Mayor Michael R. Bloomberg announced his $59.0 billion budget plan for Fiscal Year 2008 and presented his updated four-year financial plan for New York City. In preparation for a possible economic slowdown, the mayor's proposal focuses on long-term planning that will help meet budget gaps through FY 2010, and new initiatives to maintain and advance the city's financial health.
"Over the past five years, a rigorous policy of fiscal prudence has guided our recovery, and has earned the city its best ever bond rating," said Mayor Bloomberg. "We're applying that same good sense to using this year's exceptional revenues. We won't squander what we have on politically popular giveaways that would jeopardize our future. Instead we'll protect that future, both by wisely reducing our looming liabilities, and also by encouraging continued economic growth."
Tax revenues continue to grow beyond expectations, rendering a projected surplus of $4.4 billion for the current fiscal year. As announced in his preliminary budget proposal in January, the mayor plans to return $1.25 billion to New Yorkers in business, sales and property taxes.
The Independent Budget Office (IBO), a bipartisan agency that analyzes the city's financial health, finds that the most urgent issue facing the mayor and City Council in the near term is how to effectively use the anticipated $4.4 billion surplus.
The economy remains strong but, according to IBO Director Ronnie Lowenstein, as the local real estate market slows, transfer taxes, which accounted for a large portion of the revenue, are expected to decline in 2008. IBO predicts that with the economic slowdown, weaker tax revenue growth will not be enough to keep up with increased spending in other areas. If the mayor's tax reductions are fully endorsed, IBO expects that tax revenues will to drop 2.3 percent in 2008.