NEW YORK—Mayor Michael Bloomberg’s administration was criticized for its use of so-called one-shot measures to balance the fiscal year 2013 budget on Monday by the state Financial Control Board, which must review the budget at least quarterly.
A surplus of more than $2.3 billion from fiscal year 2012 enabled the city to plug a large gap in the current budget, which was recently enacted, along with a billion here and $635 million there. The billion was taken by the mayor from the Retiree Health Benefits Trust, which was created in 2006 by the mayor for the payment of retiree health and welfare benefits.
The trust reserved money for future payments, guarding against future liability for benefits that has now reached over $70 billion. After the loss of the $1 billion, the fund is now projected to dissolve in fiscal year 2014. This move was called “shortsighted” by state Comptroller Thomas DiNapoli, who is on the five-member control board.
But the mayor argued the funds have been used for health care. “I don’t think there’s any question that health care costs and pension costs are a sword hanging over us,” he said. “It would have been nice to have revenues exceeding health care.”
Taxi Medallion Revenues Anticipated
The $635 million one-shot, the planned outer-borough taxi medallion, or license sale, has been termed a risk by the board. One of several lawsuits succeeded in blocking it, at least temporarily, making the three-year overall revenue of $1.5 billion (making this more of a three-shot) uncertain.
“People who for their own selfish reasons don’t want competition, but haven’t been providing a service to the rest of the city, sued to stop us from going ahead for providing a service,” said Bloomberg, referring to the Metropolitan Taxicab Board of Trade, a group of yellow taxi drivers that says the plan violates their exclusive rights of providing taxi service. At issue is that the yellow taxis rarely venture outside of the busier parts of Manhattan.
“We are confident that the city will prevail in court and with ample time to enact our responsible plan to begin selling these medallions over three years,” Bloomberg told the board.
DiNapoli, state comptroller, also was concerned with rising unemployment—now at 10 percent—particularly among some segments of the labor force. The economy is more diversified than the 90s, but “is still heavily dependent on the securities industry.”
Bloomberg, however, citing his decades of experience, assured the board and DiNapoli that “Wall Street will come back,” finding ways to make money and hire people. He also said the focus has been on “creating jobs at the lower end of the economic ladder … because those people are the most problematic.”
And though the city faces a $2.5 billion deficit next fiscal year, it faced a $4.6 billion deficit during fiscal year 2012 looking at fiscal year 2013.
One-Time Fixes Common
“The problem with that is you are basically delaying any action that you have to take later on, so you’re depleting your resources and reserves, and you’re just in a tough spot for next year,” said Maria Doulis, director of city studies for the Citizens Budget Commission, in a previous phone interview.
Yet one-time fixes to gaps are a common solution, said Bloomberg. “We‘ll always find other ways to get revenue that we hadn’t counted on and we’ll always have expenses that we hadn’t counted on,” he said.
Other one-time plugs for this fiscal year include $150 million from a federal settlement with ING Bank and $469 million from a settlement with the payment system contractor CityTime.
The meeting was adjourned with the board determining the budget meets legal criteria, including paying debt service on time, and not incurring an operating deficit of more than $100 million.
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