April-June 2008

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Summary

Overview

• New York City had more than sufficient cash-on-hand during the fourth quarter of FY 2008 to meet operational needs and prepay future years’ expenditures. The City began the fourth quarter of FY 2008 with $10.057 billion and made payments of $5.069 billion more than it collected in receipts during the quarter. During the previous four years, the City expended $848 million more than it received in the fourth quarter of FY 2004, $1.520 billion more in the fourth quarter of FY 2005, $2.236 billion more in the fourth quarter of FY 2006, and $6.461 billion more in the fourth quarter of FY 2007. The closing balance for FY 2008 of $4.988 billion was $515 million more than the closing balance of FY 2007, primarily due to the timing in the receipt of real property taxes and expenditures in the last week of June and the first week of July. The average daily cash balance during the fourth quarter of FY 2008 declined $315 million to $9.440 billion from $9.755 billion in the fourth quarter of FY 2007.
  


• New York City’s cash position improved dramatically from FY 2004 through FY 2007. FY 2004 was the last time the City needed to issue short-term notes to ensure adequate cash for operations. In FY 2004, the lowest daily balance was $1.748 billion and the highest was $6.558 billion, after borrowing $1.5 billion in notes. FY 2007 had a record high daily cash balance of over $12 billion. During FY 2008, the lowest daily balance was $2.068 billion and the highest was $11.297 billion. The lowest daily cash balance during FY 2008 was the lowest level since FY 2004. Average daily cash balances increased in each fiscal year from $3.689 billion in FY 2004 to $7.293 billion in FY 2007 and then fell to $6.849 billion in FY 2008. The average daily cash balance during FY 2008, although lower than in FY 2007, was 86 percent greater than the average daily cash balance in FY 2004.
  
  

Cash Receipts    

• Cash receipts totaled $20.504 billion and averaged $320 million daily during the fourth quarter of FY 2008. Receipts during the fourth quarter of FY 2008 were greater in April and June and for the quarter than receipts in the same time frames in FY 2007. Cash receipts in the fourth quarter of FY 2008 were $1.467 billion and $6.588 billion more than in the fourth quarters of FY 2007 and FY 2004, respectively. During the fourth quarter of FY 2008, collections of real property tax increased by $347 million, other taxes by $465 million, and miscellaneous receipts by $81 million over the fourth quarter of FY 2007 and were partially offset by decreased federal and state aid of $367 million and increased debt service funding of $85 million. Reimbursements to the New York City Central Treasury for capital expenditures increased by $958 million and were the largest portion of the increase in receipts between the fourth quarters of FY 2007 and FY 2008. Although total taxes grew in the fourth quarter of FY 2008 compared with the fourth quarter of FY 2007, lower collections of business and mortgage and real property transfer taxes reflect the slowing of the City’s economy.
  


• Cash receipts during FY 2008 increased 8 percent from FY 2007, and 34 percent from FY 2004. Average daily receipts were $22 million and $79 million greater in FY 2008 than during FY 2007 and FY 2004. The three largest sources of cash receipts accounted for 40 percent of total receipts in FY 2008. These sources were real property tax collections, $13.867 billion or 18 percent of total receipts, personal income tax receipts, $8.836 billion or 12 percent of the total receipts, and NYS education aid, $7.857 billion or 10 percent of the total receipts.
  

