Budget Director Fuleihan Details Fiscally Responsible, Progressive, Honest Financial Plan

June 6, 2014

Testimony follows all three major raters affirming New York City bonds as AA stable, highlighting 'highly effective budget management'

Even after labor agreement and key investments, out-year gaps and debt service remain below historical levels

 

NEW YORK—Today, Dean Fuleihan, the Director of the Mayor's Office of Management and Budget, detailed the Mayor's fiscally responsible, progressive, and honest Fiscal Year 2015 Executive Budget in his testimony before the City Council.

The testimony comes on the heels of all three major rating agencies—Fitch Ratings, Standard and Poor's, and Moody's—affirming the city's rating as AA with a stable outlook. Yesterday, Fitch Ratings specifically highlighted the city's "highly effective budget management" and pointed out that the labor settlement reduces a long-standing budgetary risk.

"The Mayor established core principles that guide this administration and our entire budget process: fiscal responsibility, progressiveness and honesty," said Budget Director Fuleihan. "We see those values in action, with the executive budget moving forward key initiatives that will make this city a better, more affordable place, while protecting our fiscal health. Even after the unprecedented labor agreement and critical investments, out-year gaps and debt service remain below historical levels, and our credit ratings remain strong."

"I was pleased to have Budget Director Fuleihan and Commissioner Linn jointly detail a financial plan that shares many of the Council's priorities during today's Executive Budget Hearing," said Council Member Julissa Ferreras, Chair of the Committee on Finance. "Through their testimony, the Council gained clarity on the labor settlement and the recent ratification of the UFT contract. It is great news that the new pattern in labor established by OMB and OLR has not affected our AA rating, as reported by Fitch yesterday. However, the labor settlement is just one component of our budget. A lot more needs to be done, and I look forward to continuing to work closely with the Budget Director, in collaboration with Speaker Mark-Viverito, to ensure that the Adopted Budget is fiscally responsible and also reflects the city's priorities and values."

As detailed in Budget Director Fuleihan's testimony, the Mayor's executive budget moves forward a number of key initiatives that will improve the health and vitality of the city and begin to address income inequality through affordable programs that can be initiated and sustained:

  • Invests in our children, including by delivering on the promise of universal, full-day pre-K for all 4-year-olds and an expansion of after-school programs for middle school students;
  • Protects the city's most vulnerable, including through investments to prevent and reduce homelessness;
  • Dramatically expands affordable housing, including by providing funding for the Mayor's plan to build or preserve 200,000 affordable units over 10 years;
  • Creates economic opportunity, including by following through on the Mayor's pledge to reduce arbitrary and punitive fines on small businesses;
  • Makes New York City safer, including by investing in the Mayor's Vision Zero initiative to reduce pedestrian traffic deaths to zero.

Even after these key investments, the executive budget makes good on the Mayor's promise of fiscal prudence by:

  • Keeping out-year budget gaps well below historical averages. While the budget finally recognizes expenses for labor contract settlements, the city's credit ratings remain strong and, in fact, better than many other major cities, with Moody's rating the city Aa2/stable, Standard and Poor's rating the city AA/stable, and Fitch rating the city AA/stable.
  • Maintaining debt service at significantly less than the long-term benchmark trend level, at less than 15 percent of total tax revenues;
  • Beginning to address the unprecedented and unstable fiscal challenge of more than 150 expired labor contracts through a historic settlement with the UFT. This sets a pattern for all contracts that is below inflation rate.
  • Securing an unprecedented $3.4 billion in health care savings, per an agreement with the Municipal Labor Committee, the first major reduction in health care costs in history. These savings are guaranteed and enforceable by arbitration.
  • Keeping reserves strong—in fact, the city's annual general reserves are more robust than in any previous administration, and $1 billion removed by the previous administration to pay down long-term health care obligations has been restored.
  • Securing additional funding from the state for high-quality, full-day universal pre-K programs, as well as the largest school aid increase in years and key funds for after-school programs.

Budget Director Fuleihan also highlighted the positive, respectful dynamic between the administration and the Council throughout the budget process, a key part of the Mayor's commitment to a more honest budget that ends the notorious "budget dance" and moves forward shared priorities.

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