City Surplus Could Hit $2.1 Billion, Report Says

The city’s fiscal health is even better than Mayor Bloomberg’s most recent forecast suggests, and this year’s surplus could hit $2.1 billion, according to a report released yesterday.The city’s Independent Budget Office is predicting that the city will, yet again, rake in more tax revenue than expected because the city economy keeps defying economists’ expectations with strong Wall Street earnings and a real estate market that is not slowing at expected rates.The IBO report estimates that the city’s 2007 surplus will be $2.1 billion, compared to the $1.9 billion that the city predicted in November. In 2005, the city was projecting a $2.25 billion shortfall for fiscal year 2007, which ends in June.“The city’s short-term fiscal picture appears to be even brighter than the Mayor’s most recent projection,” the report said.Mr. Bloomberg has not yet said what he’ll do with the city surplus, but there will undoubtedly be calls to cut taxes and increase spending, two arguments he is now used to hearing.The mayor’s next budget is due out later this month and if last year is any indication, he will probably stash away much of the surplus to pay for future city costs and debt. He has also said he’ll earmark millions for new anti-poverty programs.Meanwhile, IBO is now estimating that the city will end 2008 with a $688 million surplus, rather than that $2.5 billion gap it once predicted. City Hall’s last forecast projected a $510 million shortfall for 2008 — down from the staggering $3.8 billion shortfall it was projecting in June.The swollen tax revenues are being driven by the city’s real estate market and the finance industry. The IBO found that profits at New York’s securities firms are expected to top $16 billion for 2006 — $7 billion more than profits in 2005.The IBO tempered its cheery forecast by noting that tax revenues are not expected to keep growing at this rate. That has become something of a mantra for economists, but with each financial update the slowdown date gets pushed a little further back.The IBO’s report predicts that the economy will slow sharply in 2007 and that the budget shortfall will be $2.2 billion in 2009. It says if the out-year gaps are not wiped out by the continuation of stronger-than-expected tax revenues, the city will have to either increase taxes or cut spending to balance the budget.For now, the strength of the property transfer taxes has “continued to confound forecasters,” IBO said. Some of that is due to large one-shot transactions, including the sale of Stuyvesant Town and Peter Cooper Village on Manhattan’s East Side.Metropolitan Life Insurance Company sold the 110-building complex to developer Tishman Speyer for $5.4 billion in October. The deal yielded $208.9 million in tax revenue for city coffers.A spokesman for Mr. Bloomberg, Stuart Loeser, said he would not disclose anything about the budget, saying the mayor would be presenting it later this month.

City Surplus Could Hit $2.1 Billion, Report Says

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