Budget 360 overview tent version


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Budget 360 overview tent version

  1. 1. New York City “Budget 360” Overview FY 2014 through FY 2017 November 2013 Prepared for 1
  2. 2. Budget Questions 1. 2. 3. 4. 5. As this period of transition begins for the new Mayor, what do you wish for New York City? How can the Mayor help achieve that? If you could have the Mayor add anything to your community to make it better, what would it be? And knowing that resources are scarce, what would you be willing to trade to make it happen? How would you suggest the Mayor raise more funds in order to meet the needs of the City? Do you support raising taxes? If you had $100 million of the City budget to spend as you saw fit for the public, what would you prioritize? How much do you think a fire engine costs? What do you think costs more: a fire engine, or an after school program? Do you think that's a meaningful comparison or fair question? 2
  3. 3. Where Does The Money Come From? Estimated Revenues NYC Budget 2013 Total $69 billion Federal Categorical Grants 10% Property Tax 27% State Categorial Grants 17% Other Non-Tax Revenues 10% Personal Income Tax 12% Other Taxes 5% General Sales Tax 9% Business Income Taxes 8% Real Estate-related Taxes 2% SOURCES: IBO 3
  4. 4. Where Does The Money Come From? Estimated Revenues NYC Budget 2013 Total $69 billion State and Federal Aid 27% Taxes 63% Other Non-Tax Revenues 10% SOURCES: IBO 4
  5. 5. Where Does The Money Go? Estimated Spending NYC Budget 2013 Total $69 billion General Government 8% Debt Service 9% Education 28% Pension & Fringe Benefits 17% Recreation & Cultural 1% Health, Sanitation & Environmental Protection 6% Social Services 19% Police, Fire & Corrections 10% Transportation & Housing 2% SOURCES: IBO 5
  6. 6. The Capital Budget: Where Does the Money Go? Capital Commitment Plan 2013 – 2016 (All Funds) Total $34.4 billion Transportation 15% Education 26% Sanitation 4% Public Safety 6% Parks, Libraries & Culturals 8% Environmental Protection 20% Housing & Economic Development 9% General Services 8% Health and Social Services 4% SOURCES: IBO; Fiscal Year 2013 Capital Commitment Plan (October 2012) NOTE: Plan categories defined by IBO. General Services includes public buildings and real estate, and citywide equipment purchases. 6
  7. 7. New York City Charter prescribes a process and due dates for producing the upcoming fiscal year’s budget January February March By January 16th First Hearings By March 25th •The Mayor must submit a Preliminary Budget to the City Council •It is customary for newly elected Mayors to be afforded additional time to produce their first financial plan, often 2 additional weeks. •The City Council holds public hearings on the Preliminary Budget and represe ntatives from the Borough Boards as well as any member of the public who wishes have the opportunity to submit testimony •The Council issues a report on its findings and recommend ations April By April 26th •The Mayor must submit a proposed Executive Budget to the Council and also provides a Budget Message to share high level comments May Second Hearings •The City Council again conducts public hearings June July September Negotiations By June 15th Next Five Days •The Mayor’s Office of Manageme nt and Budget and the City Council's Finance Division negotiate to come up with an agreed upon balanced budget •The Council votes on the budget and any proposed recommend ations by the Borough Presidents •The Mayor has the opportunity to veto any increases, a dditions, te rms or conditions the Council has made to the budget but cannot alter any decreases the Council has made to the budget. The Council can override a mayoral veto by a two-thirds vote of all Members October After the five days •The budget becomes the Adopted Budget November In November •In addition to the chartermandated process, the Mayor, in most years, prod uces a public budget modificatio n in November to move money between agencies and make other shifts in revenues and expenses as needed 7
  8. 8. Goals of the “Budget 360” Review the Mayor’s budget and financial plan for FY2014-2017 & analyses by key institutions to get a 360-degree view of the City’s financial condition, including: Projected gaps/surpluses for each year Drivers of projected gaps/surpluses for each year Identification of additional budget risks 8
