In: Economics
How is the New York City Budget determined?
The budget process for the City of New York is a year round
process that is centered around a fiscal year, not a calendar year.
New York City's fiscal year begins on July 1st and ends on June
30th. The New York City Charter ("the Charter") vests the
responsibility for preparing an annual expense and capital budget
with the mayor. The mayor must then submit the expense and capital
budget to the City Council for its review and adoption.
Each budget must consist of several parts: the expense budget,
which sets forth proposed appropriations for the operating
expenditures for municipal services including debt service; the
capital budget and program, which sets forth proposed
appropriations for capital projects for the ensuing fiscal year and
the three succeeding fiscal years; and the revenue budget, which
shall set forth the estimated revenues and receipts of the city. In
addition, the expense budget is further broken down into a contract
budget, which can be viewed as a detailed portion of each agencies'
other than personal services expenditures for contractual services
that are personal service in nature.
Since the fiscal crisis which occurred during the f1970's, the City
is required to maintain a budget that is balanced in accordance
with generally accepted accounting principles pursuant to State
law. In addition, pursuant to the New York State Financial
Emergency Act for the City of New York, the City is required to
prepare a four-year financial plan, which is reviewed and revised
on a quarterly basis and which includes the City's capital, revenue
and expense budget projections and outlines proposed gap-closing
programs for fiscal years with projected gaps.
The Process
Preliminary Budget
According to the Charter, the preliminary budget for the ensuing
fiscal year shall be submitted to the City Council by the mayor no
later than January 16th. The Council then has until March 25th to
hold public hearings on the program objectives, and fiscal
implications of, the preliminary budget and any statements of
budget priorities of the community and borough boards, the draft
ten-year capital strategy and any borough president
recommendations. These hearings are usually held during a two week
period in which agency officials, as well as representatives of the
borough and community boards may come and testify regarding their
needs for the coming fiscal year. In addition, any member of the
public who wishes to testify may do so as well.
The Charter requires the Council to issue its findings and
recommendations related to the preliminary budget by March 25th.
The Council usually issues a comprehensive response to the proposed
preliminary budget which includes various policy recommendations
and expenses and revenue proposals. In addition, a summary of all
the budget hearings held by each of the Council's committees is
prepared outlining the issues raised and recommendations and
requests made by each committee.
Executive Budget
The Charter requires that by April 26th of each year the mayor must
submit to the Council a proposed executive budget, along with
supporting schedules that outline all the proposals in the
executive budget in detail. A budget message is also submitted by
the mayor that includes an explanation of the major programs,
projects and objectives of the budget, the general fiscal and
economic conditions of the city, the tax and fiscal base of the
city along with explanations of the various components of the
executive budget. It is then up to the Council to conduct public
hearings in the same manner in which it does for the preliminary
budget. After these hearings have taken place, negotiations begin
between the Mayor's Office of Management and Budget and the City
Council's Finance Division to come up with a negotiated balanced
budget. The Council may increase, decrease, add or omit any unit
appropriation for personal or other than personal services, omit or
change any terms or conditions related to any appropriation. The
Council then votes on the budget and any proposed recommendations
of the Borough Presidents by June 5th. The mayor, no later than
five days after the Council votes on the budget, may veto any
increases or additions the Council has made to the budget and any
terms or conditions proposed by the Council. However, if the
Council decides to make decreases to the budget the mayor cannot
take any action upon such decreases. The Council may override a
mayoral veto by a two-thirds vote of all the Council Members.