Delay of mayor's borough taxi plan could increase next year's deficit to $4 billion
Today, city budget director Mark Page said that the budgetary damage from last week's court decision delaying the mayor's borough taxi plan could somehow be absorbed this fiscal year, and might inflate next year's budget deficit to $4 billion.
"The city has some limited ability to absorb the loss of this revenue in '13, but at the cost of further increasing the forecast deficit already standing at $3 billion in Fiscal Year '14," said Page, during testimony this morning before the City Council.
It's not clear how that absorption would work. The mayor's office did not provide further elaboration. But Doug Turetsky, of the Independent Budget Office, says his educated guess is that the city would take the $1 billion it was setting aside from the Retiree Health Benefits Trust Fund to pull down the 2014 deficit and apply it to 2013's instead.
That would mean that the trust fund, which was created in 2006 to fund retiree health benefits, would be exhausted a year early, too.
"The quote-unquote 'easiest' thing you could do is pull some of that money that you were hoping to close the 2014 gap [with] to close 2013," said Turetsky.
When Mayor Michael Bloomberg presented his preliminary fiscal year 2013 budget in February, it relied in part on $1 billion in revenue from the anticipated sale of 2,000 new taxi medallions, part of the mayor's ambitious "borough taxi" plan. He also predicted a $3 billion gap in the following fiscal year.
Last week, a judge halted the plan, and while the city will fight the injunction, the appeals will take some time and the outcome is uncertain.
"We believe the legal issues raised will ultimately be resolved in favor of the plan and will allow it to go forward," said Page. "However, the legal process is likely to be time-consuming, delays unfortunate for New Yorkers waiting for the benefit of improved taxi service. But it also adds uncertainty regarding the receipt by the city of the $1 billion in proceeds of sale of the additional medallions."
"I guess what this is saying is that it's hard to know where we stand in terms of the medallion sale, the timing of it and what it's going to be worth," Page added.
At issue in the judge's injunction halting the plan was the question of home rule. Basically, the judge argued that the city failed to get City Council approval before getting the borough taxi legislation passed in Albany.
Today, Bronx Councilman G. Oliver Koppell asked whether the administration was now, belatedly, considering seeking the Council's approval so as to be able to move forward with the plan, which would have put 2,000 yellow taxis on the street and created an 18,000-strong fleet of green taxis for the outer boroughs.
"What I've been advised is that although we've thought of that and we're thinking about it, that that doesn't fix the statutory problem of the state," said Page, arguing that if the city were to get a home rule message from the Council, it would then have to go back to the state and gets its approval all over again.
Page said the city has discussed that approach, but "it did not come out very positively thus far."
UPDATE: City Council Speaker Christine Quinn's office sends over the following statement:
"I have serious concerns about the consequences court proceedings on the city's taxi medallion sales could have on the FY13 budget. The judge's temporary restraining order jeopardizes our ability to reach a balanced budget without having to make even more drastic cuts than have already been proposed. Right now, my principal concern is with reaching a balanced budget that protects important city services. I call on State Supreme Court Justice Engoron to rule on this matter expeditiously. The sooner a decision is made in this case, the sooner we will have clarity on whether we can apply the hundreds of millions of dollars we need to programs and services New Yorkers depend on."