New York City Quarterly Cash Report

Summary

The City began FY 2024 (FY24) with $12.387 billion in cash-on-hand, versus $8.159 billion at the same time last year. During the first nine months of fiscal year 2024 (FYTD24), the City’s cash balances averaged $10.827 billion, compared to $9.845 billion at the same time last year. FYTD24, receipts totaled $95.767 billion, while expenditures totaled $95.011 billion. Fiscal year to date, total receipts rose 1.5%, while expenditures increased 9.3%. As expected, the cash balance fell below the prior year for a sustained period in the third quarter but remained elevated. Both receipts and expenditures for this period were the highest amounts on record.

City revenues have continued to benefit from increasing residential property assessed values, growing business income tax payments, robust consumer spending, and the recovery in the leisure and hospitality sector. In addition, the City received almost $3.1 billion in COVID-19 pandemic relief funds from the Federal government. See a further discussion of the City’s economic and fiscal position in this Office’s recent review of the City’s Executive Budget and Financial Plan.

Expenditures were $8 billion higher than last year, through the third quarter. The growth in expenditures is mostly attributed to the higher spending on payroll and the implementation of collective bargaining agreements since last year; public assistance and other social services, including shelter for people seeking asylum and rental assistance; the timing of medical assistance payments; and spending on capital projects.

By the end of FYTD24, the cash balance stood at $13.143 billion, compared to $15.643 billion in FY23, $8.961 billion in FY22, and $12.072 billion in 2021. The current cash balance includes $1.959 billion in the Revenue Stabilization Fund (RSF), the City’s rainy-day fund. See a further discussion of the City’s long-term reserves in the Preparing for the Next Fiscal Storm and in the November 2022 economic newsletter.

Cash Balances

January 2024 – March 2024 (3Q24)

During the third quarter of FY24 (hereafter 3Q24), cash in the New York Central Treasury averaged $11.561 billion, compared to $13.310 billion in 3Q23, $6.908 billion in 3Q22, and $9.278 billion in 3Q21. Last year’s cash balances reached record high levels due to timing of the pass-through entity tax (PTET) collections and due to COVID-19 pandemic aid, as discussed in more detail in the Receipts section of this report.

July 2023 – March 2024 (FYTD24)

The City of New York began FY24 (in July 2023) with $12.387 billion in cash-on-hand, compared to $8.159 billion last year. During the first nine months of FY24, the City collected $95.767 billion in revenues and incurred $95.011 billion in expenditures, for a net gain of $756 million. FYTD24, receipts rose 1.5%, while expenditures increased 9.3%. Both revenues and expenditures were the highest FYTD amounts on record. Cash balances declined from the record highs reached in FY 2023 due to higher spending on payroll; public assistance and other social services, including shelter for people seeking asylum; medical assistance; and unreimbursed spending on capital projects.

Cash Receipts

January 2024 – March 2024 (3Q24)

Receipts at a Glance

Cash receipts in 3Q24 totaled $33.542 billion, down 9.3% versus a year ago. The City collected $20.3 billion in tax revenues in 3Q24, $1.1 billion, or 5.4%, less than during the same period last year.

Real property tax, the City’s largest revenue source, increased $605 million, or 6.9%.

Personal income and pass-through entity tax (PTET) collections decreased $1.5 billion, or 25.5%. Last year’s number included $2.2 billion in collections from the newly enacted PTET, which were offset in the following quarters. PTET is an optional tax that partnerships or New York S corporations may annually elect to pay on their income. The PTET is structured to be revenue neutral and provide a partial workaround for the $10,000 cap on the State and Local Taxes (SALT) deduction from federal individual income tax, enacted in the Tax Cuts and Jobs Act of 2017.

Total Federal and State aid declined 27.3%. Last year’s 3Q total included $2.4 billion in American Rescue Plan (ARPA) and Coronavirus Response and Relief Supplemental Appropriations (CRRSA) education grants and $588.9 million in COVID-19 FEMA reimbursement money from the Department of Homeland Security.

July 2023 – March 2024 (FYTD24)

Receipts at a Glance

Overall, FYTD24 cash receipts totaled $95.768 billion, up $1.4 billion (or 1.5%) compared to the previous year. Debt service funding is counted as a negative inflow (rather than a positive expense). In FYTD24, the City debt service funding decreased total cash revenues by $1.9 billion, $475 million more than a year ago. The other category includes capital transfers, which amounted to over $8.9 billion in FYTD24. Removing the effect of capital transfers, net cash receipts decreased 0.9%.

