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Dear New Yorkers,
When New York City’s fiscal crisis hit in the 1970s, one of the factors was a lack of awareness by City officials of the growing mismatch between the cash in the City’s bank accounts and the funds needed to cover its obligations. In other words: the City was running short of cash, and no one knew.
As a result, the Financial Emergency Act of 1975 required stronger monitoring of the City’s cash position – as well as balanced budgets, stringent limits on short-term borrowing, and other reforms that have strengthened the City’s financial management systems and dramatically improved our credit. Since then, the Comptroller’s office (along with the Department of Finance and the Mayor’s Office of Management and Budget) keeps a sharp eye on the City’s daily cash balances.
So we were paying attention earlier this year when the City’s cash balance hit its highest amount ever: $18.7 billion on April 21, 2023.
This month’s spotlight illuminates the reasons for the past year’s elevated levels: an amalgam of higher-than anticipated tax receipts, federal Covid aid, a shift in the timing of income tax collections, deposits into the City’s new Rainy Day Fund, and inflation affecting City revenues earlier than expenses. But it also reminds us that we shouldn’t get ahead of ourselves: we explain our forecast for balances returning to more normal levels in FY 2024.
Meanwhile, the economic numbers reflect a pattern similar to the last few months: both the national and NYC economy continue to show resilience, despite some slowing in job creation. Office attendance remains far lower than before the pandemic, but attendance is ticking up mid-week. Rising housing costs for New Yorkers and shelter for new arrivals remain high on the list of concerns for New York City’s economic thriving and the City’s financial stability.
Finally, on June 30, the City Council adopted the City’s $107 billion budget for Fiscal Year 2024. The agreement between the Mayor and the Council, buoyed by strong tax receipts, restores some of the cuts to essential services proposed by Mayor Adams in the Executive Budget, but leaves many long-term issues unaddressed. You can read my initial statement here. We’ll have much more to say in our full analysis of the adopted budget next month.
In the meantime, we’ll keep watching the cash balances (even while many New Yorkers are watching the surf).
Sincerely,
Brad Lander
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