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Comptroller William C. Thompson, Jr. today released his Comprehensive Annual Financial Report for Fiscal Year 2006, which shows that New York City ended the year with a General Fund surplus of $5 million.  

The General Fund, a primary indicator of the financial activity and legal compliance for the City, shows revenues and other financing sources of $54.004 billion for FY 2006 and expenditures and other financing uses of $53.999 billion, netting a $5 million surplus. Spending increased by $1.209 billion in FY 2006, an increase of 2.3 percent from FY 2005. Excluding the transfers and subsidy payments to eliminate future fiscal year projected gaps and a non-recurring FY pass-through of Federal funds to the World Trade Center Captive Insurance Company of $999 million, expenditures and other financing uses increased by $1.986 billion, or 4.1 percent.

The $5 million surplus for FY 2006 is a result of expenditures and other financing uses included in transfers and subsidy payments of $3.751 billion to help eliminate the projected budget gap for the current fiscal year, FY 2007.

This report is presented based on new rules promulgated by the Governmental Accounting Standards Board for the recording of the City’s liability as well as the establishment of the trust fund for Other Post Employment Benefits (OPEB), which are primarily post-retirement healthcare benefits.  The City implemented these changes one year earlier for the financial reporting of the New York City Retiree Health Benefits Trust Fund (RHBT) and two years earlier for the City to record its liability for OPEB. 

“In fiscal year 2006, the City contributed $1 billion to the RHBT from the General Fund,” Thompson said.  “The City also recorded an OPEB expense and liability in the Government-Wide Statements of Net Assets and Activities of $53.5 billion.  This enhanced disclosure is an important step to provide policymakers and the general public a more complete financial picture of our City.  This additional information will improve New York’s efforts to protect all retiree post-employment benefits.”

Among the results of operations reported in the Financial Report are the following:

Economy and Budget: The City’s economy, as measured by the Comptroller’s Gross City Product (GCP), rose 3.3 percent in FY 2006, slightly below its 3.5 percent rise in FY 2005. Payroll jobs rose 51,900, or 1.5 percent in FY 2006, compared with 43,900 in FY 2005.  Virtually all job growth was within the private sector.  As a result of higher energy prices, the New York City metropolitan area inflation rate was 4 percent in FY 2005, the highest since FY 1991.  

The Mayor’s FY 2006 Executive Budget, released on May 6, 2005, projected a budget of $49.7 billion. During the course of FY 2006, tax revenues, fueled by strength in both the economy and real estate market exceeded expectations and were substantially higher than projected. As a result, the Mayor’s FY 2007 Executive Budget submitted on May 4, 2006, reflected a FY 2006 budget stabilization account of $3.4 billion, funded with an expected FY 2006 surplus. The FY 2007 Executive Budget included prepayments of $3.751 billion of certain FY 2007 expenditures from this budget stabilization account.

Pension Funds: For the 10-year period ended June 30, 2006, the Pension Funds (the Funds) had annualized returns of 8.4 percent. Continuing on a course set in FY 2003, all of the Funds conducted a review of their asset allocations, assisted by a number of third party consultants and coordinated by the Comptroller’s Office. As a result of these new asset allocation studies, the Funds decided to increase their level of investment in longer term, less liquid securities – in particular, real estate and private equity. In addition, they decided to invest a portion of their fixed-income securities in inflation-linked treasury securities. The new policies are designed to increase the diversification of the assets by reducing the Funds’ concentration of assets in U.S. equity securities. The funding of these new asset classes continued during FY 2006.

Public Finance: The City and its blended component units issued $6.78 billion of long-term bonds to finance its capital plan and to refinance certain outstanding bonds.

 

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