New York City Cash Balance Projection December 2022

New York City is starting December 1, 2022 with $4.275 billion in cash, above last year’s figure by $2.628 billion. The cash balance includes $1.954 billion in the Revenue Stabilization Fund (RSF), the City’s rainy-day fund. The majority of funds, $1.455 billion, were allocated to the RSF in fiscal year 2022. See a further discussion of the City’s long-term reserves in the November economic newsletter.

The City’s cash balances continue to benefit from growth in employment and strong consumption. Tax revenues for the first quarter of FY 2023 grew 9% from the same quarter last year. The City collected almost $9 billion in property tax in 1Q23, an increase of $705 million from last year, with rising property values and new construction driving the growth. Personal income tax and business taxes grew 1.9% and 4.8%, respectively. The sales tax grew 17.8%, helped by higher prices and from rebounding activity in the tourism and hospitality sectors. The real property transfer tax and the mortgage recording tax together grew 11.2%. Real property transaction taxes most likely peaked in 1Q23, as higher interest rates are likely to affect both sales and refinancing activity in the future.

During the last 12 months, cash balances have averaged $7.655 billion, compared to $8.541 billion at the same time last year.

For a full description of the last quarter, please see the accompanying report.

Projected Cash Balances (December 1st – March 31st)

The updated projection below outlines expected cash balances in the NYC central treasury from December 1, 2022 to March 31, 2022, incorporating guidance provided in the FY23 November Plan.
The City’s cash position remains strong. December 2022-March 2023 average cash balances are expected to be higher than average balances in the same time periods in FYs 2020-2022.

Projected Cash Balances

We expect there will be sufficient cash-on-hand during the leanest part of the year. Our projection shows that, as in previous years, the annual cash balance low will occur in early December and will measure between $3.8 billion and $4.3 billion. The seasonal low measured $1.338 billion in FY 2022, $2.143 billion in FY 2021, and $1.769 billion in FY 2020.

The forecast also includes the recently enacted Pass-through Entity Tax (PTET) that is expected to temporarily increase the cash balance. This optional tax allows taxpayers with pass-through income from New York City partnerships and New York S corporations to pay the PTET and receive a commensurate credit on their New York City personal income tax. The PTET was implemented to counteract the loss of federal personal income tax deductions for state and local taxes and is expected to be revenue neutral for the City. The City expects to collect $1.5 billion in PTET in January 2022 and will see the offsetting reduction in personal income tax receipts later in the fiscal year.

The CARES ACT allowed employers and self-employed people to put off paying the employer’s share of their eligible Social Security tax liability, normally 6.2% of wages. The City deferred payment of payroll taxes from April 2020 to December 2020, saving about $1.35 billion. The City repaid half of the deferred amount on January 3, 2022, and the other half is due on January 3, 2023.

Spending on NYC Health + Hospitals (H+H) for its COVID response effort is expected to slow, as the public hospital’s provision of testing, tracing and isolation rooms on behalf of the City ramp down. NYC ended its hotel isolation program in March 2022 and its contract tracing program in April 2022.

The City is also expected to spend more on vendor payments, public assistance and other social services. Rising inflation and the end of pandemic unemployment insurance partly underlie the higher outlays in these categories. In addition, the City is allocating funds to provide shelter, food, legal aid, and other social services to recently arrived asylum-seekers. H+H will receive funds for its operation of the City’s Humanitarian Emergency Response and Relief Centers (HERRCs).

Overall, cash flow balances are estimated to average $9.248 billion during the next four months compared to $5.774 billion during the same time last year.

Projection details are in the following pages of this document.