Chief Leader – August 04, 2015
by DAN ROSENBLUM
Overtime costs related to hiring new Police Officers, stagnating Federal reimbursements for special-education services and a shortfall in forecasted pension earnings are adding risks to the city’s financial plan, City Comptroller Scott Stringer warned last week.
Still, even with those uncertainties, unexpected revenue such as increased property-tax collections is projected to reduce the cumulative budget gap to $1.85 billion over the next four years, the lowest in more than 20 years, his office said. At the same time, the city’s headcount is expected to grow to 314,000, surpassing previous records.
The $78.5-billion budget for the fiscal year that began July 1 will benefit from $5.9 billion in higher-than-projected tax revenues, lower interest rates, agency savings, and the rolling over of a surplus from last year. That was used to offset a decrease in taxi medallion sales and the hiring of 1,297 new Police Officers and 777 staffers at the Department of Education. Citywide OT to Rise
In a surprise move, Mayor de Blasio in June agreed to hire the new cops, which was almost 300 more than City Council Speaker Melissa Mark-Viverito had advocated. To pay for that, the administration capped overtime spending at $522 million, but according to Mr. Stringer’s analysis, released July 30, citywide overtime expenditures are likely to be $104 million more than the $1.2 billion planned by the city. Of that overrun, $24 million would be for police overtime and $80 million would be for the Department of Correction.
“While the city has not outlined a hiring plan for the additional officers, it is expected that the hiring will be staggered in two or three groups, with most of the additional officers being assigned to precincts in the latter part of FY 2016,” according to the review. “Therefore, any overtime savings from increased police headcount will only be realized towards the end of the fiscal year.”
Another lingering concern was lagging special-education Medicaid reimbursements expected by the DOE, which the Comptroller’s analysis said could be short $60 million for last year and $80 million beginning this year. The Mayor’s Office projected getting $67 million from the Federal government last year and $97 million annually through the next few years.
“However, given that only $7 million in revenue has been realized for FY 2015 and only $2 million was collected in the previous year, it does not appear the DOE will achieve its Medicaid revenue targets,” the report stated.
Pension Earnings Off?
The Comptroller also estimated a gap between the Mayor’s calculation of pension-fund returns of 7 percent and a 3.3-percent projected return for the last fiscal year. That gap could total $422 million between July 2016 and June 2019. Over that period, the city’s pension contributions are projected to rise by an average annual 0.4-percent rate to $8.8 billion.
This year, 37 percent of the city’s revenue is expected to come from income and business taxes, 28 percent from property taxes, and 26 percent from state and Federal grants, according to the financial plan. Mr. Stringer projected the tax-revenue increase to be $822 million this year, $1.1 billion in the 2017 fiscal year, $1.3 billion the following year and $1.5 billion in 2019.
The new revenue is also covering the de Blasio administration’s increase in its general-reserve contribution to $1 billion and a new $500-million capital-plan reserve. Mr. Stringer said Mr. de Blasio was sensible to put away the money and suggested he continue to build a cushion in case the “revenue rug gets pulled out from under us.”
“The city’s tax revenues came in well above projections yet again, but robust revenue growth doesn’t last forever,” the Comptroller said. “If we want to stay nimble in case of a downturn, the city must continue to find efficiencies and recurring savings.”
DOE Hiring Mainly Pre-K
Among the 777 new DOE employees, 539 positions are attributed to Mr. de Blasio’s universal pre-kindergarten expansion, 60 to a Committee on Special Education and 59 to physical education and wellness.
By next year, the city’s headcount is projected to rise to the highest level in recent history, according to an analysis released last month by the Citizens Budget Commission. The 315,199 employees projected for June 30, 2016 is more than a recent peak of 311,018 in 2008, shortly before then-Mayor Bloomberg began layoffs and hiring freezes in response to the national financial crisis. The city workforce had dropped by 6 percent four years later.
The city’s headcount rose by 4 percent during the last fiscal year, according to the CBC.
The figure includes both full-time positions and calculations for “full-time equivalent” employees. An analyst at the CBC said there were 231,000 full-time employees in 1975, right before the fiscal crisis, as compared to 288,000 currently.
No comments yet.