New York City Cash Balance Projection June 1, 2021

Last year the Covid-19 virus led to the shutdown of non-essential businesses and wiped out hundreds of thousands of jobs in New York City.  Income and sales taxes, property transaction taxes, tourism-related revenue, licenses, fees, and permits, and fines and forfeitures all plunged as a result of the pandemic.    One year later, the City is slowly recovering, thanks to vaccination efforts and the infusion of federal aid.  The City is seeing higher corporate and personal income tax receipts. Tourists are coming back to the City, as museums and many performance venues have opened up.  As of May 28, 2021, the cash balance stands at $9.996 billion, compared to $5.562 billion at the same time last year.  Thus far in FY 2021, cash balances averaged $8.177 billion, versus $6.359 billion during the same period last year.  On May 19th, the City’s cash balances benefited from $2.129 billion in federal aid from the recently passed relief package, the American Rescue Plan Act.

The accompanying updated projection outlines expected cash balances in the NYC central treasury from June 1 to September 30, 2021, and incorporates guidance provided in the FY22 Executive Budget.

Projected Cash Balances (June 1st – September 30st)

The City’s cashflow is healthy in the near term.  The City has sufficient cash to sustain its operations, and does not anticipate issuing deficit bonds or notes in FY 2022.  The projection indicates a fiscal year-end (June 30, 2021) closing balance in the range of $8.1 billion to $9.3 billion, compared to $6.6 billion in FY20, $7.1 billion in FY19, $9.4 billion in FY18, $9.3 billion in FY17, and $11.7 billion in FY16.

Annual retiree health insurance cost is paid out of the RHBT. Typically, the City would remit the cost of retiree health insurance to the RHBT in June. In FY20, faced with the fiscal challenges due to the COVID-19 pandemic, the City reduced its remittance to the RBHT by $1 billion and paid only $1.680 billion into the fund.  This year, the Executive budget assumes that the City will pay $2.729 billion into the RHBT, and we have modeled this estimate into our model.

The Executive budget also projects a prepayment of debt service in the amount of $3.628 billion, but the final prepayment is likely to be closer to $4 billion. The prepayment equaled $3.819 billion at the end of FY20.

Last year the City froze various capital projects to save money during the financial crunch.  In March, 2020, the City restarted its capital program, and the projection anticipates higher capital spending going forward.   Last year The City also reached agreements in FY 2021 with the United Federation of Teachers, District Council 37, and other smaller unions, deferring certain payments until FY 2022.  During the first three months of FY 2022, the City will repay over $500 million to the unions.

We project that cash balances will average $9.043 billion during the next four months, compared to $8.074 billion during the same time last year.

Projection details are in the following pages of this document.