See Report

Comptroller William C. Thompson, Jr. today released his charter-mandated report on the city's modification of the FY 2002 budget and FYs 2002-05 Financial Plan, and the Mayor's preliminary budget for FY 2003. The Comptroller finds that while the city is likely to balance its FY 2002 budget, it faces severe and immediate budget gaps beginning with the 2003 fiscal year which starts this July.

"Although this report demonstrates that this year's surplus will be somewhat higher than the Mayor's projections, the city still faces a budget gap in excess of $4.5 billion for the fiscal year beginning this July," said Comptroller Thompson. "The city's proposed gap-closing program relies heavily upon risky assumptions and non-recurring solutions to achieve FY 2003 budget balance." The report questions the city's ability to achieve all of the savings projected in such areas as intergovernmental aid, fringe benefit cost containment and prior-year airport rents.

The report also notes that the city intends to borrow $2 billion through the New York City Transitional Finance authority to support FY 2002 and 2003 operating expenses. "When money is borrowed, costs are transferred to the future," said Comptroller Thompson. "In this period of recovery and fiscal stress we must not fall prey to easy solutions that offer short term benefits without regard to long term costs. As we discuss, debate, review and revise proposed solutions to the city's fiscal problems we must not create greater difficulties in the years to come. It is vital that we design coherent and sustainable tax, debt, and spending policies."

The report also finds that the outlook for New York City's economy is less promising than for the nation's. It demonstrates that the slowdown in the local economy in the second half of 2001 was severe and that the city's recovery is likely to lag behind the nation's. It further points out that the city faces real and pressing needs especially in the maintenance of its infrastructure. "If we use the opportunity to refinance debt to gain immediate budgetary relief, we must ensure that we are not increasing future debt service levels and limiting our ability to maintain the city's physical facilities," Comptroller Thompson said. "Furthermore, as we address our enormous fiscal problems we must not forget that the need for low and middle income housing has not diminished and the need for all neighborhoods to receive their fair share of city services has not faded either. It is important that the city's resources are managed efficiently and that services are provided in the most efficient and cost effective manner."

The full report is available on the Comptroller's web site at www.comptroller.nyc.gov.

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