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Mayor Bloomberg Announces Budget for Fiscal Year 2015 – Which Begins on July 1, 2014 – Already Balanced

November 21, 2013

First Time in Documented City History an Incoming Administration will Inherit a Balanced Budget for the Current Fiscal Year and the Next Fiscal Year

Balanced Budget the Result of Additional Revenue from Continued Economic Growth and Cost Savings Achieved Through Increased Efficiencies in City Services

Mayor Michael R. Bloomberg today released the City’s first quarter budget modification, which maintains balance in the current fiscal year, FY 2014, and balances the upcoming Fiscal Year, FY 2015, which begins on July 1, 2014. This is the first time in documented City history that an incoming Administration will inherit a budget that is already balanced for the fiscal year that begins six months after inauguration. The City budget is already balanced far ahead of time due to a sustained commitment to prudent fiscal management, the city’s continued economic growth and significant costs savings achieved without impacting services. Since the current year’s budget was adopted in late June, the Administration announced a series of cost savings initiatives, which helped reduce a $2 billion budget gap for FY 2015 down to zero. Cost savings included lower health care expenses for employees resulting from the Administration’s plan to competitively bid the City’s health plan for the first time in more than a decade; the sale of two underutilized, City-owned buildings; the first public bidding of school bus contracts in more than 30 years and other actions. In addition, tax revenues have come in above forecasts, with strong performance largely due to increased collections of personal income tax revenues derived from the ongoing growth in the local economy and increased revenue from real estate transfer taxes due to the ongoing strength of the commercial and residential markets in the City. As a result, the budget deficit for FY 2015 already has been closed without raising taxes or eliminating critical services, and the budget maintains a labor reserve to settle expired union contracts by funding reasonable raises going forward, some starting this year. Mayor Bloomberg made the announcement in the Blue Room of City Hall.

“Today – for the first time in the City’s history – the budget for an upcoming fiscal year already has been balanced for an incoming mayor, before he steps into office,” said Mayor Bloomberg. “This historic accomplishment is the result of New York’s continued economic growth, our Administration’s fiscal discipline and the significant savings we have achieved in recent months. And let me add that we have reached a balanced budget without proposing any tax increases or cutting essential services.”

The current year’s budget (FY 2014), agreed to by the Administration and the City Council, was passed by the Council in late June of 2013 and remains balanced. At the time the FY 2014 budget was adopted, the projected budget deficit for the following year, FY 2015, was $2 billion.

Since the FY 2014 budget was adopted last June, the Administration has announced a series of savings initiatives and seen increased revenues that have combined to eliminate the $2 billion budget gap for the next fiscal year, FY 2015, which begins in July of 2014.

Cost Savings Achieved Since June 2013

Throughout the last 12 years, the Bloomberg Administration consistently has taken major steps to make City government more efficient and lower costs – from reducing the number of City employees by more than 15,300, while expanding City services, to consolidating City-owned office space to save taxpayers nearly half a billion dollars over the next 20 years, to streamlining the nation’s largest municipal fleet of vehicles.

The following are examples of new savings items that were announced after the adoption of the FY 2014 budget in June that helped to eliminate the budget gap for FY 2015 and maintain services:

  • The Administration has been working on a Request for Proposals for a new healthcare provider for City employees and retirees – the first competitive bid for a healthcare provider in more than a decade. Following the announcement of the request-for-proposals, the City’s current primary healthcare provider announced in August that, for the first time in 15 years, it would not seek a premium rate increase for the next fiscal year. This resulted in savings of $364 million in Fiscal Year 2015, $399 million in FY 2016 and $437 million in FY 2017.
  • Through the refinancing of high-cost debt, and interest rates which have been below forecast, the City has reduced debt service costs by more than $200 million this year and nearly $150 million next year.
  • Earlier this year, Mayor Bloomberg and Schools Chancellor Walcott opened school busing contracts for public bidding for the first time since 1979. Earlier this month, the Mayor announced the City will save an additional $210 million over the next five years from the public bidding of the busing contracts, allowing more dollars to be spent in the classroom.
  • Last week, Mayor Bloomberg and City Comptroller John C. Liu announced a $60 million settlement with Verizon for the delay in delivering a component of the Emergency Communications Transformation Program (911 system).
  • In August, Comptroller Liu announced the City’s pension funds exceeded the assumed seven percent rate of return in FY 2013, and the higher investment returns reduce the City’s annual pension obligations. Pension returns are “smoothed in” over seven years and the first year of impact from the results of the FY 2013 returns is FY 2015, reducing FY 2015 pension expenses by $86 million.

