Res. No. 416
Title
Resolution calling upon the New York State Legislature to pass, and the Governor to sign, legislation permitting the City of New York to establish a "rainy day" fund.
Body
By Council Members Gjonaj, Yeger and Holden
Whereas, Following the City's fiscal crisis in 1975, the State enacted the New York State Financial Emergency Act for The City of New York ("FEA") to address some of the City's financial management shortcomings which led to or exacerbated the crisis; and
Whereas, One of the requirements of the FEA was that the City must balance its operating budget each fiscal year according to generally accepted accounting principles ("GAAP") which mandate that revenues in a given year must equal or exceed expenditures in the General Fund in that year; and
Whereas, In 2005, this requirement was incorporated into section 258 of the New York City Charter which states that "[f]or each fiscal year, the city's budget covering all expenditures other than capital items shall be prepared and balanced so that the results thereof would not show a deficit when reported in accordance with [GAAP]"; and
Whereas, While GAAP budgeting has been successful in eliminating the large operating deficits that precipitated the financial crisis of the 1970's, it prevents the City from being able to carry funds forward from one year to the next; and
Whereas, The City should be able to carry forward funds from one year to the next to respond to the cyclical nature of its revenues and to save in good times for spending during bad times; and
Whereas, According to an April 2006 report issued by Dall Forsythe of Baruch College entitled "Cyclical Budget Management in New York City," the City experiences cyclical deficits and surpluses because it relies on a variety of economically sensitive sources of revenue that fluctuate quickly in response to the state of the City's economy; and
Whereas, About half of the City's tax revenue is eco...
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