Taxes^[2]

Tax receipts were 1% lower versus a year ago. Real property tax receipts increased 5.2%, to $25.3 billion. The tentative assessment roll for FY24 showed the total market value of all New York City properties at $1.479 trillion, a 6.1 percent increase from FY23.

The sales tax was up 5.5% and reached $7.2 billion in FYTD24. Inflation remains one of the factors keeping sales tax growth robust. The resurgence in tourism is also boosting retail, restaurant, and entertainment businesses, contributing to consistently stronger sales tax revenues. The hotel occupancy tax grew 9.5%. The city’s seasonally adjusted hotel occupancy rate has remained in the 80-90% range, roughly on par with pre-pandemic levels, while room rates have risen above 2023 levels. The general corporation tax grew 6.3%, while the unincorporated business tax increased 11.9%.

On the other hand, combined personal income tax and PTET collections dropped 12.3%, to $11.2 billion, after peaking at $12.8 billion in FYTD23. The principal reason for this decline was a holdover from the introduction of PTET in December 2022. As discussed previously, PTET was designed as revenue neutral for NYC, but the timing of its rollout shifted revenues to the second and third quarters of FY23 while the offsetting reductions in net revenue began at the end of FY23 and continued into the first two quarter of FY24 via lower tax payments, larger refunded and City/State offset payments that true up after processing returns.

The mortgage and real property transfer taxes declined 30.2%. The decline was primarily driven by the impact of high mortgage rates on residential transactions and refinancings and continued weakness in the investment market. The commercial rent tax was 1% lower. The demand for commercial real estate remains anemic in NYC, with high vacancy rates still rising and very little growth in rental rates.

Payments in Lieu of Taxes (PILOTs) fell 52.2%. Last year’s PILOTs were elevated because payments from Hudson Yards Infrastructure Corporation (HYIC) for a total of $200 million were front-loaded. The City’s Office of Management and Budget expects to receive $325 million from HYIC in total this fiscal year.

Miscellaneous (non-tax) revenues increased 2.7%, or $163 million. Higher interest income (+$261 million) drove most of the growth. Water and sewer charges increased $81 million, while income from licenses, privileges, franchises, and other governmental charges rose $92 million.

FYTD24, the City received almost $22.5 billion in Federal and State Aid, $487 million less than last year but still very high by historical standards. In FYTD24, the City received $3.1 billion in COVID-19-related stimulus and COVID-19 FEMA reimbursement funds, compared to $4.5 billion at the same time last year.

Cash Expenditures (Including Capital)

January 2024 – March 2024 (3Q24)

Cash Expenditures at a Glance

Cash expenditures, including capital, totaled $31.690 billion in 3Q24, averaging $511 million daily. During the same period last year, cash expenditures totaled $29.631 billion and averaged $478 million daily. Gross payroll increased 10.8%, primarily due to recent labor agreements with the City unions; spending on fringe benefits was 7.8% down, due to timing of payments. Fringe benefits include pension contributions, social security, health plan, and supplemental (union-related) welfare benefits.

Non-personnel expenditures increased 8.1% compared to the same period last year.

Medical assistance jumped the most, up 27.6%, due to timing of Supplemental Medicaid payments, which are large and lumpy . Public assistance and other social services (where much of the spending on asylum seekers sits) rose 8.5%. Vendor and other service spending went up 4.9%.

When the impact of capital expenditures is removed, 3Q24 net expenditures reflect an increase of 4.6% versus a year ago.

“All Other” Spending

July 2023 – March 2024 (FYTD24)

Cash Expenditures at a Glance

FYTD24 total expenditures increased 9.3% versus a year ago. Gross payroll increased 15.8%, while spending on fringe benefits was unchanged. Gross payroll grew due to new collective bargaining agreements reached with the City unions. Also, higher headcount and growing overtime spending contributed to the higher gross payroll expenditures this fiscal year. As of March 2024, the City employed 284,158 full-time employees, versus 280,684 a year ago. Even though the City’s full-time workforce grew and the vacancy rate came down from the prior year, the City’s vacancy rate remains relatively high by historical standards at 5.5%. In FYTD24, the City spent $2.1 billion on overtime, including uniformed and civilian, 16.2% more than in FYTD23.

