Advertisement

SKIP ADVERTISEMENT

City Hall Budget Deal, for Now, Includes Few Layoffs and No Tax Increases

More than half of the City Council celebrated a budget agreement with the mayor on Monday, including, from left, Leroy G. Comrie Jr., Margaret Chin, Erik M. Dilan and James S. Oddo.Credit...Christopher Gregory/The New York Times

Despite uncertainty over hundreds of millions of dollars in anticipated revenue, Mayor Michael R. Bloomberg and the City Council agreed Monday on a $68.5 billion budget for the coming fiscal year that would avoid tax increases, firehouse closings and widespread layoffs.

New York City budget officials were also able to avoid cutting child-care and after-school programs, which had been the subject of intense public pressure.

The budget was buoyed by a late infusion of $150 million from a settlement between ING Bank and the Manhattan district attorney’s office, stemming from a joint federal and state investigation into compliance with United States sanctions against Iran, Cuba and other countries.

The city was also able to save $240 million in debt costs through low interest rates, while collecting $70 million more than anticipated in permits, licenses and fees.

The budget for the fiscal year that begins July 1 will be about $500 million more than the current one. That increase, the city said, resulted primarily from a $2 billion rise in costs that the city said it could not control, like those of pensions, health care, Medicaid and debt service.

Then again, compared with those of previous years, this year’s budget agreement warrants an asterisk or two.

The budget is predicated on collecting $635 million in revenue in the first year, and an additional $825 million in the next two years, from the expected sale of 2,000 new yellow taxi medallions as part of a plan to expand street hail service throughout the five boroughs. But a judge’s ruling this month temporarily blocked the taxi plan, on a jurisdictional question about whether such policy should be set by the City Council or the State Legislature.

Budget analysts are also cautioning that the city’s revenue projections could be subject to high volatility in coming months. In May, the city’s Independent Budget Office noted that “New York City is particularly vulnerable to crises that batter the banking sector or international tourism,” like any upheaval in the Euro zone crisis, the slowdown of the Chinese economy or election-year domestic squabbles over taxes and spending.

As a result, many budget analysts said they would not be surprised if the mayor had to propose sizable midyear budget adjustments in the fall.

Still, during a news conference in the Governor’s Room in City Hall, Mr. Bloomberg and the City Council speaker, Christine C. Quinn, flanked by more than half of the Council’s 51 members standing on risers, could barely hide their enthusiasm, and relief.

“We’re able to achieve these goals without asking taxpayers to stretch” their dollars, Mr. Bloomberg said.

He also praised Ms. Quinn, a likely candidate for mayor next year, who he said “has once again demonstrated a strong commitment to maintaining the city’s finances on a sound footing.”

Ms. Quinn returned the favor by thanking Mr. Bloomberg for possessing “visionary fiscal leadership.” But she also underscored the determination among council members that “children are, without doubt, our No. 1 priority.”

When Mr. Bloomberg first proposed his budget in February, the spending plan struck many city officials and economists as being fairly routine, with no layoffs of teachers, police officers or firefighters.

Over the next few months, the city calculated that tax revenue had increased more sluggishly than had been anticipated, while costs for social programs, including ones for the homeless, had risen more rapidly. But the additional shortfall would be filled, Mr. Bloomberg said, by a one-time-only payment of $466 million from Science Applications International Corporation, to settle federal and city investigations into alleged fraud in the CityTime automated payroll system.

Then came the judge’s order in the taxi lawsuit. And while the city remains confident that it will ultimately prevail in court, some budget watchdogs have questioned whether a mayor so determined to avoid raising taxes acted prudently by relying so heavily on one-time revenue payments that might not occur.

Full details are expected to be released in the next few days, when the City Council is scheduled to vote on the budget.

But some council members expressed some misgivings. Melissa Mark-Viverito of Manhattan and Letitia James of Brooklyn, two liberal council members, both said that while they were grateful that child-care services would continue, they were concerned that the contracting process would favor large providers at the expense of neighborhood ones.

And Councilman Daniel J. Halloran III, a Republican from Queens, warned that the budget had “achieved short-term victories at the expense of the long term.” He added: “We’re presuming that the economy will recover this year. But what if it doesn’t? We need a more forward-thinking budget process that lives within our present means and doesn’t assume some future pot of gold at the end of the rainbow.”

A correction was made on 
June 27, 2012

An article in some editions on Tuesday about a budget deal between Mayor Michael R. Bloomberg of New York and the City Council referred incorrectly to a settlement with ING Bank that brought $150 million to the city. The settlement was between ING and the Manhattan district attorney’s office; it was not “a federal settlement.”

How we handle corrections

A version of this article appears in print on  , Section A, Page 20 of the New York edition with the headline: City Hall Budget Deal, for Now, Includes Few Layoffs and No Tax Increases. Order Reprints | Today’s Paper | Subscribe

Advertisement

SKIP ADVERTISEMENT