Additional Revenues Since June 2013

Tax revenues are more than $520 million higher than levels forecasted in June. The growth is being driven primarily by additional personal income tax revenues and real estate transfer tax revenues, all signs of the continued growth in the city’s economy.

As a part of the City’s Boro Taxi plan, which has brought taxi service to the boroughs outside of Manhattan, the City is selling 400 new yellow taxi medallions this fiscal year – all of them handicapped accessible. The initial auction for the first 200 of those medallions took place last week, and resulted in higher than estimated sale prices, producing an additional $64 million in taxi medallion revenues this year and raising next year’s projections by an additional $81 million.

In his 2010 State of the City Address, the Mayor set a goal of reducing agency office space by 10 percent or 1.2 million square feet by 2014 to make operations more efficient and less costly. The City is set to exceed that goal, and as part of this initiative, the Mayor announced the sale of two underutilized city-owned buildings in Lower Manhattan. With one sale already closed and the other scheduled to close next month, more than $200 million of revenue from this asset sale will be generated in FY 2014.

Labor Contracts

The budget includes funding to settle all expired labor contracts by funding raises for employees going forward, starting this year for some unions. The Administration has a standing offer to all city labor unions since June of 2010 for new contracts under the following structure:

  • Three years of no base salary increases after the expiration of any union’s 2010 round of bargaining;
  • Raises of 1.25 percent for two consecutive years after; and
  • Agreement for mandatory employee contributions towards healthcare premiums (10 percent for individuals, 20 percent for families). Currently, more than 90 percent of City employees and retirees pay zero towards their healthcare premium and the city covers the entire cost.

The City Budget Since 2002

When Mayor Bloomberg was inaugurated in January 2002, he had to propose a plan to close a deficit of $4.8 billion after one month in office and with structural expenses growing and the economy suffering from 9/11 attacks, the deficit grew to $6.4 billion the following year. More recently, New York City faced a financial crisis resulting from the global recession that began in 2008, which opened up a deficit of $4 billion. While cities and states across the nation experienced large-scale layoffs and major service cutbacks, New York City’s commitment to sound financial management by saving, not spending, resources when revenues were still strong, allowed the City to cushion to blow and avoid major cutbacks and maintain essential City services. The Administration’s economic diversification strategy, which reduced dependence on the financial sector, allowed the city to enter the recession later than the rest of the country and emerge faster and stronger than the rest of country.

Since 2002, controllable expenses other than education have risen with the rate of inflation, while non-controllable expenses and debt service have increased at dramatically higher rates. Total personal service costs – the costs for City employees – has risen by 74 percent from $22.8 billion in FY 2002 to $39.7 billion. The driver of the growth has been pension and fringe benefits, which represent 69 percent, or $11.6 billion, of the increase. This is despite the City having more than 15,300 fewer employees than it did in FY 2002.

Pension expenses have risen from $1.5 billion in FY 2002 to $8.2 billion in FY 2015, while health insurance costs to the City have risen to $7.1 billion for FY 2015 – an increase of 163 percent from the $2.7 billion in FY 2002. Currently, 95 percent of all City workers do not make any contribution toward their health care insurance premium. However, more than 90 percent of State employees and more than 90 percent of private sector employees make a contribution. The Administration has proposed reforms to offset these costs, including new contracts with the healthcare service providers for the City’s workforce and restructuring health benefit plans.


The City’s current full-time and full-time equivalent headcount is 296,436 – a reduction of 15,368 positions since the start of the Bloomberg Administration. The City’s December 31, 2001 full-time and full-time equivalent headcount was 311,804.

Contact: Marc La Vorgna / Kamran Mumtaz (212) 788-2958