  9. 9. Roles of Institutions Surveyed NOTE: City Council is not included due to its charter-mandated institutional role in the budget process (see budget calendar) • State Comptroller • Mayor’s Office & Office of serves as the State’s chief fiscal Management and Budget (OMB) and auditing officer produces and updates Preliminary, Executive, and Adopted • Financial Control Board reviews New York City financial budgets plans since created in 1975 by • City Comptroller an act of state legislature serves as the City’s chief fiscal and • Citizens Budget Commission auditing officer provides the public with • Independent Budget Office (IBO) nonpartisan analysis of New provides nonpartisan information York City and State financial about the city budget and tax revenues management as an independent city-funded agency 9
  10. 10. The Mayor cites the following budget drivers with general agreement from institutions surveyed… • Tax Revenue Estimates – Highly dependent on economic forecasting • Increased Spending on Education – A combination of higher government priority & city supporting higher percentage of total cost • Debt Service – Debt service growth is projected to outpace growth in local tax revenues; estimated increase from 12.8% of local tax revenues in FY 2013 to 15% by FY 2017 – Increased by $2.2 billion, or 59%, since 2002 • Non-controllable Expenses – Primarily made up of pensions, fringe benefits, and Medicaid – Grown by $13.3 billion, or 133%, since 2002, compared to controllable expenses (excluding Education) which have grown by $4.3 billion or 37%, at the rate of inflation – Estimated increase from 44% of city revenues in FY 2013 to 48% by FY 2017 – Health Insurance and Pensions greatly increasing 10
  11. 11. …But budget projections differ between the Mayor’s 4-year plan vs. other institutions surveyed FY 2014 - 2017 Projected Gap or Surplus NOTE: Gap estimates do not include labor negotiation risk estimates (removed from City Comptroller’s estimate) 1,500 1,000 Dollars In Millions 500 0 (500) (1,000) (1,500) (2,000) (2,500) (3,000) FY 2014 FY 2015 FY 2016 FY 2017 $0 ($1,965) ($1,769) ($1,382) Independent Budget Office $476 ($930) $157 $1,065 City Comptroller $624 ($1,736) ($986) ($205) State Comptroller $238 ($2,290) ($2,054) ($1,707) Financial Control Board ($102) ($2,579) ($2,379) ($2,032) Mayor 11
  12. 12. Differences in Economic Forecasting & Related Tax Revenues are the Primary Drivers of Differences Between Mayor's Projections vs. the IBO & City Comptroller $3,000 $2,500 In Millions $2,000 $1,500 $1,000 $500 $0 -$500 City Cmpt '14 Property Tax IBO '14 Personal Income Tax City Cmpt '15 Business Taxes IBO '15 Sales Tax City Cmpt '16 IBO '16 Real-Estate-Related Taxes City Cmpt '17 IBO '17 All Other, Audit 12 STAR
  13. 13. Other Sources of Differences between the Mayor & Institutions Surveyed (Excluding Tax Revenue) 400 200 Dollars in Millions 0 -200 -400 -600 -800 City Cmpt State '14 Cmpt '14 FCB '14 City Cmpt State '15 Cmpt '15 FCB '15 City Cmpt State '16 Cmpt '16 FCB '16 City Cmpt State '17 Cmpt '17 Taxi Medallion Sale Agency Actions DoE Medicaid Reimbursement Uniformed Service Overtime Overtime Expenses Police Overtime PEG Judgments and Claims Debt Service Pension Asset Gains FCB '17 13
  14. 14. Settlement of labor contracts could increase projected costs substantially 14
  15. 15. Other risks include federal budget cuts and infrastructure needs 15
  16. 16. Appendices 16
  17. 17. FY 2014 - 2017 Differences From Mayor’s Estimated Gap In Millions 17
  18. 18. Differences From the Mayor in Tax Revenue Estimates In Millions 18
  19. 19. Sources of Differences between the Mayor & Institutions Surveyed (Excluding Tax Revenue) In Millions 19
  20. 20. Risks to Taxi Medallion Revenue Assumptions • New York City plans to increase mobility for disabled residents and everyone traveling outside the central business district in Manhattan – 2,000 new taxicab medallions for disability accessible cabs – up to 18,000 new hail licenses allowing livery cars to make street pick ups, 20% for accessible vehicles • These plans were ruled constitutional by the New York State Court of Appeals on June 6, 2013 after a year-long legal battle • There are requirements the City must meet, including an environmental review and submission of a disabled accessibility plan which could delay or derail these sales • The nearly $1.5 billion the Adopted Budget assumes in revenues over the next four years may be at risk ($300 million in FY 14, $400 million in FY 15, $360 million in FY 16, $400 million in FY 17) 20