footing,” NYC Comptroller Scott M. Stringer said. “While businesses are still growing and jobs are still on the rise, there are signs the economy is slowing. Of course, with chaos in Washington and the White House seeking to slash the safety net, we have to remain vigilant.”

Findings in the report include:

  • The Comptroller’s Office expects the City’s economy to continue to outpace the national economy through 2019. The most likely risks to continued economic growth is a premature increase in short-term interest rates by the Federal Reserve and the success of fiscal policy initiatives from Washington.
  • In the first quarter of 2017, the City’s economy grew by 2.6 percent, outpacing national economic growth of 1.4% over the same time period;
  • During the first six months of the year, the City’s unemployment rate averaged 4.3% — down from 5.3% over the same period in the previous year. Between January and June 2017, the number of payroll jobs in the City increased by 82,000, or 1.9%;
  • Overall, the Comptroller’s Office expects the City’s economy to outpace the nation at least through 2019;
  • The FY17 budget increased the City’s cushion to $9.8 billion — close to the Comptroller’s suggested cushion of 12% of adjusted City spending;
  • Approximately 72% of the FY18 budget is funded with City-generated revenue, followed by State categorical grants (17%), Federal categorical grants (9%), other categorical grants (1%), and Inter-Fund Agreements (1%);
  • More than 80% of budgeted expenditures — nearly $70 billion — are allocated to education, social services, public safety, and judicial, fringe benefit, pensions, and general government spending;
  • According to unaudited, preliminary returns, the City Pension Funds’ investments grew by 13 percent in Fiscal Year 2017, above the actuarial interest rate assumption of 7 percent. Since 2014, the funds have averaged annual returns of more than 7 percent. These preliminary numbers may be revised up or down in the coming months, and the Comptroller’s Office expects that potential market declines in future years could lower returns.
  • The City’s FY18 budget reflects $4.17 billion in prepayments from FY17, including $3.47 billion for debt service, $400 million for retiree health benefits, and $300 million for Health + Hospitals subsidies;
  • The Comptroller’s Office analysis of the Financial Plan estimates smaller out-year gaps in FY2020 and FY2021 than the City, based primarily on higher expected property tax revenue in those years;

The Comptroller’s Office identified four main spending-based risks in the FY18 adopted budget: overtime, homeless services spending, Health + Hospitals payments, and special education Medicaid reimbursements. Specifically:

  • Overtime ($169 million) — The City’s FY18 overtime budget is 22% lower than the current year’s estimated overtime spending through June.
  • Homeless Services ($121 million) — Spending on shelter operations by the Department of Homeless Services (DHS) is projected in budget documents to fall from $795 million in FY17 to $694 million in FY18.
  • Health + Hospitals ($165 million) — H + H is required to reimburse the City for debt service, judgements and claims settlements, and fringe benefit costs incurred on H + H’s behalf. While the financial plan reflects the City’s decision to waive H + H’s debt service, it continues to assume the system will pay $140 million for settlements and $25 million for fringe benefit costs — despite the fact H + H has only made one payment for these expenses in the last four years.
  • Special Education Medicaid Reimbursements ($70 million) — the Department of Education must cover any shortfall in Medicaid reimbursement for special education related services. The City’s financial plan assumes reimbursements of $97 million annually — despite the fact the DOE has only realized an average of $15 million in annual reimbursements over the last six years.

“Throughout this budget cycle, we’ve worked with the Mayor and City Council to deliver a balanced, responsible budget that serves New Yorkers. My office will continue to work with the Administration and Council to monitor the budget and ensure our City stays on track to handle whatever challenges we face,” Comptroller Stringer said.

###