Non-personnel outflows rose 5.7%, to $36.1 billion, with medical assistance rising 17.5% and public assistance and other social services increasing 15.4%.

Public assistance and other social services mostly consist of cash and housing assistance, homeless shelter and services, foster care, and early learning programs for children from low-income families.

Caseloads for cash assistance increased after the expiration of the COVID-19-related unemployment insurance extensions, with expenditures rising from $619 million in FYTD22 to $858 million in FYTD23 to almost $1.2 billion in FYTD24. Asylum seekers that have applied for asylum but are still waiting for their work permit were made eligible for safety net assistance in May 2023. At the same time, combined spending at the Department of Homeless Services on tier II homeless shelters for families and sanctuary shelters for asylum seekers increased $504 million from a year ago. Spending on childcare for low-income children rose $118 million, while spending on contractual foster care services was up $43 million.

Vendor and other spending increased 1.3%. The biggest reason for the increase was that NYC allocated about $766 million to special reserves for judgements and claims in FYTD24, compared to $222 million in FYTD23.

Spending on NYC Health + Hospitals (H+H), which is included in the “All other” spending category, increased by $109 million. The public hospital system is now receiving less funding from the City for its COVID-19 related efforts. However, beginning in 3Q23, H+H began receiving funding from the City for managing Humanitarian Emergency Response and Relief Centers (HERRCs) that serve newly arrived asylum seekers. So far this fiscal year, H+H received $1.1 billion in HERRCs funding. The number of individuals seeking asylum in H+H-managed facilities has increased from a monthly average of 618 in October 2022 to 25,342 in April 2024.

“All Other” spending grew 17.2%, mostly due to the increase in City-funded capital spending. When the impact of capital expenditures is removed, FYTD24 net expenditures were up 7.1% versus a year ago.

Capital Expenditures

City-funded capital expenditures are primarily financed from the proceeds of General Obligation (GO), New York City Transitional Finance Authority (TFA), and New York City Municipal Water Finance Authority (NY Water) debt. Non-City funded capital expenditures for education are financed by TFA Building Aid bonds. Capital expenditures are initially paid from the New York City Central Treasury and then reimbursed from various capital accounts and State sources.

January 2024 – March 2024 (3Q24)

Capital expenditures totaled $3.680 billion in 3Q24, up 29.1% from $2.850 billion in 3Q23. City-funded capital expenditures jumped 30.2%, while non-City-funded capital expenditures increased 10.9%.

During 3Q24, reimbursements trailed eligible capital expenditures, decreasing the City’s cash balance by $586 million. Table 13 shows that eligible capital expenditures exceeded reimbursements in seven out of the last ten 3Q periods (FY15 -FY24), resulting in a total drain of $3.737 billion to the Central Treasury.

July 2023 – March 2024 (FYTD24)

FYTD24, total capital expenditures increased 30.6% versus a year ago. City-funded capital expenditures grew 34.1%, while non-City-funded capital expenditures declined 15.9%.

FYTD24 eligible capital expenditures exceeded reimbursements by $1.212 billion, or 11.9%. Over the long term, capital expenditures and reimbursements should offset each other. Notably, over the past ten FYTD periods reimbursements were higher than expenditures in the first 4 out of 10 years, and less than expenditures in the last four out of ten years,during the first three-quarter period of each fiscal year.

Financings

In FY24, the City plans to issue $10.3 billion in bonds.  The City issued $7.4 billion in GO and TFA FTS bonds for new money capital purposes in FYTD24, leaving $2.9 billion of issuance planned for the remainder of the current fiscal year.

FY24 New Money GO, TFA FTS, and TFA BARBs Issuance

Three bond sales closed in 3Q24.  The first transaction was a refunding sale of over $1.4 billion of tax-exempt fixed rate TFA FTS bonds. The refunding achieved $172 million in budget savings, or about $158 million on a present-value basis.

The second transaction was a new money sale of nearly $1.3 billion of TFA FTS bonds.   The transaction included $1 billion of tax-exempt fixed rate bonds and $250 million of taxable fixed rate bonds.

The third transaction was a new money sale of $1.2 billion of tax-exempt fixed rate GO bonds.

As shown in the following chart, in FYTD24 the City issued $8.9 billion in new money and refunding bonds, compared to $9.9 billion at the same time last year.