Cash Expenditures

• Cash expenditures, including capital expenditures, totaled $25.573 billion and averaged $400 million daily during the fourth quarter of FY 2008. This was an increase of only $75 million in expenditures and $2 million more in average daily expenditures compared with the fourth quarter of FY 2007, but $10.809 billion more in expenditures and $169 million more in average daily expenditures than in the fourth quarter of FY 2004. Personal service expenditures decreased by $1.072 billion in the fourth quarter of FY 2008 from the fourth quarter of FY 2007 and increased $3.714 billion over the fourth quarter of FY 2004. Other-than-personal-service expenditures fell by $365 million and increased $1.136 billion in the same time frames. During the fourth quarter of FY 2008, gross payroll increased 2 percent, other personal service expenditures decreased 22 percent, public assistance increased 4 percent, medical assistance decreased 10 percent, other social services decreased 20 percent, and vendor and other payments decreased 4 percent from the fourth quarter of FY 2007. All other expenditures, including cash prepayments, capital expenditures, and tax refunds were $1.512 billion greater in the fourth quarter of FY 2008 than in the fourth quarter of FY 2007. When there is a budget surplus, June expenditures can include cash prepayments of future years’ expenditures. Cash prepayments during FY 2008 totaled $6.611 billion, $694 million greater than in the fourth quarter of FY 2007; capital expenditures accounted for 10.1 percent of total expenditures and were $774 million greater than in the fourth quarter of FY 2007, and tax refunds were $168 million greater than in the fourth quarter of FY 2007. The largest decline in expenditures was the result of a $1.5 billion payment to the Retiree Health Benefits Trust Fund to build the Trust’s assets in the fourth quarter of FY 2007. That was not repeated in FY 2008.
  
  
• Cash expenditures during FY 2008 increased 5 percent from FY 2007 and 37 percent from FY 2004. Average daily expenditures were $12 million and $83 million greater in FY 2008 than during FY 2007 and FY 2004, respectively. From FY 2004 to FY 2008, personal service expenditures averaged 46 percent of total expenditures and grew 35 percent and other-than-personal-service expenditures averaged 32 percent of total expenditures and grew 28 percent. The average of daily expenditures as a percent of daily cash balances during FY 2008 was the same as in FY 2007 and has decreased by 2 and 14 percentage points since FY 2004 and FY 1999.
  

• Total capital expenditures of $2.583 billion were $774 million more during the fourth quarter of FY 2008 than during the fourth quarter of FY 2007, and $1.225 billion greater than in the fourth quarter of FY 2004. The City-funded portion of capital expenditures was $771 million and $833 million more than during the fourth quarters of FY 2007 and FY 2004. April 2008 had the greatest amount of capital expenditures in any month of a fourth quarter during the last five years. In April 2008, the City acquired the assets of the Jay Street Development Corporation for $499 million. Payments to the School Construction Authority totaled $400 million during the fourth quarter of FY 2008.
  


• During FY 2008, total capital expenditures were $1.768 million greater than in FY 2007 and $3.052 billion more than in FY 2004. In FY08, the high level of total capital expenditures was due in part to the purchase of the Jay Street Development Corporation and increased payments totaling $2.4 billion to the School Construction Authority. In the last ten years, capital expenditures as a percent of total expenditures ranged from 7.7 percent in FY 2000 to a high of 10.9 percent in FY 2008, and averaged 9.6 percent from FY 1999 through FY 2008.
  


• All capital expenditures are initially paid from the New York City Central Treasury and then reimbursed mostly from the proceeds of general obligation, Transitional Finance Authority, and water and sewer debt and Expanding our Children’s Education and Learning capital grants from the Dormitory Authority of the State of New York. Reimbursements were $2.834 billion, including the reimbursement for the purchase of the Jay Street Development Corporation, during the fourth quarter of FY 2008. Reimbursements during FY 2008 were $8.203 billion, $327 million more than reimbursable expenditures. From FY 2004 through FY 2008, general obligation debt financed 51 percent, Transitional Finance Authority debt 8 percent, water and sewer debt 29 percent and Transitional Finance Authority Building Aid and the Dormitory Authority of the State of New York funds 11 percent of reimbursements.
  

Financing

• The City issued $2.757 billion of general obligation bonds during the fourth quarter of FY 2008. During FY 2008, general obligation bond issuances totaled $7.382 billion; $3.425 billion funded the City’s capital program, $2.431 billion refunded outstanding debt providing budget savings of $176 million over the life of the bonds, and $1.526 billion restructured a portion of outstanding insured floating rate debt.
  


• The Transitional Finance Authority sold $700 million Transitional Finance Authority Building Aid bonds in June 2008. This was the only sale in FY 2008. The Authority has sold a total of $2 billion in Building Aid bonds and the City has received $1.851 billion of the proceeds from these bonds as reimbursement for capital education expenditures.