Archives of the Mayor's Press Office

FOR IMMEDIATE RELEASE
Date: Tuesday, January 28, 1999

Release #034-99

Contact: Colleen Roche/Curt Ritter (212) 788-2958


MAYOR GIULIANI ANNOUNCES NEW YORK CITY'S FINANCIAL PLAN FOR FISCAL YEARS 1999 - 2003:

Reduction In Projected Year-Over-Year City-Funded Spending

Third Year Of Record Surplus; $338 Million In Additional Tax Reductions; Out-Year Gaps Cut in Half; Increased Spending For Education and Public Safety Initiatives

Tobacco Settlement To Benefit School Construction, Health Care Initiatives And Capital Financing Needs

Mayor Rudolph W. Giuliani today outlined his Financial Plan for Fiscal Years (FY) 1999-2003, which reflects the Administration's continued fiscal priorities: reducing the out-year gaps, cutting taxes to stimulate job growth and increasing spending in targeted areas while holding overall spending to less than the rate of inflation. The Plan projects a surplus for 1999 of $1.6 billion. For the third year in a row, the New York City four-year Financial Plan contains a surplus of more than $1 billion and reflects the City's success in reducing taxes by more than $2 billion since 1994 -- more than any administration in the history of the City. Combined with the $2.3 billion in tax cuts already enacted, this Plan will bring the total value of the Mayor's tax reduction program to $10.4 billion through 2003.

"Five years ago our Administration was handed a budget which presented the City with its greatest fiscal crisis since the 1970s," said Mayor Giuliani. "Since then, New York City has become a leader in preparing responsible budgets. Today we serve as an example to cities across the country that an adherence to the basic principles of fiscal stability and accountability can bring a City out of the red.

"The cornerstone of our success has been controlling the growth of spending and keeping it under the rate of inflation. Since 1994, the City has lowered projected spending by $13.3 billion. Following the creation of the Budget Stabilization Account two years ago, the City continues to be prepared for any downturns or slowdowns in the economy. When the stock market was losing 18 percent of its value near the end of last year, the City remained fiscally sound because we were prepared to handle it," the Mayor continued.

"After another year of unprecedented revenues, we remain committed to reducing the out-year gaps, cutting taxes to stimulate job growth and increasing spending in strategic areas to improve the quality of life for all New Yorkers.

"Since the adoption of the FY99 budget, the City is now forecasting additional resources for FY00 of $3.5 billion," the Mayor added. "For the third year in a row we have produced a budget surplus. We will not repeat the mistakes of the past: seventy-five percent of this money will be used to reduce the out-year gaps; 15 percent will fund targeted educational, public safety and other initiatives; and an additional 10 percent will be used to reduce taxes even further.

"New York City is stronger today then its has been in many years. I hope this is the legacy that we will leave future administrations - never to forget the impact of the budget on the larger economy of the City and on the quality of life of New Yorkers. Budgets are not about numbers, or balancing equations - they are about making the decisions that will strengthen and secure the economy and the lives of New Yorkers for generations to come," the Mayor concluded.

OUT-YEAR GAPS

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 six years, been held below the rate of inflation. For FY00 the proposed City-funded spending actually decreases from FY99 levels by 0.3%. This Plan includes a Budget Stabilization Account for FY99 of $1.6 billion in addition to a budgeted reserve of $100 million. This is the largest amount of budgeted reserves ever maintained by the City. The Plan also includes $345 million in reserve from the proceeds of the sale of the Coliseum. Instead of using this resource to balance next year's budget, we have funded the Budget Stabilization Account for FY00 with $345 million from the sale.

JOB GROWTH

In 1998, New York City experienced its strongest private sector job growth on record, with the creation of over 84,000 jobs. In addition, since 1993 New York City has created 292,900 new private sector jobs and has outpaced the rest of the State by 5% with a job growth of 10.6%.

TAX CUTS

Since 1994, the Mayor has reduced taxes by $2 billion -- more than any administration in the history of the City. In 1998 the City's tax burden has fallen to 7.8% as a share of personal income -- lower than in the years leading up to the fiscal crisis. The creation of the Tax Reform Task Force will look to further reduce the tax burden on New Yorkers. The Task Force's goal is to make the tax structure in New York City and State more competitive with other large cities and to study ways of streamlining the number of - more - taxes levied on businesses and individuals. To assist the Task Force, the City has reserved another $100 million for tax reductions. Combined with the $2.3 billion in tax cuts already enacted, this Financial Plan will bring the total value of the Mayor's tax reduction program to $10.4 billion through FY03. With tax cuts already enacted and those proposed ($338 million), taxpayer savings will double from $1 billion to $2 billion annually.

