Release #329-97

Contact: Colleen Roche (212) 788-2958

MAYOR GIULIANI ANNOUNCES BUDGET ACCORD WITH CITY COUNCIL CITY FINISHES FY97 WITH A $1.3B SURPLUS AND $500M "CUSHION"

Budget Contains Largest Tax Reduction Program In City History

Mayor Rudolph W. Giuliani announced tonight an agreement with the City Council to adopt the $33.4 billion Fiscal Year 1998 (FY98) budget. The budget creates a $500 million reserve cushion; further reduces the out year gaps; provides $449 million more for education; as a result of prudent budget management, decreases actual spending by approximately $900 million; and provides the largest tax cuts in City history, now exceeding $835 million for FY98.

The Mayor also announced that the City is expected to finish the FY97 budget with $1.3 billion in excess revenues.

"I would like to congratulate Speaker Peter Vallone and the City Council for reaching this budget accord so professionally and expeditiously," the Mayor said. "The Speaker's leadership during this entire process has allowed the City to develop a fiscally disciplined budget.

"The mistakes of the past have not been repeated. As I proposed in the Executive Budget, this adopted budget will invest additional revenues in the largest reserve cushion in City history and future gap reductions, as well as additional tax reform which will stimulate both economic growth and private sector job creation. Building on the record tax reductions of the prior years, the Speaker and I have agreed on the largest tax reduction program in City history. Effective and disciplined fiscal management has allowed us to return unprecedented amounts of money to the citizens of New York City.

"Education spending has also increased by $449 million over last year for initiatives like Project Read, Project Smart Schools, restoration of a full arts curriculum and funding for new textbooks. And the significant quality of life improvements we have achieved during the last three-and-a-half years will be enhanced by additional funding," the Mayor concluded.

BUDGET HIGHLIGHTS:

Surplus revenues estimated at $856 million in the Executive Budget, now total $1.3 billion and will be used to prepay FY98 and FY99 debt service.

The adopted budget will provide the City with a $500 million cushion: $200 million in the general reserve; $200 million set aside at the Executive Budget for payment of FY99 debt service; and an additional $100 million for further payment of the 1999 debt service. This is the first time that the City will have a reserve as large as $500 million.

The adopted budget further reduces the out year gaps to an even greater extent than in the Executive Budget.

A $835 million tax reduction program is also contained in the adopted budget of which $516 million has already been enacted and $319 has been added, including:

• 4% City Sales Tax Reduction $ 157 million
• Increased UBT Credit $ 75 million
• Additional CRT Reductions $ 30 million
• Real Property Transfer Tax $ 2 million
• Exemption for Assumable Mortgages
• Eliminate Vault Charge & Tax $ 8 million on Coin Operated Amusement Devices
• Proportionate Share of State $ 47 million Tax Relief

The Speaker and the Mayor have agreed to create a $30 million Emerging Industry Job Development Fund. This Fund will be managed by Rudy Washington, Deputy Mayor for Business Services and Community Planning, through the Department of Business Services with oversight by the City Council.

The adopted budget has also moved the expected $295 million Port Authority settlement payment from the FY98 budget FY99 through FY01.

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