Mayor’s final capital plan robust troubling decline in later years

Mayor Michael Bloomberg’s final Executive Budget offers a capital spending plan for Fiscal Years 2014 through 2017 that maintains the administration’s commitment to near-historic levels of capital spending.  Thanks in part to significant emergency federal aid related to Superstorm Sandy, spending is forecast to increase in each year compared to the budget presented one year ago.

• The City proposes to spend $10.2 billion in 2014, the second-highest level of capital spending of the last thirty years in absolute terms.
• The City’s five-year spending plan is $45 billion – also near record highs.
• The City’s Ten-Year Capital Strategy forecasts a total of $3 billion in new federal capital assistance related to Sandy, most coming in the next four years.

Critical components of the investment strategy include:

• $2.3 billion in new commitments from the Department of Environmental Protection in 2014.
• $2.4 billion for the Department of Transportation in 2014 commitments, one of the highest levels of planned new project commitments in the last thirty years.
• $2.6 billion in 2014 for the Department of Education.

However, the budget also highlights longer-term concerns.  The City forecasts future capital commitments (new contracts the City expects to register, an indice of future work) to drop to $5.2 billion in 2017.  Only $3.7 billion of this will be City-financed commitments, the lowest level posted in any budget of Mayor Bloomberg’s twelve years in office.

A major reason for the low level of commitments is the City’s increasing debt burden, which is expected to grow from $68 billion this year to $75.5 billion in 2017 (not including the independently-funded water and sewer system).  Debt service will also take up a larger share of tax revenues, rising from 13.2% to nearly 15% of tax revenues in 2015-17.
 
These numbers are a red flag that the City, given current revenue projections, will not be able to sustain robust levels of investment in critical infrastructure in the future.  A recent Citizens Budget Commission report also warned of the growing debt burden and its impact on the City’s overall budget.

A Building Congress review of City budget documents showed that total capital spending under Mayor Bloomberg was greater than at any point in the previous three decades. This was accomplished even as the Administration kept debt service at generally accepted levels.  However, as candidates jockey to take the reins of City Hall next year, a critical issue will be how to maintain a robust program as debt levels threaten to shrink the City’s ability to invest in the future.

What you can do:

Contact candidates for New York City Mayor with the message that capital commitments are expected to drop to levels last seen in the 1990s with fewer revenues to support new investment – meaning less money for schools, roads, parks, libraries and other critical infrastructure; and ask how they would address this issue as Mayor.

Sal Albanese
Bill de Blasio
Adolfo Carrion
John Catsimatidis
Joe Lhota
John Liu
Christine Quinn
Bill Thompson
Anthony Weiner