City budget gap could be $6.3B in 2011

Over the next three years, the city can expect to see $14 billion in budget gaps with the worst coming in 2011when the city could face a gap of nearly $6.3 billion, according to a recent report issued by the city’s Independent Budget Office (IBO).
The doom and gloom forecast cited the downward trend in economic growth and the increased costs in contract settlements with municipal workers as two key factors contributing to the negative predictions.
The report highlighted a $3.1 billion projected gap for 2009 - $360 million more than Mayor Michael Bloomberg’s administration predicted in October - and the IBO forecast that gap will swell to $4.6 billion the next year.
“I think it will be manageable because we did spend our surplus [$9.4 billion in 2008] responsibly; we didn’t just spend it like drunken sailors,” said City Councilmember David Weprin, who is the chair of the council’s finance committee and a candidate for city comptroller in 2009.
Weprin said that he believes the numbers in the IBO report are more accurate for 2009 because it is much more difficult to predict these gaps further out into the future.
“We set aside money, and I think we will handle the deficit pretty well - probably better than the state - who didn’t set aside money,” Weprin said.
However, the report also said that sagging numbers on Wall Street as well as increased vulnerability to the housing crisis could even create higher deficits than those predicted if those trends continue.
“The administration is already taking prudent fiscal steps to help meet the tough economic times we’re anticipating over the next few years,” said Bloomberg spokesperson John Gallagher. In addition, he said that Bloomberg has already directed city agencies to reduce spending and set aside money to prepay some of the expected debts.
While the report detailed ominous projections for the budget gaps, it also predicted slow job growth in the city for the next two years. In 2006 and 2007, the city gained 62,000 jobs (1.7 percent annual growth) and 41,000 (1.1 percent) respectively, but the IBO report predicted only 500 jobs for 2008 and 20,800 jobs for 2009.
“We agree that the economy is taking a turn for the worse, as the comptroller pointed out in his December report,” said Jeff Simmons, a spokesperson for comptroller William Thompson. “We will have an updated analysis later this winter in response to the mayor’s preliminary budget.”