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New York City Comptroller William C. Thompson, Jr. today released his analysis of the fiscal year 2004 Executive Budget. The report concludes that after reviewing the Mayor's submission, and accounting for the impact of the budget recently enacted by the State Legislature, the fiscal year 2004 Executive Budget contains over $600 million in risks. The report also finds that the City faces a $2.9 billion deficit in fiscal year 2005, which begins July 1, 2004.

"We are by no means out of the woods, " Comptroller Thompson said in remarks prepared for delivery to the City Council's Finance Committee this afternoon. "The fiscal year 2004 Executive Budget still contains $618 million in risks. The level of risk that remains in the budget may appear comparatively low in light of the massive deficit the City just closed. It is, however, because of the dramatic steps we have already taken that those risks still loom large. It simply will not be easy to find the additional $618 million if my projections are correct."

The assumptions questioned by the Comptroller's analysis include underestimated overtime ($172 million) and social service ($70 million) costs and overestimated revenues ($139 million) from sales, income and business taxes.

"These risks are consistent with my view of the prospects for both the national and city economies, which is more conservative than that of the Mayor," the Comptroller said. "In calendar year 2003, my office is projecting a decline in Gross City Product of 3.7 percent. While we project meager GCP growth of 0.8 percent in 2004, the Mayor is forecasting growth of 2.9 percent. My forecast predicts a longer delay between the U.S. and local recovery than the Mayor does."

"These risks will persist into the next Fiscal Year as well. We project a $2.9 billion deficit in fiscal year 2005," Thompson said.

"We believe the City overestimates tax revenues in 2005 by 113 million dollars, and underestimates the cost of overtime by 170 million dollars and public assistance and Medicaid costs by 70 million dollars. We also question the City's assumption that it will collect 583 million dollars in rent for the airports and 600 million dollars from tolling the East River bridges," the Comptroller said.

"The fact is we must continue to seek out recurring solutions because our budget problems are not yet behind us. For that reason, it is imperative that the ongoing negotiations between the Mayor and the municipal unions produce manageable and real savings for the City."

At the conclusion of his testimony, Thompson said: "Only as a result collective action taken by both legislative and City leaders were we able to address our most immediate and pressing problems. That spirit of cooperation, coupled with a continued sensitivity to fairness, must persist in the coming months if we are to overcome our next set of challenges."

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