New York City Comptroller William C. Thompson, Jr. has released his Comprehensive Annual Financial Report for Fiscal Year 2007, which shows that New York City ended the year with a General Fund surplus for the 27th consecutive year.

The General Fund, a primary indicator of the financial activity and legal compliance for the City, shows revenues and other financing sources of $58.711 billion for FY 2007 and expenditures and other financing uses of $58.706 billion.

The expenditures and other financing uses include transfers and subsidy payments of $4.665 billion to help eliminate the projected budget gap for FY 2008. Excluding the transfers and subsidy payments to eliminate future fiscal year projected gaps, expenditures and other financing uses increased by $3.793 billion, or 7.5%.

The report, the sixth issued by Thompson, details economic conditions within the city and the outlook for FY 2008. Among the results of operations reported in the Financial Report are the following:

Economy and Budget: Led by a banner year on Wall Street, the City’s economy expanded rapidly during FY 2007. Employment and earnings recorded large gains, translating into strong revenue growth for the City. Securities industry profits, bonuses and hiring surged in FY 2007. The job count in the financial sector was almost 11,000 greater in June 2007 than in June 2006. Securities industry bonuses reached an all-time high exceeding $33 billion during the fiscal year, according to Comptroller’s Office estimates.

“Wages and salaries paid by the City’s securities firms have exceeded 20% of total wages paid citywide for several years, although the sector accounts for only about five percent of employment,” Thompson said in the report.

Additionally, other industries benefited from the financial sector’s strong performance: professional and business services firms added more than 15,000 employees while the leisure, retail and hospitality industries grew by almost 15,000. However, employment remained flat in the information (publishing, broadcasting and motion pictures) industry while the wholesaling and manufacturing sectors continued their long-term employment decline.

Overall the Gross City Product (GCP) grew by 3.3% in Fiscal Year 2007, after growing by 3.7% in Fiscal Year 2006. The City’s payroll jobs rose 1.6%, or 57,000, in Fiscal Year 2007 after expanding by 60,100 in the prior fiscal year. All of the job growth was in the private sector, where employment rose 1.9%, or 58,400.

The Mayor’s FY 2007 Executive Budget, released on May 4, 2006, projected a budget of $52.7 billion. During the course of FY 2007, tax revenues, fueled by strength in both the economy and real estate market that exceeded expectations, were substantially higher than projected.

As a result, the City’s April Modification of the FY 2007 budget, submitted with the Mayor’s FY 2008 Executive Budget on April 26, 2007, projected a FY 2007 surplus of $4.4 billion. The surplus is presented in the budget stabilization account (BSA) line. The April 2007 Financial Plan for FYs 2008 through 2011 reflected the use of this BSA to provide budget relief of $2.03 billion in FY 2008, $2.01 billion in FY 2009 and $350 million in FY 2010.

Pension Funds:

For the 10-year period ended June 30, 2007, the Pension Funds had annualized returns of 8.1%. Continuing on the course from FY 2003, each of the Funds conducts a review of its assets allocation, 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 have decided to increase their level of investment in longer term, less liquid securities, in particular, real estate and private equity. 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 2007.

Public Finance: In FY 2007, the City and its blended component units issued $5.54 billion of long-term bonds to finance its capital plan and to refinance certain outstanding bonds. As of June 30, 2007, the City’s outstanding General Obligation fixed and variable rate debt totaled $27.85 billion and $6.65 billion, respectively.

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