Release #008-00

Contact:

Sunny Mindel / Curt Ritter (212) 788-2958

See archived video of the event Read Summary Book and Volume I

Mayor Rudolph W. Giuliani today outlined his Financial Plan for Fiscal Years (FY) 2000-2004. The Plan reflects the Administration's continued fiscal priorities of cutting taxes to stimulate continued record job growth and economic development; increasing spending in targeted areas, reducing City funded spending year-to-year by
1%, while maintaining overall City spending to less than the rate of inflation; and reducing the out-year gaps.

The Plan reflects the Administration's success in reducing taxes by $2.3 billion since 1994 -- more than any administration in the history of the City. Combined with the more than $2 billion in proposed tax cuts, this Plan will bring the total value of the Mayor's tax reduction program to $4.5 billion annually by 2004. The Plan projects a surplus for FY2000 of $2.2 billion, the largest surplus in the City's history. This is the fourth year in a row that the New York City four-year Financial Plan contains a surplus of more than $1 billion. In addition, the Plan continues the policy of two year Budget Stabilization Accounts for FY2001 and FY2002, in the event that the City is faced with an economic slowdown.

"New York City is stronger today than it has been in decades," said Mayor Giuliani. "In 1994, the City was faced with its greatest fiscal crisis since the 1970s.
Since then, instead of being faced with a budget deficit, we have a budget surplus.

Today New York City is a leader in preparing responsible budgets and is an example for cities around the nation that an adherence to the basic principles of fiscal stability and accountability can bring a city out of the red.

"The cornerstone of this success has been our ability to control the growth of spending and keep it under the rate of inflation. Since 1994, the City has lowered projected spending by $16 billion. Following the creation of a Budget Stabilization Account three years ago, the City continues to be prepared for any downturns or slowdowns in the economy. We will not repeat the mistakes of the past: 73 percent of this money will be used to reduce the out-year gaps; 13 percent will fund targeted educational, public safety and other initiatives; and an additional 14 percent will be used to reduce taxes even further," the Mayor continued.

"Today, as we begin a new millennium, New York City is a better place to live. Our City's economy is stronger then it has been in decades. Our streets are safer and cleaner than they have been in a generation. During this past year New York City had its strongest private sector job growth, surpassing last year's record, which was the City's best performance in more than 40 years. Our City's unemployment is at its lowest level in more than a decade, our welfare rolls have been cut nearly in half since 1995 and our continued efforts to cut taxes over the past six years have been more successful than those of any other administration in the history of the City. Because of these accomplishments, New Yorkers today are more optimistic about the future of their City than they have been in many years," the Mayor concluded.

OUT-YEAR GAPS

In order to continue to reduce the out-year gaps, the City has imposed fiscal discipline on the rate of growth of City spending which has, over the last seven years, been held at the rate of inflation. The Plan also contains a two year Budget Stabilization Account for FY2001 and FY2002, in the event that the City is faced with an economic slowdown.

LABOR POLICY

Six years ago the City's Financial Plan made no provision for a new labor settlement despite the fact that union agreements had expired. This Plan articulates a strategy in which the work force can be rewarded by providing for a Merit Pay Plan. Employees will receive increases based upon performance evaluations. This is a departure from an old system that encouraged mediocrity and gave increases across-the-board. Employees will be expected to be more productive; therefore, in addition to funds provided in the plan, reductions in employee fringe benefit costs or increased labor productivity will provide the necessary funding for a Merit Pay Plan.

JOB GROWTH

In 1999, New York City experienced its largest single-year private sector job growth on record with the creation of more than 81,100 jobs - surpassing last year's record year, when the City created 77,400 private sector jobs. During this Administration, the City has experienced the strongest six-year job gain on record, with the creation of more than 379,000 new jobs since December 1993, compared to the loss of over 320,000 jobs during the last recession in the early 1990s. In 1999 New York City's private sector employment recorded a growth of 2.7%, outpacing the rest of the country's employment, which grew at 2.3%. Since 1993 New York City has also outpaced the rest of the State with a job growth of 12.8%, significantly more than the rest of the State's job growth of 7.7%. In addition, the City's unemployment rate reached its lowest level in a decade when it fell to 6.0% in December. The City's unemployment rate is down more than four percentage points since December 1993, when unemployment was 10.2%.

TAX CUTS

Since 1994, the Mayor has reduced taxes by $2.3 billion -- more than any administration in the history of the City. This Plan proposes a substantial new tax reduction program valued at more than $2 billion.

Among the tax cuts proposed in this Financial Plan are:

• Termination of the 14% Personal Income Tax Surcharge;
  
• Elimination of the Commercial Rent Tax;
  
• Extension of real property tax relief for Co-op and Condo owners;
  
• Elimination of the Mortgage Recording Tax for first time homebuyers;
  
• Increase in resident UBT/PIT credit;
  
• Sub-chapter S-Corporation tax relief;
  
• Repeal of the $2 flat fee tax on hotel rooms over $40;
  
• Reduction in City business tax rates and the utility tax; and,
  
• Tax incentives for the Borough Commercial Revitalization Program.

PUBLIC SAFETY

This Plan demonstrates the Administration's commitment to continuing to improve the quality of life for all New Yorkers. This Plan calls for the creation of several new public safety initiatives, among them:

• Equip every FDNY Ladder Company with infrared cameras;
  
• Establish a new DNA laboratory with the ability to test all criminals arrested for a printable offence;
  
• Increase number of school safety officers to ensure a safe learning, teaching and working environment;
• Expand TRACK (Truancy Reduction Alliance to Contact Kids);
  
• Implement the Young People at Risk Strategy to remove gangs and related problems from City schools;
  
• Implement Domestic Violence Prevention Strategy to enhance the ability to police domestic crimes;
  
• Enact Senior Safety Strategy to further protect City senior citizens from crime;
  
• Implement Aggressive Driving Initiative to reduce fatalities on City streets; and,
  
• Develop new drug enforcement initiative to maintain crime reductions.