Additional tax cuts proposed in this Financial Plan include:

IMPROVING THE QUALITY OF LIFE

This Plan demonstrates the Administration's commitment to improving the quality of life for all New Yorkers. To ensure the continuation of the City's historic reductions in crime, 1,500 new police officers will be added to the New York City Police Department through the six-month acceleration of the FY 2001 police recruit class. These additional police officers will enable the Police Department to enhance enforcement in the following areas: drug abuse, domestic violence, gun related crimes and property crimes.

EDUCATION INITIATIVES

The Fiscal Plan will continue to meet the educational needs of New York City's children. This Plan will provide the Board of Education (BOE) with its largest Capital Plan ever. The City will provide $5 million over two years to the BOE to facilitate Chancellor Rudy Crew's sponsorship of Charter Schools in New York City. In addition, the City has added $12 million over three years as an incentive for Community School Districts to provide parents with vouchers that can be used at any school, public or private. In addition, a large percentage of tobacco settlement money will be used to build new schools and expand the number of school seats. Any New Yorker whose reading, writing and math skills need improvement before they attend college should be able to receive that instruction anywhere, not just at CUNY. State and City dollars used to subsidize remediation at CUNY should be made available to students as vouchers so that the student can choose the school they think will provide them with the best chance of success - whether it be a CUNY Community College or a private educational institution. -over- The Fiscal Plan also calls for continued funding of several educational initiatives to ensure their continued success, among them:

 

SUBSTANCE ABUSE-FREE LIVING

The City will continue to help substance abusers become drug-free, employed and self-sufficient. The Human Resources Administration (HRA) and the Health and Hospitals Corporation (HHC) will receive $11 million in FY00 and $16 million in FY01 to expand and improve substance abuse services. HRA will use its portion of the funding to develop intensive case management contracts for substance abusers. HHC will expand methadone-to-abstinence drug abuse programs. The City will also seek to take over all State-run substance abuse contracts to create a cohesive Citywide substance abuse treatment system.

TOBACCO SETTLEMENT

Following the $200 billion nationwide tobacco settlement in 1998, New York City will receive over the next 25 years an adjusted $6.7 billion of payments from the four largest American tobacco companies. Tobacco settlement bonds funded from this source will enable the City to fund its capital needs, particularly for schools, through January 2002, when the State constitutional amendment increasing the City's capacity to issue General Obligation debt could become effective. Tobacco bonds will finance $2.5 billion in the City's capital program over the next four years with money from tobacco companies. These funds will be used primarily to fund school construction and rehabilitation. A total of $4.9 billion in debt service will be paid by tobacco companies instead of by the City.

ACCOUNTABILITY IN CITY SUBSIDIES FOR CULTURAL INSTITUTIONS

In line with the Administration's emphasis on accountability and private responsibility, the City will revise the way it provides funding to cultural institutions and cultural programs. The City will reinstitute the Cultural Challenge. Five million dollars will be awarded to institutions and programs on a competitive basis and this will help leverage more private donations and result in better exhibitions and programs. The Administration will also require that institutions and programs raise significant funds for their operations if they want to receive City subsidies or grants. To give institutions and programs time to plan and adapt to this requirement, the City will phase in thresholds. In FY00 a private funding requirement will be established at a level of 25%. In FY01, this requirement will be increased to 50%. The result will be better public/private partnerships with strengthened cultural institutions and programs that are more efficient and responsible.

CAPITAL EXPENDITURES

The Fiscal Year preliminary Capital Plan provides a total of $22.2 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. Over half of the funding provided in the Plan, a total of $11.9 billion, will be devoted to improving the City's transportation, mass transit, water and sewer and sanitation systems.

Among the projects included in the preliminary Capital Plan are:

* New Queens Hospital Center $148 million
* Hudson River Park $ 98 million
* Willis Avenue Bridge Reconstruction $ 94 million
* New Kings County Hospital $ 90 million
* Brooklyn Sportsplex & Minor League Baseball Park $ 50 million
* Citywide Street and Park Tree Planting $ 35 million
* Minor League Baseball Park in Staten Island $ 29 million
* City Hall Park $ 22 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 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:


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