New York City Cash Balance Projection March 2023

On December 1, 2023, New York City’s unrestricted cash balance reached a seasonal low of $3.966 billion, compared to $1.338 billion in FY22 and $2.143 billion in FY21.  FY23 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.[1] See a further discussion of the City’s long-term reserves in the November economic newsletter.

Since the beginning of December, a gap began to develop between the FY23 and FY22 cash balances, as shown in the chart below. In November 2023 the City received $1.5 billion in personal income tax, twice as much as at the same time last year.  The same month, the City also received almost $2 billion in capital transfers, compared to $492 million in November, 2021. The gap further increased during the second half of December, due to the incoming real estate tax receipts.  December and January property tax receipts combined were about $930 million higher than the prior year. On January 13, 2023, the cash balance reached $15.569 billion, the highest cash balance on record.  Then, on January 25th, 2023, the City received $1.7 billion in new Pass Through Entity Tax (PTET).[2] The PTET is an optional tax that partnerships or New York S corporations may annually elect to pay on certain income. The intention of PTET is to mitigate the effect of the federal SALT cap for individual owners of pass-through entities.  The PTET is intended to be revenue neutral but currently reflects as an increase against the cash balance at the same time last year.  On February 28, 2023, the cash balance measured $11.124 billion, compared to $5.114 billion last year.  During the first 8 months of FY 2023, cash balances averaged $9.541 billion, versus $7.386 billion during the same period last year.

The accompanying updated projection outlines expected cash balances in the NYC central treasury from March 1, 2023 to June 30, 2023 and incorporates guidance provided in the January 2023 Financial Plan.

NYC Projected Cash Balances ($ in Millions)

We project that cash flow balances will average $10.517 billion during the next four months, compared to $7.787 billion in FY22, $9.552 billion in FY21, $6.136 billion in FY20.

Our forecast shows that cash balances will exceed last year’s figures from the beginning of March to the end of May but fall in June due to the recently reached collective bargaining agreement with DC 37.

On January 17, 2022, DC 37 reached a tentative contract agreement with NYC.  The union represents about 90,000 workers, a quarter of the city’s unionized workforce. The agreement is retroactive to May 26, 2021 and includes raises of 3% for the first four years, 3.25% in the fifth year, and gives every member a $3,000 signing bonus.  Our forecast assumes that the City will pay out the signing bonus and the retroactive salary increases for DC37 before the year-end. Other contracts will likely follow beyond this forecast period.

Last June, the City benefited from unprecedented amount of Federal and State aid: $8.9 billion, in part due to Covid-related stimulus funding. On June 6th, the City received $2.1 billion in the Coronavirus State and Local Recovery Funds (SLFRF), a part of the American Rescue Plan Act of 2021. The combination of the retroactive labor payments with the decrease in Federal funding will result in cash balances moving closer to the prior year’s by the end of FY23.

This year’s prepayment is currently budgeted at $2.166 billion, but we expect that this number will be higher.  Last year’s prepayment equaled $6.114 billion.  In addition, this year’s contribution to the RHBT will equal $2.430 billion, versus $2.710 billion last year.

Projection details are in the following pages of this document.

[1] See a further discussion of the City’s long-term reserves in https://comptroller.nyc.gov/newsroom/newsletter/new-york-by-the-numbers-monthly-economic-and-fiscal-outlook-no-71-november-15th-2022/#spotlight

[2] PTET is discussed in more detail in the PIT and PTET section of https://comptroller.nyc.gov/reports/annual-state-of-the-citys-economy-and-finances/