Hevesi: Huge City Budget Gap Looms
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The state comptroller, Alan Hevesi, sounded the alarm yesterday, saying New York City faces a roster of risks that could significantly widen its budget gaps in future years.
Overspending at the Department of Education, increases in the city’s contribution to comply with a court ruling that requires the state to beef up spending on public schools in the five boroughs, and the potential for increased contributions to the Metropolitan Transit Authority and the Health and Hospitals Corporation could run the city’s budget into the red, Mr. Hevesi, a Democrat and former city comptroller, said.
“New York City successfully pulled through the financial crisis brought on by the World Trade Center, but it still faces formidable fiscal challenges,” Mr. Hevesi said in a written statement that accompanied his latest assessment of the city’s fiscal health. “But many uncertainties remain.”
Under the new 2005 budget, the city’s spending is on track to grow 10%. Excluding federal and state grants, the cost of running city government will grow to $35 billion in 2005, from $31.9 billion the year before. The worrisome trend was the subtext to last July’s Financial Control Board meeting, in which Mr. Hevesi first voiced his concerns about how the mayor could manage to keep the city in the black next year.
Most of the growth in spending is in pensions, wages, and Medicaid – areas over which the mayor has some, but not much, control. What Mr. Hevesi highlighted in the report released yesterday is other spending, particularly anticipated expenditures to comply with the court ruling that the city’s public schools are being under-financed.
Speaking of the recommendation last week to a judge in connection with the lawsuit filed by the Campaign for Fiscal Equity, the comptroller wrote: “The panel stated that the State Legislature should determine how these additional costs are split between the State and the City, but that the burden placed on New York City cannot be arbitrary or unreasonable.”
It isn’t clear how much of the bill the city will end up having to foot, and how that might add to deficits in the future. The city’s latest four-year financial plan projects large budget gaps of $3 billion for fiscal 2006, $4.2 billion for fiscal 2007, and $3.3 billion for fiscal 2008.
