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42-11 _Preliminary Budget_

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42-11 _Preliminary Budget_ Powered By Docstoc
					                                    THE CITY OF NEW YORK
                                     O F F IC EO F TH E M AY O R
                                       N E W Y O R K , NY 1 0 0 0 7

                                                           FOR IMMEDIATE RELEASE
                                                           February 2, 2012
                                                           No. 42
                                                           www.nyc.gov

          MAYOR BLOOMBERG PRESENTS FY 2013 PRELIMINARY BUDGET

     Balanced Budget with No Tax Increases Due to Prudent Planning and Spending Restraint

        Mayor Michael R. Bloomberg today presented a Fiscal Year (FY) 2013 Preliminary Budget
and an updated four-year financial plan. The Mayor outlined a plan that achieves a balanced budget
– closing a $2 billion budget gap without tax increases – which is made possible by the City’s years
of prudent planning and spending restraint. The Preliminary Budget reduces year-over-year
controllable City expenditures, but expenses that are not fully controlled by the City – primarily
pensions – continue to rise and continue to make less funding available for City services. The
Preliminary Budget relies on $6 billion in savings for FY 2013 generated though eleven rounds of
deficit closing actions taken by City agencies since 2007.

        “Cities across the country have struggled to keep their heads above water – laying off
teachers, police officers, or firefighters, with a few even having to declare bankruptcy,” said Mayor
Bloomberg. “We’ve avoided those painful steps, because we spent years planning ahead, made
government more efficient and saved for a rainy day. The budget we are presenting today is a
balanced budget – with no tax increases, no layoffs of teachers or uniformed workers and no
walking away from our long-term investments. It is a responsible budget that continues to make
responsible spending cuts, while protecting the core services and investments that have helped our
city to weather the national recession better than most other places. But we face a ticking time bomb
in rising pension costs. The only way we will be able to continue to pay for top-quality public
schools, fire and police protection, and other services New Yorkers need, and also to protect the
very financial security of the pension system City workers rely on, is to adopt real pension reform.”

        The Preliminary Budget is a $68.7 billion plan, with a City-funded portion of $50.7 million.
The Preliminary Budget reduces year-over-year controllable City expenditures by $437 million, a
1.9 percent decline from FY 2012. Expenses not fully controlled by the City – primarily pensions,
health care, Medicaid and debt service – rise by $2 billion, a 7.5 percent increase from FY 2012.

       The City will spend less in virtually every major area of controllable spending except for
education, where City funding will again increase.



                                                  (more)
                                   The City’s Improving Economy

        Tax revenues continue to rebound as the city’s economy continues a gradual recovery. New
York City has regained 65 percent of the private sector jobs lost during the recession, while the rest
of the country has only gained back 36 percent. The city now is expected to recover all jobs lost
during the recession by the end of 2013, one year sooner than the rest of the country.

                                              Pensions

       The Preliminary Budget assumes the City’s Independent Actuary will make a series of
changes to the actuarial assumptions that determine the City’s pension bill, including an expected
change in the assumed rate of return from 8.0 percent to 7.0 percent. The Preliminary Budget
estimates the changes will increase the City’s pension costs by $575 million in FY 2012 and FY
2013 – bringing the City total pension costs to $7.8 billion in FY 2012 and $8.0 billion in FY 2013.
The Preliminary Budget funds these increased costs by utilizing dollars the City specifically
reserved over the last two years in anticipation of the actuary’s actions and the increased costs. The
City had reserved $1 billion in FY 2012 and $1 billion in FY 2013 in anticipation of the actuary’s
changes and the City will use the reminder of the reserve funding to help close the budget gap.

       Since FY 2002, City funded pension costs have now increased by nearly 500 percent, rising
from $1.3 billion to $8.0 billion in FY 2013.

        The City’s pension funds have produced an average return of 5.6 percent over the last ten
years and pensions systems across the country have reduced their assumed rate of return in recent
years. Pensions systems in Delaware, the District of Columbia, Illinois, Indiana, Virginia,
Wisconsin and more have recently reduced their assumed rate of return.

                                          Capital Spending

         The Preliminary Budget increases the City’s five-year capital construction program to $39.4
billion, up nearly $700 million.
                                             Headcount

      The City’s full-time and full-time equivalent headcount in FY 2013 Preliminary Budget is
291,326, a reduction of 20,478 positions (6.6 percent) since the start of the Bloomberg
Administration. The City’s December 31, 2001 full-time and full-time equivalent headcount was
311,804.
                                           Out-Year Gaps

       The Mayor also announced today that while the Preliminary Budget for FY 2013 presents a
balanced budget, New York City will still face budget gaps of approximately $3.0 billion in FY
2014, $3.5 billion in FY 2015 and $3.4 billion FY 2016.

                                                 -30-

            Contact:        Stu Loeser / Marc La Vorgna                   (212) 788-2958

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