EDUCATION INITIATIVES

The Plan will continue to meet the educational needs of New York City's children. This Plan will provide the Board of Education (BOE) with $6.15 billion -- its largest Capital Plan ever. As a result of the policy to end social promotion, 320,000 students are expected to attend summer school this July. This Plan provides a $64 million increase in summer school funding, bringing total funding to $160 million. To assist the BOE in managing a program of this size, at least 20 percent of the summer program should be delivered through contracts with private education companies, private schools and colleges using the funding provided. These providers generally work with and train BOE personnel to administer intensive remedial course work.

The Plan also calls for continued funding of several educational initiatives to ensure their continued success, among them:

• Private Management - The State Board of Regents has placed 97 failing BOE schools on the SURR (Schools Under Registration Review) list, which is a list of failing schools. Some of these schools have been on the SURR list for more than 10 years. The Plan sets aside an additional $45 million for these schools. With these additional funds and existing resources at least 20 percent of these failing schools should be turned over to private firms which would manage them and be rewarded if the SURR designation is removed. Throughout the country private management has shown excellent results in improving school performance.
  
• Reduction in Bureaucracy -- The BOE's headquarters at 110 Livingston Street should be sold. Funds from the sale should be used to construct a smaller and more modern facility. A reduction of up to 75 percent in the BOE's headcount would result in more resources at the District and school level and minimize bureaucracy. This efficiency will target an additional $88 million to the classroom.
  
• Freeing Schools from Bureaucracy - The BOE has only converted two existing public schools to charter schools, freeing them from onerous control by the Central Board. The BOE should expand this program.
  
• Teacher Merit Pay - Funds have been set aside for a two-year collective bargaining agreement to provide a merit pay package for teachers which will allow for the reward and retention of selective staff.
  
• Competition in Education -- In FY2001 $6 million has been set aside as an incentive for a school district that volunteers to participate in a school choice program to be administered by the City. Poor families in the district who choose to opt into the program will be provided with tuition vouchers that can be used at any eligible private or parochial school in the City. The funding for the vouchers will come from the District's per capita allocation, and the incentive funding can be used by the District to enhance its own offerings.
  
• Keeping High School for High School Students - Too many high school students are taking too long to graduate - in some cases, up to 7 years. In FY1999 the BOE was provided $7 million in additional funding, which will grow to $11 million in FY2001, to establish Borough Young Adult Centers for those students who do not earn their high school diplomas within five years. The centers provide these young adults with an alternative to high school. They are open until 10:00 PM and provide intensive instruction, GED preparation, school-to-career training and guidance support. The BOE should mandate that high school be limited to 6 years for this year, and then 5 years thereafter, at the same time focusing its remedial efforts at increasing the rate of 4-year graduation.

CAPITAL EXPENDITURES

The Fiscal Year preliminary Capital Plan provides a total of $22.5 billion in capital funding over the next four years. The Capital Plan demonstrates the Mayor's continued commitment to strengthening the City's economy by emphasizing infrastructure rehabilitation. More than half of the funding provided in the Plan, a total of $12.2 billion, will be devoted to improving the City's transportation, mass transit, water, sewer and sanitation systems.

Among the projects included in the preliminary Capital Plan are:

• Brooklyn Criminal and Family Court Complex $330 million
  
• Bronx Criminal Court Complex $234 million
  
• Queens Hospital Reconstruction $149 million
  
• Whitehall Ferry Terminal $109 million
  
• Hudson River Park $ 98 million
  
• Kings County Hospital Redevelopment $ 90 million
  
• Queens Family Court $ 89 million
  
• Queens Criminal Court Annex $ 77 million
  
• ACS Children's Center $ 67 million
  
• Nehemiah Housing at Spring Creek $ 51 million
  
• Brooklyn Stadium & Sportsplex $ 50 million
  
• Staten Island Criminal and Family Court Complex $ 40 million
  
• St. George Ferry Terminal $ 35 million
  
• Kingsbridge Armory Reconstruction $ 30 million
  
• Minor League Baseball Park $ 29 million in Staten Island
  
• Brooklyn Army Terminal $ 15 million
  
• Flushing Meadows Pool $ 15 million
  
• Red Hook Port Development $ 11 million
  
• East River Park $ 5 million
  
• Hunts Point Recreation Center $ 5 million
  

MAJOR CULTURAL EXPANSIONS

The City will be a partner in a number of world-class cultural construction projects that will enhance our position as the Cultural Capital of the World and help attract even more tourists than the record 34 million who visited the City this year. These projects will significantly improve the City's cultural base, strengthen the City's economy and provide lasting cultural monuments for generations to come.

Among the projects included in the major cultural expansions are:

• Museum of Modern Art - the City will contribute $65 million toward the $650 million expansion and renovation of the Museum
  
• Lincoln Center Master Plan - the City will contribute $25 million for the rehabilitation of Lincoln Center
  
• Metropolitan Museum of Art - the City will contribute $25 million toward the $250 million expansion and renovation of the Museum
  
• Museum of Jewish Heritage - the City will contribute $22 million for a new wing of the Museum
  
• Library for Performing Arts at Lincoln Center - the City will contribute $19 million to reconstruct the library
  
• Center for Humanities at 42nd Street Research Library - the City will contribute $16 million to upgrade the Center
  
• Jazz at Lincoln Center - the City will contribute $15 million toward the creation of a landmark facility for Jazz at the Coliseum site