IBO Paints a Slightly Rosier Picture for City Budget
Tuesday, May 24, 2011
The nonpartisan Independent Budget Office is predicting slightly better news for the city than Mayor Michael Bloomberg laid out in his revised spending plan earlier this month.
In a new analysis, the IBO is forecasting an $84 million surplus for fiscal year 2012 that begins on July 1, largely because of higher income taxes from businesses, and it's projecting budget gaps that are lower than the city's own estimates for 2013 to 2015.
Bloomberg didn't dispute IBO's report on Tuesday, saying it's a very small number in a $65 billion annual budget that can be offset by a slew of uncertainties.
"The bottom line is the city does not have the kinds of money it used to have," Bloomberg said. "And we have obligations mainly because we tried to support education and because of the pension system — which is out of our control — have both skyrocketed.”
The IBO report says although the mayor has balanced the 2012 budget with spending cuts as well as a surplus from 2011 of more than $3 billion, the far smaller surplus projected for 2012 and the poor prospects of additional state and federal aid means the 2013 budget will require measures to further cut costs or raise local revenues.
The report also says while its forecast is a relatively strong one for the city, it does contain multiple risks that can significantly alter the picture, from a possible Medicaid reform on the state level and how it might shake out jobs in health care (where IBO expects to see the most job gains in the city), to the volatile oil prices due to political instability in the Middle East.
"Recoveries are always fragile or they always feel fragile. And the hardest time to forecast is when the economy is at a turning point," said IBO Director Ronnie Lowenstein. "It may be less surprising that there are differences in the forecasts because it's a time of real uncertainty."